Thursday, December 29, 2016

Dow- two possible patterns

QUESTION: As a small retail investor, what would Marty suggest to invest in if in fact we break the 23000 level on the DOW and we do in fact get the phase transition that he is talking about?  Furthermore, what would he use to profit from it?  Shares in particular stocks, futures contracts or options in the DOW index?  Lastly, if this phase transition does happen, what is the longest time frame that it would last, 12 to 18 months?
Thank Marty for all that he has done for us little guys.  He has really opened my eyes to what is going on in this world.
ANSWER: In 2017, I will publish a breakdown of sectors and the differences between them. Keep in mind that the bulk of the retail public are not yet back in the market. The majority keeps saying how overvalued the market is, yet a substantial amount of people are all looking to buy the dip. Trump will be very good for the US markets and economy. Reducing taxes will bring capital home and it has already resulted in a new 13-year high in consumer confidence. That is the key to the market going into 2018.
The reflection point that will tip the scales to extremely bullish will turn on confidence. What MUST BE UNDERSTOOD here is we have two possible patterns: (1) We leave 2016 as the intraday high temporarily and back off, moving to retest support into 2018, and then rally in a major breakout into 2020, or (2) we press immediately higher and complete the rally by 2018 followed by a harder crash and burn.
These are the two possible paths that are coming up and it will all depend upon the actions and tone we set in January. We will prepare a very important special report on this topic.

Tuesday, December 27, 2016

I would recommend, I would say the Genoa system of term limits. No career politicians.

What Type of Government Should We Strive For?

