Tag Archives: Understanding cycles

Mar 4 2020

Fed Cuts Rate on Schedule!


Armstrong Economics Blog/Interest Rates

Re-Posted Mar 3, 2020 by Martin Armstrong

The Federal Reserve is in full panic mode. The Federal Reserve cut interest rates Tuesday in a rare emergency meeting, responding aggressively to the growing threat the coronavirus poses to the economy and markets. The Fed lowered its key federal fund rates by half a percentage point to a range of 1% to 1.25%, the central bank said in a statement.

We warned over the weekend that Socrates had pinpointed this week and then the week of March 23 for actions by the Fed. The Fed is between a rock and a hard place. It had to act in response to the collapse in economic data for the 1st quarter, but at the same time, rates are rising in the real world due to perceived credit risks. This means that the Repo Crisis will get worse and the Fed will have to become the permanent market-maker to maintain short-term rates at these levels.

The steep cut of 50 bp was an emergency half-percentage point rate cut on Tuesday in an effort to protect U.S. economic growth from the impact of the coronavirus outbreak. However, the production lines are already declining. The Fed is looking at how the press has whipped this up into a global panic. But as we can see, volatility will rise further at the end of the month and we should expect this to manifest in a serious escalation of the Repo Crisis as early as May/June

Mar 4 2020

Federal Reserve Chair Jerome Powell Statement and Press Conference Following 50 Point Fed Drop…


Posted originally on The Conservative Tree House on March 3, 2020 by 

Earlier this morning the Federal Reserve (Fed) announced a .50 drop in their lending rate in response to the potential for economic impacts from the coronavirus.  Following the rate cut Federal Reserve Chair Jerome Powell delivered a statement and held a press conference.  [Video Below]

Mar 3 2020

Why Goldbugs Get Crushed


Armstrong Economics Blog/Gold

Re-Posted Mar 3, 2020 by Martin Armstrong

QUESTION: This is what infuriates those that like gold. All of the shorting. Why? No other sector looks like this. So how is it that gold miners are restricted but no other sector sees shorting to the extent that restrictions are in place??? Gold is $1600 and these stocks traded double this price in 2008 with gold at $800. You ask why “goldbugs” are so angry, this is your answer.

S

ANSWER: For decades, I have watched “The Club” rally the metals and then crash them because the goldbugs treat it as a religion rather than a market. Every rally is touted as, here we go, the world will crash and only gold will survive. The Club uses that sentiment against them all the time for they know it is easy money. When they step back and look at the metals as markets, then they will win. Many other markets have made long-term profits but they are always demonized by the goldbugs. Why? I believe that some of the people promoting gold are the very ones involved in selling it to them. Everything has a cycle. It goes up and goes down. These chants from the goldbugs are not realistic and they cost countless people their life savings as they get sucked in by people who act like used car salesmen.

Short sale restriction is a rule that came out in 2010 and it’s also referred to as the alternate uptick rule, which means that you can only short a stock on an uptick. You will note that there is no such thing as a long buy restriction where you can’t buy a stock as it’s going up.

Inevitably, the goldbugs blame shorts. That is NEVER the case in any crash. The real cause is that you have exhausted the buying. When you run out of buyers, that is when markets become vulnerable. The smart do not short, they sell to take profits. That starts the decline and the hated short-player is blamed but never found.

The short selling rule came in only because of shorting Lehman Brothers. When the shorts turned on Goldman Sachs, they pulled the strings. But those were shorts looking at reality, not speculative. There has NEVER been a discovered mythical short position that causes the entire market to collapse.

I have stated countless times that gold will rally ONLY when the general public perceives there is a crisis with the government. Forget deficits, quantitative easing, and fiat currency. They will never convince the average person to take gold seriously. When you begin to look at the market without emotions and trade them up and down, then you will see the light.

Mar 2 2020

A Bear Market is Not Likely in the Most Hated Bull Market in History?


Armstrong Economics Blog/Armstrong in the Media

Re-Posted Mar 2, 2020 by Martin Armstrong

Well here we go again. These people who claim to be experts are warning that it is the fallout from the global coronavirus outbreak that has caused the crash and one says this could be “worse than the financial crisis” of 2008. Another claims to have forecast the 2008 Financial Crisis is now saying the idea of a major global recession “doesn’t sound too farfetched.” These people who always claim the market will crash then claim to have forecast the crash but only one out of 50 such forecasts are ever correct. They then also market themselves to please buy their newsletter because they were right.

