WEC Conference 2015
Attendees of both the Princeton and Berlin World Economic Conferences will receive: the “European” and “North American Share Market” reports, part II to the “Real Estate” report, and all attendees will also receive a complimentary DVD of the Berlin and Princeton conferences.
EXCLUSIVE for Conference attendees, you will receive a “Year-End 2015″ Special Report, which will only be sent to attendees containing the reversals to watch going into 2016 and what they mean.
This will also include the Asset Allocation for 2016 and what appears to be the best trade.
All attendees should have received: “The War Cycle”, “Transactional Banking”, and part I of the “Real Estate” report. Please contact us if you have not received one or more of these items.
All reports and materials will be available for sale to the general public after the conferences. We expect to release the conference DVDs in the beginning of 2016.
We have now increased the venue space to increase the number of seats available to try to accommodate everyone. We apologize that we could not accommodate everyone in Princeton. Then venue was simply at maximum capacity. Tickets for the Berlin conference are still available. If you have any additional questions pertaining to the conference, please contact us at PEIConferences@PrincetonEconomicsIntl.com.
TIME & PRICE
QUESTION: Marty time and price you always say are two separate forecasts. So reaching a price level means nothing unless it also meets the objective in time. So it is time that is more important than price. Correct?
HK
ANSWER: Yes. Only a fool thinks that forecasting is simply price. Time is far more important than price. If we saw the Dow rally to 25,000 in two weeks and gold fall to $800 the next week, neither move would signal the end of the trend. Whatever price you reach must be aligned with the time. That is why there are several price objectives on the Dow. Our first was 12,500, then 18,500, 23,000, and finally 40,000. If you exceed one before the time target then you focus on the next. You step in and out of an investment accordingly.
It is a question of time that is dominant. In gold, we must make a new low, for the low was not aligned with time. You can stop below 1,000, or the extreme would be $680. The benchmarks are the most important. Gold never elected a Yearly Bearish Reversal from 1980 suggesting the eventually new highs would still be made. You have a certain amount of time to accomplish something. That is the limit always. When gold declined for 19 years, they made excuses it was manipulated without any proof of perpetual manipulation just claiming this would create the image of less inflation and a strong dollar as if anyone really uses gold today as such a measure. Why tell people to only buy gold when the same $1000 investment in 1980 returned $19,000 and today gold would be about $1,200? When does someone admit they are wrong? Like politicians it is never. .
Only a fool would think that you could forecast only price or the market with fundamentals. How many times has the news on a company been countertrend, yet the market ignores that. Fundamentals are worthless and amount to sophistry. Gold declined for 19 years and was still fiat. They then form groups and ask for donations to fight manipulators, whom they pretend are perpetual, when in fact, the entire commodity sector is in crisis, no less the deflation that is destroying the economy. Metals will turn only when the perception of the whole changes. Then you will not hear about manipulation when gold reverses and rallies. All the excuses that hurt people will be forgotten. That is not analysis, that is called sales propaganda.
Gold & the Approaching New Lows
COMMENT: Mr. Armstrong, I want to thank you for saving me so much money. I now read the goldbugs for entertainment. They never admit they are wrong. But now they are desperately attacking you as at G—– and J—- and it is obvious with gold collapsing back below the 1100 mark all they can do is blame you. It appears they are desperately slandering you mercilessly because they can see gold is about to collapse. I just wanted to say thank you. I cannot see why they tell people to buy metals and then make excuses when they are wrong.
PD
ANSWER: It is very sad, but indeed, they always make things personal because they have nothing else to say. All their scenarios fail because they are clueless about how the world economy functions and people end up buying every high. They only see the world through the eyes of metals and nothing else. It is a very sad epitaph and I do not see the difference between that and what the investment bankers did with the dot-com bubble. You cannot offer advice on a product and then sell that product or have personal positions in it, as that would be a conflict of interest.
The bankers at least plead guilty to putting out bogus research. There was no Chinese Wall between analysis and making money trading or selling that same product. If anyone accepts money from the bankers, their research is also a conflict of interest that would need to be disclosed.