Some ask why I only criticize the left and not the right. As the Guardian wrote, the left is on the rise. There are 50 shades between left and right. If we are talking about the 1%, that is really small business, for that begins at $250,000 annual income. Everyone confuses the 1% with the “super-rich” who are Warren Buffet, Bill Gates, Wall Street Bankers, or, yes, even the Clintons. They skewed the average household income of the 1% to $1.2m back in 2008, according to federal tax data. The super-rich skew that average upwards, dramatically distorting whom most people are envisioning because they are looking not at income but net worth.
Measured by net worth, rather than income, the top 1% started at $6.9m in 2009, according to the Federal Reserve, down 23% from 2007. Contrary to the conspiracy theorists who claim the “rich” force crashes so they can buy stuff cheaper, they lose money during such declines. If the economy does not recover, they are unable to sell to make a profit. The richest man ever was Jonathan Ogden Armour (1863 – 1927), as in Armour Hot Dogs. He supplied the food for the troops in World War I. During the Crash of 1919, he lost the equivalent of $1 billion a day for 120 days straight and died penniless. He told the press before he died he knew he would be remembered for losing more money than anyone in history. So much for the conspiracy theories.
Turning to reality, let’s look at power. How do the super-rich gain access to power? They donate to politicians, which is why Hillary threw a thank you bash in New York for ONLY those who donated more than $1 million. She filled the hotel and had to turn away the paupers who donated just $1 million because she had so many. When Hillary lost the election, she sent John Podesta to say go home. She didn’t come out and thank the average person or buy them dinner. So the woman who claimed to represent the common people threw a thank you bash only for the super-rich. A $1 million donation wouldn’t get you an invite.
If you want to point the finger at the rich, you have a serious problem. All these protests against the 1% are way off base. The 1% truly DO NOT possess any direct power — they buy politicians to gain INFLUENCE. This is like jailing a driver because he paid a cop a bribe to get out of a ticket, but not punishing the cop. Let’s get real here. The 1% cannot summon troops or roll down your street in tanks. That has never been their agenda. They make money primarily from investment rather than salary, and to keep that going they need a viable economy with a respectable middle-class to whom they will sell stuff. So what is really the issue? Do you really think the rich want to suppress everyone into poverty and destroy the very market from which they derive profits? I have never seen that now or historically. That makes no sense. Someone manufacturing something may want to keep wages of his worker down — true! But that does not translate into suppressing everyone within society. They need people to buy their stuff.
So let’s focus on who they are bribing. Trump has bluntly stated that he was a businessman. “I give to everybody. When they call, I give.” He explained, “You know what? When I need something from them, two years later, three years later, I call them, and they are there for me. . . . And that’s a broken system.” He did not say he was paying for a specific thing — you do this and I will give you that. The system does not work like that, so it’s not precisely bribery or illegal. Hillary went to Trump’s wedding because he donated to the Clinton Foundation. Trump said plainly, as reported by the Daily Beast“As a contributor, I demanded that they be there—they had no choice and that’s what’s wrong with our country. Our country is run by and for donors, special interests and lobbyists, and that is not a good formula for our country’s success. With me, there are no lobbyists and special interests. My only special interest is the United States of America.”
We have a Republic, which was based on the Roman Republic and not Greek Democracy. Therein lies the problem. For you see, there is absolutely no way we live in any democratic based system where the people really have a right to vote. We live in a Republic — nothing more — and that means we only elect “representatives” who vote and decide for us. If you want to argue that the rich are the problem, the left champions communism and just wants to hand all their assets government. But government has no imagination to create new innovations and the economic system slowly disintegrates, as what took place under socialist-communism. This is also how corporations die. Once a company typically goes public, the bean counters and lawyers take over and often push out the people with visions like Steve Jobs and Apple. They may believe they know how to run a company, but they are incapable of doing so because they lack the real understanding of innovation and imagination vital to create growth. Companies and governments die for the same reason – they become too removed from humanity.
The problem is NOT the rich, but our Republican form of government. ALL REPUBLICS, without exception, ALWAYS DEVOLVE INTO OLIGARCHIES. This is exactly what Trump explained. He donates and when he needs them, they are there.
Julius Caesar-Denarius as Pontif Max
The Roman Republic became dominated by the oligarchy. That was the Civil War with Caesar against the oligarchy (see Anatomy of a Debt Crisis). No republic form of government has ever not collapsed from internal corruption. Nobody has ever beaten this political game even once. Why was the calendar revised by Julius Caesar? The high priest who had the discretion to insert days to account for leap-year differences was constantly bribed to insert days to avoid elections. Julius Caesar became Pontifex Maximus (high priest) to revise the calendar and end the corruption of discretion. Once he fixed the calendar, it ended bribery.
The Greek Democracy was rather different. Only the head of the household votes, nobody else including sons, daughters, or the wife. The head of the household was like a Congressman and represented everyone within the household. You had direct access to your “representative” under the Greek democratic system. When Socrates was put on trial, there were 600 jurors, who were the heads of their households.
Thrasymachus debated Socrates as recorded by Plato. I believe he gave the best description of all forms of government. No single system will last perfectly forever. There is a cycle to everything. All forms of government will seek to exert power out of its own self-interest. That complies also with Adam Smith’s invisible hand.
genoaThe one system that proved beyond a shadow of a doubt that class warfare is the culprit behind such economic convulsions throughout history was the political system of Genoa. This was during the city state period when Genoa competed against Florence and Venice. The Venetian system had a Doge for life. Upon his death, his estate would be reviewed and any corruption he had engaged in would then be extracted from his estate before anything went to his heirs. Genoa also had a Doge (“Genoese Duke and People’s Defender”). The Doge was the ruler of the Republic of Genoa from 1339 until the state’s extinction in 1797 by the hand of Napoleon. Originally, the Doge was elected for life. The Genoese realized that this lent itself to corruption. After 1528, the Doges were elected for terms of two years only – they politically reformed.
The Doge rotated among a small group of merchant families — the rich. This actually provided the best form of government in all the systems I have reviewed. Yes, you can say it was an oligarchy. However, what was interesting was the fact that no individual family would ever pass some law to which they would be subjected to in two years that would be unfair or Draconian. Because Genoa competed against Florence and Venice, the management of the state was always directed at trade, not domestic class warfare. In fact, there were several wars between Genoa and Venice over trade. Venetian–Genoese Wars were a series of struggles for dominance in the Mediterranean Sea between 1256 and 1381.
During the period post-1528, the merchant families made decisions that benefited the city-state, not individuals. By limiting terms to two-years, this defeated the sense of entitlement that we see today by career politicians. Genoa thus prospered and provided greater freedom and stability than either Florence or Venice for the whole population.
Venice really became a Marxist type system with a Doge for life. The fleet and everything was the property of the government. The main industries were not private enterprises as they were in Genoa but state owned. Florence became more of a banking and manufacturing center and built its business primarily on land. Its currency, the florin, rose to the status of the unit of account throughout Europe and others followed Florence.
In 1344, Edward III of Britain issued his first gold coinage that was set at the standards of Florence. But the wild gyrations in the silver/gold ratio set in motion by France, unleashed civil unrest in Florence where the people stormed the palaces of the bankers and burned them to the ground after blaming the bankers for economic depression. Why? The monetary system of Florence was a two-tier system whereby gold was used only for international trade and silver was used for wages and domestic bills. Everyone was required to maintain two sets of books. The French overvalued silver relative to gold and sucked in silver much like the silver Democrats in the United States during the second half of the 19th century. A depression emerged as the price of silver rose too high causing unemployment in Florence. The same set of events unfolded as the Panic of 1893 in the United States that led to the rise of Marxism.
Right now in the USA, the share market is rallying and we have consumer confidence at new highs for the first time in 13 years because Trump was elected. People see that Trump is a businessman, and what he does will benefit the country economically. This was the same thinking process in Genoa. The key here to understand is the career politicians. The two-year term for Congress was selected by the founding fathers based on the Genoa model. Our problem, however, they failed to impose a term limit. The founding fathers  ASSUMED that since a Congressman was not paid and donated his time for a few weeks each year that it was not necessary to limit the terms. Congressmen received only $6 per day for their travel and expenses prior to 1815 when they began to pay themselves annually $1500. From then on, Congress became seriously disconnected from the people and fell into a separate political class.
The difference between the left and the right is that the left hands all power to government to suppress the right, while the right bribes a republic to maintain its influence corrupting government (i.e. Hillary). Trump is absolutely correct in identifying the problem. I doubt whether he could convince Republicans to impose term limits on themselves. Those who ask if there is any system I would recommend, I would say the Genoa system of term limits. No career politicians. Only people with real life experience from the real world, thank you.

