Trading Seminar
QUESTION:
Hello Martin
Can you do a trading seminar?
Thanks
CW
ANSWER: Yes the How to Survive Your Own Trading Decision will be a training session for trading. This will include How To Trade a Panic.
2014 Upcoming Conferences
Registration - 2014PEIconferences@gmail.com
YES we will try to hold them together straddling a weekend so those who want to fly in from overseas will be able to attend them all together with a break in between. For the US attendees, these are tax deductible if held in the United States.
Practical Economics is Coming
COMMENT:
Mr. Armstrong,
I’m a 30yr old treasury trader. I trade billions a week/month with the biggest of the big from hedge funds to mostly primary dealers, I do technical analysis for them and I trade for myself but Im writing you because you have inspired me and influenced me throughout my career.
I couldn’t be the successful trader that I am had it not been for you, your efforts, and endeavors. I have studied almost everything you have ever written and I have tried my best to save your research and writings for both out of fear that one day it would be seized/destroyed and out of a desire and dream some day to start an education system/ institute following your principles of cycles and how the global economy really works and passing them along. We have “Institutes of Technology” in our establishments of higher learning (which seems we both agree are a joke)…its my dream to start one day an “Institute of Trading” as we so need as a nation and a world, we need to really know how to manage risk and how to trade. I want the truths that you have discovered about all the cycles, about capital flows, about trading, and the real GLOBAL economy to be at the core of this dream.
You deserve the nobel and every other prize that has ever been established in the realm of economics. Your proof of Cycles (from the ECM -fractal in nature- to the individual asset classes and their respective cycles) , your compilation of the economic data, of historical prices, and understanding of and documentation of all such historical events indeed is the most remarkable achievement in the field of trading/investments/ & economics that more than likely will have ever been accomplished. You really do deserve such accolades one day …and you truly are one of the greatest traders if not the best to have ever lived (your trillions in assets under management proves this point to say the least and you deserve such merits before even considering the astonishing Computer/ Artificial Intelligence dynamic system you have produced).
I’m writing this to you out of thanks, appreciation, and the utmost admiration. It would be my dream to someday get to study/trade under you, although I’m not sure that is your goal these days as you are leading our only hope for western democratic free market survival with little time to spare. However should this find you and you have a desire to lead the younger generation that wants to carry your torch…I would most certainly like to be the first to follow in the smallest of your footsteps and/or at least try to multiply what you have started.
Thank you again for everything that you have done for the world of economics/trading/investing. Thank you for everything that unknowingly you have done for my education and my career. And thank you that you continue to fight the good fight.
You are a great man Mr. Armstrong, God Bless You…
JJ
REPLY: Thank you very much. I have been actually asked to teach at three universities so far. To my complete shock, I went to a meeting with one. I was told bluntly that what they teach does not work. This is one of the most famous in the world. We are in a major transitional period where the thinking process will invert just as it did with the Great Depression. There is a return coming to the way it was before this whole social agenda that has destroyed our future. Government is too corrupt to actually care about the people. It sounds great – but like Obamacare, they could not fairly distribute life-jackets on a sinking ship even if they had more than they needed. It reminds me of Milton Friedman’s view of government.
I am planning to come out with a historical book to deal with the Practical Economics to set the record straight. It is now being edited. I am finish.
CONFIDENCE in the Economy is Changing From Public to Private
QUESTION: From reading your blog, my understanding of your view is that all relationships are in flux with respect to markets and market drivers, except for confidence. For example, the stock/bond relationship can change over time, so stocks do not ultimately go up or down based on what bonds do but based on where confidence stands. If that is correct, then I would submit that both stocks and bonds globally reflect a high degree of confidence in the authorities to “manage” the situation without an accident. European bond market yields reflect complete confidence in the EU and ECB. The US stock market is exactly positively correlated to the belief that the Fed has things under control (see Wednesday’s reaction). Logically, loss in that confidence would obliterate stocks. Yet you suggest we are on the verge of a massive collapse in confidence in government and its agencies and that stocks will double. How do I reconcile?
ANSWER: I am finishing up a new book on the global economy. The interpretation ofCONFIDENCE you assume is actually post Great Depression. This relationship between bonds and stock did not exist previously. Even when the Federal Reserve was formed and people argue that was a Jekyll Island Conspiracy, they too judge the past by the present. When the Fed began it had a direct tool to manage the economy. To stimulate it would buy corporate paper stepping in when banks would not lend. That made PERFECT economic sense. However, that was 1913. When World War I erupted and government needed to borrow, they instructed the Fed to buy their debt and not corporate. As always, they never returned the Fed to its original intent – a quasi-FDIC for banks.