They can slander me all they want, just like the bankers and government. At the end of the day, support by the end of the month still lies at 1030 and 875. Take out the July low of 1072, and they can blame me all they want, it will not change anything.
Market Talk Nov 11, 2015
Asian Equity markets really had no idea which way to play today after a
mixed set of economic data releases. The Retail Sales was marginally
better than expected at 11% (estimates were for around 10.9%),
whilst the YoY Industrial Output release failed to meet the forecasted
5.8% expectation as we saw a 5.6% print. As a result most core markets
closed around unchanged with very little incentive to move in either
direction. In Europe all the talk continues to focus on the ECB and
their next QE move and the resent press reports of potentially larger
cuts to the DEPO rate. A partially close US market saw stocks drift
closing down around -0.3%.
The US Dollar also gave some ground back
today with gains seen for GBP, TRY, and JPY but we continue to see the
Russian Rouble drift with energy prices. The DXY (USD Index) closed a
quiet day slightly weaker at 99.05 (-0.35%).
Still the concerns are for a global
slowdown and there is nowhere that is having a greater impact than in
the Oil market. Again today, we saw prices for WTI and Brent off around
3% each, which puts the YoY level down to around -44%.
The Bond Market in Europe is something we
quote most days but not so much in detail. So, as of closing this
evening I want to provide a quick over-view of just
how extreme the European Bond Market pricing has become. In Germany the
1yr rate for government bonds closed this evening at -0.33%, with 2yr at
-0.35%. It is not until 7 years do you actually see a positive return
(7’s are +0.12%) in the yield curve; with 10yr closing this evening
at 0.61bp. A similar yield for the US Treasury market would be 2yr at
0.87%, 5yr at 1.71% and 10yr at 2.33%. I often quote the spread between
10yr US and Germany (which incidentally closed at +173bp tonight) but
not often the peripherals.
The Italian government bond market currently rated by S+P (Standard and Poors) is BBB-; is the lowest limit that is accepted as investment grade. A view of the yield curve would see 2years at 0.09%, 5yr at 0.58% and 10yr at 1.63%. This compares with the USA (AA+) 2yr 0.87%, 5yr at 1.72% and 10yr at 2.33% implying a negative spread for a positive credit. Client could sell Italian 5yr paper (at 0.58%) buy US 5yr paper (at 1.71%) and collect 114 basis points. It is possible to do this spread at 10yrs and take-out 172bp. Similar credits with a BBB- rating would be Kazakhstan, Romania, Morocco, Azerbaijan, Montserrat and Uruguay.
The Italian government bond market currently rated by S+P (Standard and Poors) is BBB-; is the lowest limit that is accepted as investment grade. A view of the yield curve would see 2years at 0.09%, 5yr at 0.58% and 10yr at 1.63%. This compares with the USA (AA+) 2yr 0.87%, 5yr at 1.72% and 10yr at 2.33% implying a negative spread for a positive credit. Client could sell Italian 5yr paper (at 0.58%) buy US 5yr paper (at 1.71%) and collect 114 basis points. It is possible to do this spread at 10yrs and take-out 172bp. Similar credits with a BBB- rating would be Kazakhstan, Romania, Morocco, Azerbaijan, Montserrat and Uruguay.
Myanmar Election
Opposition leader Aung San Suu Kyi, who was under house arrest back then, now heads the NLD. Buddhists monks accused her of wanting to turn the nation into an Islamic state. Now, Myanmar President Thein Sein has congratulated Aung San Suu Kyi’s on winning the election. We will see what happens with the corruption. Can one person change it? The allegations of her supporting Islam may play a future role as an excuse to resist her when others would have a lot to lose.
(Note: We erroneously published the history first ahead of the election results.)