The end of Marxism may not unfold until 2072.

QUESTION: Salve! I speek english very bad. I speek french very well :))…but I don’t know if you too speek french. So…my question is: what is for you “the left”? Cause in Europe, I think “right” is on his way to death and “left” remains the only way for the real people :)). Salut! Ma question, en francais, fait référence au fait que dans certaines régions du monde, comme, en Romania, par exemple, le mouvement de droite est sur le chemin de la disparition et c’est le mouvement de gauche qui a vraiment quelque chose à dire pour le peuple. Qu’en pensez-vous?
REPLY: Salut! Mon français a besoin d’amélioration, mais je comprends.
Hello! My question, in French, refers to the fact that in certain regions of the world, as in Romania, for example, the right movement is on the path of disappearance and it is the left movement Which really has something to say for the people. What do you think?
(My Translation)
Left and right is a political circle. If you go extreme left or extreme right, you will quickly see that they agree on one thing – more power to the government. The extreme right such as Hitler, began not by killing Jews – but invalids who were veterans from World War I. All we hear about are the Jews and the Holocaust. However, not all German members of the military knew of the Holocaust.  The mass murder of Jews and other groups killed in the Holocaust was handled by the Schutzstaffel (SS), which was a separate military unit outside of the German army (extreme right).  People like General Johannes Blaskowitz were actually relieved of their command when he complained to the German high command about what the SS were up to.
The little known story of the Roman Catholic Church and how they protested against Action T4, the Nazi involuntary euthanasia program where the physically deformed, including the veterans of World War I, the mentally ill, and incurably sick were to be killed to save the state money. This sparked the Catholic resistance to Nazism which began in 1939 and resulted in more than 70,000 were executed. This even included not just the crippled veterans, but also children with Down’s Syndrome and senile elderly. The reasoning was to conserve assets for the state.
During the Russian Revolution, the left began a reign of Red Terror which was a campaign of mass killings, torture, and oppression carried out by the Bolsheviks (Marxists) when they rose up in the Russian Civil War of 1918. Here too we have the Cheka (the Bolshevik secret police) who carried out mass executions, which many put at over one and a half million people.
If you go extreme left or right you end up with the same action based upon two different ideas, but they reach the same conclusion. What I am saying about the left is this particular cycle remains the collapse of Marxism. Capitalism (according to Marxist theory) would no longer be sustainable. Marx believed that the living standards of the population would decline due to its need to compensate for falling rates of profit that would result in the perpetual decline in wages and in turn would reduce social benefits and pursue military aggression. The socialist system, Marx believed, would succeed capitalism as humanity’s mode of production through workers’ revolution. The problem was that Marx’s observations were seriously flawed. He lived in the early stages of the rise of industrialism. He assumed that the elite would be able to keep pushing wages lower, but could not see that if they did such a thing, then the people could not buy their production. The industrialization of society was changing the skill sets. Even in the United States, in 1850, 70% of the civil work force were employed in agriculture. That declines to 40% by 1900 and 3% by 1980. What he saw as evil orchestrated by the employers was a natural process of economic evolution just as the internet is not displacing local stores in many fields.
Marxism is on the rise once again because people do not understand how the economy functions. The masses are protesting against the 1%, yet turn a blind-eye to political corruption. This is always the self-deceiving side of Marxism. This will come to a head in 2029, but the end of Marxism may not unfold until 2072.
The left will promise the way out. The right will target immigrants taking jobs and resources. It becomes impossible to steer between the two extremes. Moving too far to the left fuels the swing to the extreme right. This is a pendulum which swings back and forth, yet never advancing to a new era.