The rates today no longer reflect CONFIDENCE in the state – only manipulation by the state. You will see divergences emerge between state bond rates and private. This took place even during the Great Depression. What will emerge is capital will migrate to stocks and private sector bonds at first for yield. This will cause the central banks to eventually have to buy government debt themselves (monetize) or allow rates to rise. This is what the Fed Tapering is all about. I have already reported that the Fed was going around and informing the banks to re-calibrate their models. They have been warning behind the curtain that they DO NOT SEE a flight to quality for the next decline. This is part of the negative nonsense coming from Summers.
There will be a split with this post-Great Depression thinking that government debt is best. This is the change on the horizon and the Fed even knows this. So open your mind and observe the subtle movements that are revealing the change in trend on the threshold of this chaos. Our sources are real. I do not bullshit with my “opinion” for like assholes, everyone has one. I report facts. That is what my clients expect. I am neither Republican nor Democrat. I am for practical economics.
The 2014 Conferences
Registration - 2014PEIconferences@gmail.com
Tax Revolts and that 309 Year Cycle
QUESTION:
Sir,
I enjoy reading your writings and find them extremely thought provoking, and ultimately very common sense to me. I have to say though Iam not sure about your assertion that governments will tax and tax. I believe they are trying, and will continue to do so, but take a look at the upheaval in France at the moment. This is starting to qualify as a full scale tax revolt. Iam also reminded of the poll tax protests here in the UK in the 1990s. I believe they will quickly hit the wall with taxation and either have to print to fund obligations or let those obligations go. I hope they let them go.
As you will see by my name I also am from Scottish stock. It looks highly unlikely barring a sea change that Scotland will vote to split with the UK. In any case, the SNP are hardly credible as leaders. An independent Scotland run to the philosophy of Adam Smith would thrive, but run by the SNP to the prescripts of socialism it would not look good.
Once again many thanks for your honest BS free articles.
Kind Regards, RB.
ANSWER: The trend has been these people will tax and tax and then tax again until society revolts historically. You are precisely correct that at some point a tax revolt emerges. That was even the core reason behind the American and French Revolutions. Sometimes those in power will get it. Ironically, republics (fake democracies) always turn into oligarchies and are actually the worse form of government you can create. There are really no checks and balances and as we see today, politicians go out of their way to prevent the people from actually voting on any specific issue as is the case in Europe and the USA. You vote for a party/person who lies anyway and then they do as they please
The best form of government is actually a benevolent dictatorship for they simply do what is right for the country and do not have to answer to anyone else. It is strange indeed, Hadrian (117-138AD) faced a tax revolt from previous emperors that had accumulated. In 119AD, he declared a tax amnesty and issued a Sesterius depicting him burning the tax records. The only Republic that did not transform into an oligarchy was that of Genoa. There the richest families ruled, but each rotated as the Doge for one year. Thus, they never became Draconian for the feared retaliation next year and they would be subject to their own laws. Career politicians are always exempt. Genoa did not fall into a rich v poor, it was business always but that benefited the entire city for it perpetually competed against Florence and Venice. You simply cannot have career politicians – NO EXCEPTIONS!
Look at the reforms being taken in China. They are actually for the benefit of the country rather than a political party. In our pretend Democracies, each party will fight to prevent the other from getting credit for anything. They would rather hurt the country than let the other party gain a victory. Take the shutdown. Obama had all the government websites turned off when it fact it cost more money to do that than just leave them alone. He sent in barriers to prevent people from walking in federal parks when there were no employees at such parks to begin with as in Virginia. All of this to make the shutdown as draconian as possible to blame the Republicans. The same takes place in Europe and Britain is no exception.
In my younger days when I believed I could make a difference, I participated in trying to get tax reform in place and to save social security. I was behind the movement for a consumption tax eliminating the income tax and to privatize social security by placing the funds with fund managers (not myself) to actually invest the money. The Dow was trading in the 5,000 area and we were project 12,000 by 2000 (we stopped at 11900).
I even debated Steve Forbes and Governor Jim Florio taking the middle ground between the Flat Tax and Tax’em Till They Drop policies of the Democrats back in 1997. Itestified before Congress on Tax Reform. I made every effort to try to prevent what we now face today.
We produced studies that were being circulated around everywhere. I found myself on Capital Hill shuttling back and forth between Dick Army who was championing the Flat Tax and Bill Archer who was Chairman of the House Ways and Means Committee championing the Consumption Tax. Both were Republicans and both were from Texas. But they would not sit down with each other for that somehow would have led to unfounded rumors. So I became the go between. I sat in Dick’s office with his boots on the desk as he smoked and filled the room. He looked at me and said: Marty, I cannot agree with the Consumption Tax unless there is a Constitutional Amendment eliminating the income tax for when the Democrats got back in power, we would then have both. It was at that moment I knew meaningful tax reform was doomed.