The German top newspaper, Die Welt, commented on the stock market decline mentioning our perspective correctly February 28, 2020:

The crucial question for investors is now whether the stock market is drifting into a bear market, whether it is losing 20 percent or more, or whether there is a quick and strong recovery. Martin Armstrong currently believes a bear market is unlikely: “The rally that started in 2009 was the most hated rally in stock market history,” says the capital market expert from independent research firm Armstrong Economics.
Yes, I have forecast all the great crashes. That was actually the easy part. The difference in such forecasts sometimes go over everyone’s head. The 1987 Crash I forecast even that the market would fall basis the S&P500 futures from 286 to 181 in two days. True, that impressed even me. But the fact that the crash came on October 19th, 1987 which was the very day of the Economic Confidence Model confirmed what all my other models were screaming – we would make new highs by the peak of the ECM in December 1989. Both the NewYorker and even Bloomberg News had to admit that we correctly forecast the 1987 Crash.
That forecast may have impressed me, but what impressed the entire world was not forecasting the crash, but that the market would then make NEW HIGHS by 1989. Then what impressed our clients even more, was the fact that the December 1989 high not merely forecast that Japanese Bubble top, but that market would NOT make new real value highs, which was SUBSTANTIALLY a different forecast from the 1987 Crash.
As far as the 2007-2009 Financial Crisis, Barron’s commented on my forecast that the market would move back into a long-term bull market. They reported that ONLYbecause they thought it was nuts. Not a single US major financial newspaper would ever report this forecast, because they too filter the news. Overseas press will report, but not the American press. They prefer to put forth the fake forecasts for they are giving them the news they want to print.
So to all the people who ask why the press will never report our forecasts, all I can say is that it would upset the apple-cart. They are only selling media. They need people willing to talk all the time so they are usually the people who do not really have a serious business and are in constant search for new clients.
Categories: Armstrong in the Media
Mar 2 2020

World Share Markets & the Mother of All Financial Crises


Armstrong Economics Blog/Stock Indicies

Re-Posted Mar 2, 2020 by Martin Armstrong

QUESTION: Marty,
Socrates has really been off the charts. I moved 401k and Roth money to cash in mid January and can not thank you enough!
In a private blog post in October, you showed the quarterly S&P with a possible high in Q1, and decline thereafter. Is it now possible that, given the directional changes this coming week, and in March, that the share markets could rise from here into 2021? That would also fit the quarterly array as well I believe. There are no other monthly directional changes after March on the array, and I think if this virus is overblown I don’t see how we go lower for a year from here unless this is truly end of days stuff. Can you ‘forecast’ 😉 what comes next?
Once again, thank you for your advice!
RK

ANSWER: I want to thank all the emails coming in with thanks for calling this correction, correctly. I am writing now the report on all the world share markets to provide the outlook into 2021. We are staring in the face the Mother of All Financial Crises and you always need the move in the opposite direction before pulling off what is the true direction of the markets.

What I hope to do is to prove to the world that this is not some random walk nor is the economy and markets play-things for economists and politicians. This is our future people are toying with. The negative interest rates have destroyed the central banks and nobody seems to have even figured that one out yet.

This is not some experiment to to allow people to try theories that are unsound. It is not just finances and money that is on the table of life. Everything flows from this right down to revolutions and war. As I have said, Marx’s theory to create Utopia, the cornerstone of socialism today, has been responsible for over 200 million deaths and counting.

While if I fail to wake up one morning, I would be relieved that I do not have to watch what these fools do and how history repeats without society ever learning a single damn thing. But I too have a family, an I fear for their future. I get to depart before so I have hope I can escape this madness. I would like to leave behind something to give them hope. Just maybe one day society will wake up and see the light at the end of the tunnel and understand that we have become addicted to repeating history and war.

When will we ever learn that we are all connected? Perhaps that is what the coronavirus will teach everyone how the global economy is interdependent

Mar 2 2020

Will There be Coordinated Central Bank Action This Week?