Tuesday, December 20, 2016

We are in for a real crisis come 2018.

Beware of Bond Funds

$50 War Bond
QUESTION #1: Dear Mr Armstrong, you recently wrote that if you are in any bond fund, better get out. Do you also mean corporate short-term/medium-term bonds or are those expected to rise when people realise government debt is the real bubble ?
Kind regards.
QUESTION #2:  Mr. Armstrong- I enjoyed my first WEC immensely! In the blog and other place’s you warned that you should get out of bond funds. I understand government bonds of all kinds should be sold including date certain and funds. I am curious though about high-quality corporate bond funds. Should one get out of corporate bond funds and move to individual issues? The funds are easier for a working person of course.
Thank you,
ANSWER: We are entering a phase of rising interest rates, so bond funds will do poorly. We are not yet at a stage where U.S. government bonds would default or be swapped. Therefore, my recommendation has only to do with rising rates. What you should do is stay short-term, like 90-day paper or less, be it corporate or government. This is just an interest rate play moving into 2018.
As we move into 2018, we will look at corporate vs government shift. That will become the play, but that will most likely unfold after we begin to see serious problems with government debt outside the United States. In Japan, the ownership of public debt by the private sector is in freefall. Debt to GDP held by the private sector before Abe came to power was 177%, which had collapsed to 100% in 2012, and has continued to decline to about 75%. The Bank of Japan through its quantitative easing now owns more government debt than the private sector. Japan is in VERY SERIOUS trouble and there is no possible way to reverse this nightmare.
The European Central Bank now holds 15% of Germany’s national debt. The central banks have been running out of positive-yielding safe-haven bonds. Yes, the Federal Reserve holds $2.4 trillion is less than 10%. The volume of repo loans using Treasury debt as collateral has collapsed from $2.6 trillion to about $1.8 trillion according to Barclays.
Despite all the complaints that QE has failed, we must ask how deep deflation would be without it. True, QE has not produced inflation. It has not stimulated the economies of Europe or Japan because the confidence of the people is not there. The central banks are trapped and politicians, not hedge fund managers, run government. These people are ignorant at best if not outright deaf, dumb, and stupid. They cannot see how this system of government borrowing will continue if the public no longer buys their debt.
This is by no means going to end nicely. So keep the power dry. We are in for a real crisis come 2018.