Putin & Military Establishment
The Obama Administration’s strategy regarding Russia and foreign affairs has been a total disaster. They have remarkably brought back the Cold War and placed the world at risk, all for their power plays that American citizens ignore. This issue in Syria illustrates how once politicians make a mistake, they will never admit it, nor will they reverse their policy. The entire Syria strategy was to overthrow the government’s attempt to get a pipeline through to Europe to compete with Russia to reduce its economy with regard to the natural gas it sells to Europe. This policy has led to ISIS, the refugee invasion of Europe, and a continual support with troops advising on the ground how to overthrow the Syrian government. This will lead to war because this is now totally insane. Saudi Arabia is beginning to issue bonds for the government’s budget counted on higher oil prices.
Putin has announced that he will counter the US-NATO’s missile shield defense program by deploying new strike weapons that are capable of piercing the shield that the Democrats objected, which was initiated by Ronald Reagan. Putin stated publicly that that he is developing defenses against ballistic missiles to prevent Obama from attempting to “neutralize” Russia’s nuclear deterrent. Unfortunately, Obama has one year left and that is too much time to screw the world up even more.
What we need is a non-politician with brains and guts. Someone who will stop the bureaucrats in the military establishment from creating World War III. Project Northwoods revealed how these people would kill American citizens and blame it on someone else just to get their military goals.
The revelation of Northwoods after the Oliver Stone movie has shed some light on the entire assassination of JFK. The problem with electing an outsider to Washington will be that he indeed would become a target for assassination by the insiders who see themselves as the defender of the faith, which is their agenda. It is like the police today; they are trained to look for the bad guys, and suspect that everyone is a criminal. Those in the military establishment are the same. Everything they see is a threat to their power. Presidents have become puppets.
They have brought back the Cold War and there is nothing that would make them happier than to create war. The Second Amendment was to keep citizens armed rather than maintain standing armies. Prince Eugene of Savoy was one of the greatest generals of all time. Montesquieu interviewed Savoy for his books and what came out of this encounter was the realization that standing armies provoke wars for those in power, whom felt it was a waste of money unless deployed.
On January 17, 1961, President Eisenhower delivered his farewell speech to the nation, reflecting his inside knowledge as a former General. He said:
“In the councils of government,
we must guard against the acquisition of unwarranted influence, whether
sought or unsought, by the military industrial complex. The potential
for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of
this combination endanger our liberties or democratic processes. We
should take nothing for granted. Only an alert and knowledgeable
citizenry can compel the proper meshing of the huge industrial and
military machinery of defense with our peaceful methods and goals, so
that security and liberty may prosper together.”
Civil Unrest, Revolution, & the Phase Transition Curve
Political corruption is everywhere, no matter what country we look at. Standing up for the truth will become increasingly prominent. This is part of the War Cycle – the civil unrest side. Career politicians and the mainstream media simply do not get it. They assume this is normal; no one ever said anything about them robbing us blind before, so they do not understand why people are becoming mad now.
What we just saw in Burma demonstrates that the computer is correct. Correlating these trends has enabled the computer to see decades into the future. Although others take current facts and try to fit it to a cycle to pretend they can forecast such things, these types of trends are set in motion decades in advance and move slowly until we see a real boiling point.
Water takes a lot of energy to heat up. The amount of energy it takes to actually heat water is very well established. A calorie is the amount of energy it takes to heat one gram (1 mℓ) of water by 1°C. This can be expressed as 1 kcal = 4184 J, which is how much energy it takes to heat one kilogram (or liter) of water by 1°C. Therefore, 1 Btu = 1055 J, which is the amount of energy it takes to heat one pound of water by 1°F. Now, when we actually chart the progression of heating a pot of water, we discover a phase transition, meaning we are reaching the point when we convert the liquid water into a gas and see steam.
So if I want to take 500 mℓ of water from 18°C to boil, I need to expend 82×0.5 kcal to get the job done, or 171.6 kJ. It takes a lot of energy to boil a pot of water. The economy functions in the same manner. We progressively turn up the heat and then all of a sudden it enters a phase transition and erupts almost out of nowhere. This is the nonlinear progression of a boiling pot of water. Politics amounts to the same type of progressive curve.
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