Market Talk – November 18th, 2015
The Bond markets really did not know what to do and consequently did very little. The 30yr actually improved slightly closing the day around 3.04%. The European core markets continued their march as dealers remain comfortable that the ECB will take whatever they are holding. the spread TY/RX was last seen this evening at +176bp. So, we have had the FED minutes now we will see the ECB’s tomorrow lunchtime. Ahead of that though we have supply from France and Italy. Lets hope MR. Draghi has his cheque book with him…
Even the FX market was quiet today with the Euro managing to hold-on to recent lows. Other core currency pairs (GBP, JPY, CHF) traded in a very narrow range in extremely light volume. Oil was also a bit of a non-event in the spot markets but ask your broker about the Forwards markets! Over the past few weeks/month the forwards have re-priced a lot of the curve and have lost almost 20% over the past three months.
Finland Referendum Forces Debate on Euro Exit
Even traditional economists are now waking up to the downside of the euro. The euro was supposed to promote European harmony by eliminating costly currency conversion fees, but the real cost has been this crazy idea that the federalization of Europe would prevent war. As a result, Finland is now seen to be in a perpetual state of an economic crisis with the economy imploding rapidly. Over the past four years, we have seen the Finish economy shrink, only to pick up speed in the last three years. Overall, the economy really peaked in 2007, so there seems to be little hope of reversing this trend until about 2020.
Traditional mainstream economists are now calling for Finland to exit the euro. The Finnish Parliament will now have to debate the euro exit in the coming year due to a citizens’ petition that gathered the required 50,000 supporters. Mainstream economists are now demanding that Finland should reintroduce its own currency once again.
Grabbing Money for the Next Trade
COMMENT: Marty, it is becoming really disgusting. Either they are slandering you for saying commodities were going down as if you were the anti-Christ, or they just outright rob all your work and pretend it is original with dates like October 7th claiming they use Kondratieff Waves that will never yield October 7th as a specific day no less the turn in the economy. Nothing happened on October 7th but they tried to even steal your model’s date. These people are really horrible lowlifes for all they are doing is lining their own pockets and will never offer anything to help society. They either plagiarize you or slander you, but you are the source of everything which is why the government wanted your code not anybody else’s. Here is the latest piece of advertising crap they are spewing around. They should be in prison.
It must get very frustrating.
REPLY: Yes. They are trying to fill their pockets and screw the world – it’s all about them. You are right. When the shit hits the fan, these people will do more harm to ensure that we cannot advance one inch as a society. They offer nothing for the future. Where will they spend their money if society blows apart? They cannot even see the future. It’s all about grabbing money for the next trade and hoping that the world will be destroyed, but they alone will be the next Donald Trump.
Is Europe Slipping into Diversions?
A bomb scare in Hannover canceled a game between Netherlands & Germany. Merkel was supposed to be there. We may see Europe slip into a paranoid state of affairs that those in government will use to (1) grab more power, and (2) distract people from the economic crisis.
London Property Crashes – Off 11.5% in One Month
It appears the London property market bubble has peaked with Osbourne’s changes in taxation and the Economic Confidence Model. Already, just since the turn on September 30, London property prices have crashed by 11.5%. The British publication Money Week reported our forecast on July 15, 2015.
The emails have been coming in, asking how can our model can pinpoint so many aspects around the globe. This is a global model; it is not constructed on a single economy. Moreover, every aspect is included, for this was created from a list of panics irrespective of the underlying instrument.
Note that the first panic was in 1683. That was more than just the Rye House plot to assassinate Charles II in England. That panic was the arrival of a 140,000-man Ottoman force in Vienna, which was the peak in the Ottoman Empire. This was the Battle of Vienna, which was the capital of the Holy Roman Empire at the time.
This list of panics revealed that people moved from instrument and countries, but they routinely fell into bubbles and moved to the next. Therefore, this was the beat of a globally connected trend, it was not isolated to a single instrument or country. Since it also involved war, it should come as no surprise that the Russian attack on ISIS started on the very day of the model on September 30, 2015 (2015.75).
Bankers to be Criminally Charged
Wait long enough and the coin always flips to the other side. The rumor circulating is that NY Federal prosecutors are at last looking to file criminal charges against bankers from the Royal Bank of Scotland and J.P. Morgan for selling faulty mortgage-backed securities that the KNEW was bogus. The cycle has turned. Bankers better be on guard when the economy turns down even harder, thanks to structured deals of debts to hide problems, as in Greece. Those in decision-making positions may find themselves criminally charged as the people become pissed off at politicians and the corruption. You can argue all you want against cycles, but everything runs its course and then flips. There is no exception. Our model on the banker fortunes turned in 2013. We have seen huge fines and the Europeans are getting out of the game.
What Is the Strength of the Dollar? Its People, Military, or Commodities?
QUESTION: Mr. Armstrong, so many of these goldbugs really hate the dollar and they argue that since Nixon closed the gold window in 1971, the dollar’s strength has been maintained by a U.S. military that has enforced the petroleum-based dollar for world trade. This seems to be way off the mark for it is the US economy that has been the strength of the dollar since everyone wants to sell goods into this market. Is there are truth to the claimed petrodollar?