Armstrong Economics Blog/Interest Rates

Re-Posted Mar 1, 2020 by Martin Armstrong

The Coronavirus has been exploited by the press to unbelievable levels. Even hop on a domestic flight in the USA and the majority of people are wearing masks. Fed is being pressured to do a coordinated rate cut this week. We should see rate cuts in China and Hong Kong where the economy has been complete decimated. Our target weeks for action by central banks will be this coming week of March 2nd and March 23rd. Based on information and belief, the press has been told to knock this off. They are creating a global panic without justification just as they created the Spanish American War.

Categories: Interest Rates
Mar 2 2020

Politics & the Great Awakening


Armstrong Economics Blog/Politics

Re-Posted Mar 1, 2020 by Martin Armstrong

QUESTION: Marty; I understand you do not support either side in politics, but what happens if the Democrats split?

KW

ANSWER: The Republicans were opposed to Trump when he was elected. You had people like John McCain who refused to even allow him to speak at his funeral. Once upon a time, the Republicans and Democrats worked together after elections. Today, the hatred in politics is really beyond all belief.

Trump simply represented a threat to their very existence. But Trump wrongly listened to the Washington elite and brought in people who were the very problem like Bolton. Trump was naive from the standpoint that he was not one of the oligarchs who funded government to further his business. That was the bankers, press, and military establishment. All three have been his enemies ever since. They are the primary donors who have filled their troughs regularly. Trump was just a lowly real estate guy that really did not have direct influence in that field – it was mostly state and local.

The split in the Democrats is indicative of the philosophy shift. They have pandered to the socialist agenda assuming these people are stupid and would never hold them to the promises they have made. This is coming back to haunt them as Bernie leads the pack.

Yes, Biden won South Carolina. But he has all the charisma of watching grass grow. The Democrats have spent $1 billion for the primaries which the press loves, but Bloomberg is $500 million of that. Hillary tried to buy the White House, and Bloomberg will fail. He is probably the most dangerous person ever to run for President in either party.

The Democrats will split over this philosophy for you have the core of the Party will rig the game against Bernie. Do we see the rise in violence against the corruption of the Democratic Party or against Trump? It is true that the there is an element of the Democrats who have been brainwashed to hate Trump and I really do not see what he has done which has been such a threat. Bloomberg suspended the Constitution with his stop-and-frisk that any rational period should have known was illegal. Then Bloomberg outlawed 2 liter bottles of soda, and removed term limits because he refused to leave office. The decisions behind all three of these moves gives me serious pause about this guy. Neither Trump nor anyone else in either party has acted so arbitrarily.

The breakup of the Democrats is not something that becomes a win simply for Republicans. We are looking at a clash of philosophies and if Bernie does not win the nomination, this may be more of the spark to violence than the hatred against Trump.

I have said many times, my concern is what comes AFTER Trump. I do not see someone stepping up from the private sector with sound mind. Bloomberg is a demagogue who is highly dangerous. I think the split of the Democrats will cause an unstable political base that will also infect the Republicans.

The older generation is losing its grip. The Clintons will be gone for 2024. The entire playing field will start to change. From there into 2032 we should witness the disintegration of government for all the socialistic programs will become unsustainable. What happens then when the people who counted on those promises realize it is all a lie? Will this be the political Great Awakening

Feb 29 2020

The ECM & the Market Crash


Armstrong Economics Blog/ECM

Re-Posted Feb 28, 2020 by Martin Armstrong

QUESTION #1: Hi Mr. Armstrong,
Might the current correction be the set up for the long awaited slingshot move?
Regards,
BE

COMMENT #1: I just wanted to say thank you. I sold out on the ECM and bought puts on the market. You just paid off my mortgage.

God bless you!

HJ

COMMENT #2: Marty, you are the only person who has the guts to make forecasts in the middle of a panic up or down. Your calls are beyond belief. No wonder the big boys call you.

KE

COMMENT #3: Hi Martin. Do you think the Fed and other Central Banks will cut rates due to the coronavirus and/or the market decline?
Socrates really helped me avoid this correction and even make some money.

Thank you.
AG

COMMENT #4: Hi Martin,
I don’t recall you ever commenting on the NYSE Composite Index. Just in case you don’t know. The all time high for the NYSE Comp Index is January 17, 2020. Right in sync with the ECM turn on Saturday Jan. 18. Most peoples focus is on the indexes that are tradable. So it is understandable that most people do not know the NYSE Comp index synced up perfectly with the ECM.
Perhaps you could mention this on your blog when commenting on the US stock market monthly closing today.
This weeks BIG down move will only increase your legendary status as the worlds top financial adviser.
Thank you so much for the private blog post last Sunday giving everyone a big warning of what was about to happen this week. The high for the week in the SP500 futures was last Sunday night at the 6 pm open.
Big Time Move Martin. Thank you from the bottom on my heart.
Sincerely,
DP

REPLY: The #1 golden rule is simple: What goes up, also comes down! Experience is something we gain through life. It is not easily acquired. We must make mistakes in order to gain knowledge. If someone wants to become an analyst, you must be in the game a long time to learn the twists the markets will always throw at you.

