Global Market Watch for May 7th, 2014
Putin & The Mouse that Roared?
Putin’s hardball with the USA is paying off. His popularity has hit 82% in Russia – the envy of any Western politician. The attitude in Russia is that they have been kicked around and now it is time to kick-back. Economically speaking, taking Eastern Ukraine is no prize. There is no real economy to speak of and Crimea had depended upon tourism that is now done. So far, Putin had to send in over $160 million to keep the economy afloat. Eastern Ukraine will be even worse. The French should pray that Russia invades. They can walk out with the hands-up and then stick their hands-out looking for a bailout like Crimea.
This is like the old Peter Sellers Movie – the Mouse That Roared. The plot was based upon US bailouts after World War II. The proposition was to declare war on the United States, lose, and then get the bailout. This irony maybe more true than anyone suspects.
Our Scalar Date System
What is a Scalar Date? The term scalars is used for real numbers because they span the “scale of progression from positive to negative infinity” representing the “comparison of positions upon one common scale”. Effectively, we created our own Scalar Datesystem in order to handle TIME within computer forecasting models. Essentially, our Scalar Date starts with day one 6,000 BC and counts every day thereafter. For example, January 1, 2014 in our computer system 2,927,114, which is the number of days since January 1, 6000 BC. We do not attempt to use the so many different calendars related to the sun and moon. Instead, we have complex translators so we can convert our dates into the contemporary calendars of the time.
We express each day as a decimal representation of the year in 365 day format. Therefore, the following table reflects the basic structure.
MONTH DAYS ACCUMULATIVE
| January | 31 | 31 |
| February | 28/29 | 59 |
| March | 31 | 90 |
| April | 30 | 120 |
| May | 31 | 151 |
| June | 30 | 181 |
| July | 31 | 212 |
| August | 31 | 243 |
| September | 30 | 273 |
| October | 31 | 304 |
| November | 30 | 334 |
| December | 31 | 365 |
For example, Pearl Harbor 1941.93 would be. If we take the 1987 Crash of October 19th, we have 273 days + 19 giving us 292 days. Divide that by 365 and we end up with 1987.8, the precise day target on our Economic Confidence Mode.
If we look moving backwards, the target 1994.25 works out by taking 365 * .25 and that gives us 91.25 days. Looking at the table above, we then have 90 days for March and 1.25 brings us to April 1st, the precise day of the low for the US market that year.
The concept of a scalar system was first invented by Sir William Rowan Hamilton (1805–1865) who was an Irish physicist, astronomer, and mathematician, who made important contributions to classical mechanics, optics, and algebra. His studies of mechanical and optical systems led him to discover new mathematical concepts and techniques. His greatest contribution is perhaps the reformulation of Newtonian mechanics, now called Hamiltonian mechanics. This work has proven central to the modern study of classical field theories such as electromagnetism, and to the development of quantum mechanics. In mathematics, he is perhaps best known as the inventor of quaternions. Hamilton regarded ordinary scalar algebra as the science of pure time
Gold for the Close
Gold rallied establishing the high on the classic 7th day. The Daily Bearish Reversal; to watch lies at 1285.60 on a nearest futures. A closing beneath 1295 will warn that a pause in the uptrend is starting.
A Significant Change in Trend
The U.S. monthly international trade deficit decreased in March 2014 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit actually decreased from $41.9 billion in February (revised) to $40.4 billion in March as exports increased more than imports. This recovery in the US economy is showing signs of shifting trends that are rather significant for the rest of the world. The goods deficit decreased $0.6 billion from February to $60.7 billion in March; the services surplus increased $0.9 billion from February to $20.4 billion in March. This is reflecting the capital shifts on a global basis as services are now rising.
However, if we peel back the vernier that has so convinced many the dollar will be reduced to dust, we see that consumer spending grew at an annualized, inflation-adjusted rate of 3%, however,. Imports of consumer goods declined at a 5% rate. Typically, such moves are often really just currency fluctuations. However, we can see that the dollar has been steady since 2010. Therefore, digging deeper reveals some interesting trends.
Looking at 2011 through the first quarter of 2014, the interesting aspect is we see that imports of consumer goods have grown at less than half the rate of corresponding measures of domestic spending. This is showing several important trends.
(1) the rising level of taxation (including state and local) is reducing disposable income among those who really do consumer cheaper imported goods;
(2) Manufacturers have been bringing their production back to the USA reducing the amount of goods that would otherwise be classified as imports.
(3) the economic recovery has been driven by
(a) the upper class that consumes less and
(b) institutional that consumes even less.
Why is this important? The only thing that is holding up the world economy is the US consumer. As taxes rise and their disposable income declines, so will consumption. We can see from the chart on the US Trade Deficit, the trend ended with the 2007 high in theEconomic Confidence Model that is reflected also in emerging markets collapse thereafter. This is putting flesh on the bones of our outlook for a 13 years decline into 2020. Up until 2007, the trend was clear that a 1% growth rate of consumer spending was historically accompanied by nearly a 3% growth rate of spending on imports of consumer goods. There has been a significant shift since 2010 whereby a 3% rise in consumer spending has been matched by a 5% decline in imports. Consumers are clearly buying less imports as the chart illustrates. We are in the shift that is often seen in the latter part of the 51.6 year Wave that is due to peak in 2032. As imports decline, the dollar has a secret underlying bid on a global scale. This also explains why the Fed can increase the money supply yet it is being absorbed on a global basis – not domestic.