ANSWER: No. The wealth of a nation is not its commodity resources, but the total productive capacity of its people. Both Japan and China rose from the ashes, as did Germany. They accomplished that not with gold or resources, but through their people. Some countries are rich in commodities, such as Africa, but all of the commodities in the world will not transform their state into a self-determined economy unless the people are educated and have a natural productive culture. This is what China is doing right now. They are trying to build their internal domestic economy to cut the reliance upon exports.
The military establishment is how the U.S. is losing its status of the financial capitol of the world. It was not the military alone that supported the dollar. No one who argues that really understands how economies function. It is always Adam Smith’s invisible hand.
Goldbugs
There is a very simple rule. Bull markets make higher highs and bear markets make lower lows. It can get bloody trying to catch a falling knife. That is why we developed unbiased models that these people hate and try to argue against with personal opinion, as always. Just astonishingly primitive.
Socrates for WEC Attendees
Those who attended the World Economic Conferences
in Princeton and Berlin will receive 10-day advance access to Socrates
for the professional Trading level. We plan to launch the Investor
service soon. The 10-day trial will begin in December after the Berlin conference in time for the end of the year.
Once the trial period is available, we will send out an email to all conference attendees with instructions for registering.
Carving Up the Middle East
QUESTION: Why did ISIS target France rather than Germany? Someone said it was France who created Syria. Is that really true?
ANSWER: Germany is not actually a target in this chess game. It is one reason we selected Berlin for our conference, even compared to London, since we had Panic Cycles in November. Germany has less than 62,000 in its army and being in the army in Germany was perhaps worse than a tax collector. The joke was that the German army does not shoot. Germany is not in the view of ISIS as is France, Britain, and the USA. Germany may be the biggest economy in Europe, but the people blamed their own military for the nation’s suffering, as did Japan.
Indeed, the Middle East as we know it today emerged from decisions made by the Allies during and after World War I. Britain and France took it upon themselves to transform what had been provinces of the old Ottoman Empire into the modern states we have come to know. This has created an international tinderbox that remains at the core of the current conflicts and politics in the Middle East.
The partitioning of the Middle East into the Arab provinces of the Ottoman Empire was set under the terms of a secret Sykes-Picot Agreement of April-May 1916. The agreement gave Mesopotamia (Iraq), the Gulf, and the regions bordering Palestine to Britain, while Syria and most of the eastern part of the region went to France.
The Cairo Conference was a meeting of Britain’s Middle East experts. The conference began formally on the morning of Saturday, March 12, 1921. The conference approved a plan for giving control over two large pieces of the former Turkish territories that Britain controlled to princes in the Hashemite family. It was agreed that Prince Feisal, with whom T.E. Lawrence had worked during and after World War I, would become king of a new country created from the Turkish Province of Mesopotamia; it would be called Iraq. His brother, Prince Abdullah, would rule a country made up of Palestine west of the Jordan River: Transjordan (now Jordan).
Britain’s interest in the provinces focused on safeguarding the trade route to India to ensure cheap and accessible oil for Britain’s requirements. Therefore, maintaining the balance of power in the Mediterranean was essential to its economic advantage.
France hoped to maintain its centuries-old ties with the Syrian Catholics. In so doing, France looked to establish a strategic and economic base in the eastern Mediterranean. It was not oil then, but maintaining a cheap supply of cotton and silk, that prevented Arab nationalism from destabilizing France’s North African empire. Therefore, France held Syria in the partition process. That is coming back to haunt them to this day.
Police Civil Asset Forfeitures Exceed All Burglaries in 2014
Between 1989 and 2010, U.S. attorneys seized an estimated $12.6 billion in asset forfeiture cases. The growth rate during that time averaged +19.4% annually. In 2010 alone, the value of assets seized grew by +52.8% from 2009 and was six times greater than the total for 1989. Then by 2014, that number had ballooned to roughly $4.5 billion for the year, making this 35% of the entire number of assets collected from 1989 to 2010 in a single year. According to the FBI, the total amount of goods stolen by criminals in 2014 burglary offenses suffered an estimated $3.9 billion in property losses. This means that the police are now taking more assets than the criminals.
The police have been violating the laws to confiscate assets all over the country. A scathing report on California warns of pervasive abuse by police to rob the people without proving that any crime occurred. Even Eric Holder came out in January suggesting reform because of the widespread abuse of the civil asset forfeiture laws by police.
Bloomberg News
has reported now that Stop-and-Seize authority is turning the Police
Into Self-Funding Gangs. They are simply confiscating money all under
the abuse of this civil asset forfeiture where they do not have to prove
you did anything. Prosecutors are now instructing police on how to confiscate money within the grey area of the law.
A class action lawsuit was filed against Washington DC
where police were robbing people for as little as having $100 in their
pocket. This is getting really out of hand and it has indeed converted
police into legal criminals or “gangs” as Bloomberg News calls them.
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