In the New Yorker Article on me back in October 2009, they wrote: “Armstrong remembers him coming out of his office in September 1998, two months after he’d got short in front of the ruble crisis. Monica Lewinsky was on TV. ‘My oscillators just turned,’ Armstrong announced. He booked his profits, pulled out of the market, and went to his beach house, on the Jersey Shore.” The 1998 turn saw the S&P 500 peak the very day of the ECM. That warned me that there would be a serious crisis and that became the Long-Term Capital Management debacle when the Fed bailed out a hedge fund.  The currencies peaked 8/17 and the games began in September.

Here we had the NYSE, and even the Dow peaked on the ECM, but the Dow followed the NASDAQ into its high which was due in February. Our Panic Cycles were due this week into March. What I have learned over the years is the real opponent is not the market — it is yourself! People always want to blame someone else for their loss. They will be the sort of people who are incapable of ever mastering the markets because they are incapable of ever learning from their mistakes. Always remember, you are battling against your own emotions.

I have come to LEARN that the harder it is to do a trade, the more likely it is absolutely correct. That statement in the New Yorker that I went to the beach after closing my short positions was not a celebration. It was discipline, for it was very hard to cover shorts and flip to a long position emotionally when the entire world says there will be no tomorrow.

 

The entire purpose of the Reversal System is to provide definitive levels in a market that is NOTdependent upon human emotion — mine or yours!

It does not matter if we are looking at 1987, 1998, 2007, or 2020. The numbers are the numbers. In the case of the 2007 ECM, the very day of the panic began on February 27, 2007. I have explained many times that I discovered the frequency from a list of international panics between 1683 and 1907 spanning 224 years with 26 events. The high in 2007 came intraday on October 11, 2007, which was 26.2 intervals of 8.6 days, or in other words it was fractal. However, the highest daily closing was two days before on 10/09, which made it precisely 224 days.

There are people who are so desperate to discredit the Economic Confidence Model and that remains a mystery to me. Are they the Flat Earth types that simply refuse to consider anything? Or are they paid for by “The Club” who are desperate to make money trading against the people and manipulating them at will? I really do not know. All I can do is say, “Hey look at the interesting order!” This proves the world is not just random chaos. There is a Secret Cycle or hidden order behind the curtain.

 

Insofar as the pressure on the Federal Reserve, we can see that pressure has been building in the form of the Repo Crisis into February. There is a Directional Change here with February and we should expect higher volatility in April/May where we have a turning point and a Directional Change. The entire Repo Crisis may begin to cause a severe crisis of confidence by the time we reach May/June.

Yes, this appears to be the beginning of a slingshot move

Feb 29 2020

Corporate Profits to Decline into 2021?


Armstrong Economics Blog/Economics

Re-Posted Feb 27, 2020 by Martin Armstrong

QUESTION: You posted that there should be a recessionary trend starting here in 2020 even in the United States. Does that mean corporate profits will decline which impacts the stock market?

JB

ANSWER: Yes. I warned at the WEC that we were approaching a point where we could see a correction unfold in US equities. Corporate earnings should have peaked after a 19-year rally in 2019. There was a major spike rally into 2018-2019 that has been impacted by the Trump tax cuts and the corporate buy-backs so earnings rise in proportion to outstanding shares. There should be a two-year correction into 2021.

Our correlation models show that since we actually have global cooling, despite all the desperate manipulation of the data to create an average that is rising, temperatures have been declining where people actually live. This is serious for as the real temperature declines, the flu season gets worse. The last major flu epidemic was 1968 and that became a pandemic that killed more than 1 million people. The overreaction to this coronavirus may be an intentional manipulation of the economy as it undermining the economy. Cyclically, this is right on target. We have a Directional Change in 2021 and that is the next turning point. so I would expect we have seen the high in corporate profits and we have that correction unfolding into 2021