So today I am more practical. I seek to inform people of what is really going on Behind the Curtain for I have been where others cannot even imagine in a fictional dream. Dick Army had the same practical view of politics that Margaret Thatcher had – it was cyclical and only a matter of time before the other side grabs power for their turn.
So they will raise taxes until the people get mad as hell and refuse to take it any more. The first tax revolt in England was that of Wat Tyler in 1381. The first interval of 309 years was 1690 when because of taxes and a shortage of money in America, on February 3rd, 1690, the very first paper money was issued by the colony of Massachusetts and on December 10th that same year, they became the first American colonial government to borrow money starting national debts. Add another 309 years and you get the birth of the Euro, and the start of this cycle for that was the 19 year low also in gold. This cycle was another reason we called for the all time low in gold would be 1999 and the birth of a new cycle, which should culminate by 2025 in the significant demise of Western political systems..
China & the Dollar
QUESTION: Mr. Armstrong; It is true that China will stop supporting the dollar and will become a net seller? The Goldbugs are claiming the dollar is dead buy gold. But they seem to use every reason to justify only buying and it rarely proves to be true. If there’s anyone who knows what is really going on behind the curtain it is most certainly you. Is this for real?
Thanks so much for everything you do.
RKB
ANSWER: Sorry. The answer is no. China will stop accumulating dollars and begin to apply its earnings more directly into its domestic economy. It is not in their interest to ”sell” the dollar or stop “supporting” the dollar as this is being portrayed. Their reserves at $3.6 trillion and they cannot buy much of anything except dollars because that money is kept in bonds not raw cash. They can’t buy euro bonds of most countries. They cannot buy Japanese. So they have few options.
This is part of their reform process – not an act to undermine the dollar that would hurt their economy by reducing their sales to the USA. The central bank under Zhou Xiaochuan has consistently flagged its intention to liberalize financial markets and allow the yuan to trade more freely. Zhou has suggested urgency in pushing for change, although he has not provided any specific timetable. He promised on Saturday to “pull out all stops to deepen financial sector reforms”. The People’s Bank of China (PBOC) will widen the trading band of the yuan in the near term.
The government announced a 60-point reform plan and its leaders pledged to let markets play a “decisive” role in the economy as they unveiled a reform agenda for the next decade. China intends to achieve “decisive results” in its reform push by 2020.
We must keep in mind that in Asia, the government actually looks at the economy more like a business than something to manipulate society as in the West. They are concerned about the health of the economy and moving forward where in the US and Europe it is all about trying to retain political power. This is a HUGE difference.
The People’s Bank of China said the country does not benefit any more from increases in its foreign-currency holdings. This reflects the willingness to now address its domestic economy. I have been stating that China must turn inside and develop its own consumer based economy and that is precisely what it is doing. This is fundamental if China is to become the Financial Capital of the World. Only that will displace the USA from that position.
The reduction in the dollar purchases will allow the yuan’s appreciation. This was precisely what we have been forecasting. The dollar will decline against the yuan. They cannot hold the yuan down any longer. With talk of rates also going negative, the central bank stated “It’s no longer in China’s favor to accumulate foreign-exchange reserves.”
The monetary authority will effectively end its normal intervention in the currency market and broaden the yuan’s daily trading range, China’s foreign-exchange reserves surged $166 billion in the third quarter to a record $3.66 trillion, more than triple those of any other country and bigger than the gross domestic product of Germany,
The increase in capital inflows has highlighted that money simply poured into the nation’s assets yet it withdrew from developing nations such as Brazil and India. The yuan’s appreciation benefits more people in China than it hurts and instead of Japanese tourists dominating the various sights it is now Chinese.
The central bank has no choice but to widen the yuan’s trading band for the trend in in its favor as we forecast last year. The yuan’s spot rate is allowed to diverge a maximum 1 percent on either side of a daily reference rate set by the People’s Bank of China. The trading range was doubled in April 2012, after being expanded from 0.3 percent in May 2007. The band could be widened to 2 percent,
Capital inflows into China accelerated in October, official data suggest. Yuan positions at the nation’s financial institutions accumulated from foreign-exchange purchases, a gauge of capital flows, climbed 441.6 billion yuan ($72 billion), the most since January. About half of October’s increase in the positions was attributable to surpluses in trade and foreign direct investment, with the rest accounted for by inflows of the more common hot money,
The yuan has appreciated 2.3 percent against the dollar this year, which has been its best-performance of all the emerging-market currencies. This is also in part caused by the Eurozone crisis leaving little choice for investment in that region.
China’s growth in reserves has been focused in U.S. government debt, which gave them a large leverage in the Syrian Crisis. China is the largest foreign creditor to the U.S. and its holdings of Treasuries increased by $25.7 billion, or 2 percent, to $1.294 trillion in September making it the biggest gain since last February.