Sunday, December 18, 2016

To date, the market has exceeded last year’s high of 1835136. In order to maintain an upward advance, we need to close above last year’s high at year end

Beyond AI
QUESTION:  I am writing again to find out when and if the “Trader Level platform” will ever be released to the average follower and subscriber of the “Investor” platform. If I was a cynical individual, I would think its only reserved for those of wealth with the ability to attend the WEC conferences to get access. I hope the release is coming to the rest of us soon, not this quarter or next month as I have been told since I started inquiring.
Still waiting patiently,
REPLY: I believe we will be releasing the trader in the first quarter. The delay has NOT BEEN the programming. It has been the banks. Many seemed to refuse to allow clients to pay using credit cards claiming this does not fit neatly into their business model. If I assume this is not a conspiracy of actually trying to prevent the launch of this system, then it really is about incompetence and being too far ahead of the cutting edge. They just have never heard of a computer that actually writes the reports of everything in the world.
The people who attended the WEC simply were given access and did not have to pay per click so no credit cards were involved. Some banks are put off by the global client bases we have spanning every country and they do not know who they all are. There is no other computer that does this and we may have the most diverse client base of anything they have seen before. Nobody seems to know what to make of this. We are in the process of setting up systems. However, this has been frustrating to say the least. Hopefully, we have the green light at last. Nevertheless, I concede, at times it has appeared to be a deliberate effort to prevent this system from launching globally.
We should see a trend change come this month in Dow Jones Industrials so pay attention to events ahead. Last month produced a low at 1788356 and so far we have exceeded last month’s high. We now need to close above 1922529 at month-end to imply a technical reversal of trend to the upside for now. As of the close of Fri. Dec. 16, 2016, the market is immediately in a bearish posture near-term for now on the daily level warning caution should be taken yet this market is still trading above the November high. Dow Jones Industrials closed today at 1984341 and is trading up about 13% for the year from last year’s closing of 1742503. Thus far, we have been trading down for the past 2 days, but this has been an inside trading session warning caution following the high established Wed. Dec. 14, 2016.
On the weekly level, the last important high was established the week of December 12th at 1996643, which was up 6 weeks from the low made back during the week of October 31st. We have been generally trading up since that low, which has been a significant move of 11% percent in a stark panic type advance. The broader perspective, this current rally into the week of December 12th has exceeded the previous high of 1844988 made back during the week of September 19th. We have seen a rally so far from the last low at 1788356 made the week of October 31st, and only a break of that low would signal a technical reversal of fortune. Otherwise, the market remains strong at this time. Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend, and cyclical strength. Looking at this from a wider perspective, this market has been trading up for the past 13 weeks overall. Interestingly, the Dow Jones Industrials has been in a bullish phase for the past 15 months since the low established back in August 2015.
The market is trading sharply some 8.13% percent above the last high 1835136 from which we did originally obtain two sell signals from that event established during May 2015. Long-Term critical support still underlies this market at 1561754 and only a break of that level on a monthly closing basis would warn of a break of the current uptrend. From the May 2015, this market declined into a low during August 2015 at 1537033. Right now, the market has rallied from that low and is breaking out to the upside. At this time, the market is holding and is trading above last month’s high as well. From the low of August 2015, we have elected four buy signals. This warns that the trend is robust moving forward.
Manifestly, my longstanding view projection recognizes that the current directional movement since the low made back in August 2015 has been a long-term Bullish trend in Dow Jones Industrials which remains in motion as long as we hold above 1601364 on a monthly closing basis. It is incredibly important to identify the broader trend for that is the underlying tone. It is wise to take position counter-trend only with this understanding of what you are doing.
Consequently, this has been a 7 year rally in motion since 2009. This puts us on notice that it now becomes imperative to exceed this year’s high, next year, to keep the upward momentum moving in place. A lower closing at year end would warn the caution bell for a near-term correction.
Searching the immediate trend remains bullish since November made new highs and we have exceeded that high so far this month. This is further illustrated given the fact that last month also closed higher. To date, the market has exceeded last year’s high of 1835136. In order to maintain an upward advance, we need to close above last year’s high at year end. On the weekly level, last month was an outside reversal to the upside which is implying we have a bullish bias currently. Currently, this market remains in an uptrend posture on all our indicators looking at the weekly level. We see here the trend has been moving up for the past 6 weeks. The last weekly level low was 1788356, which formed during the week of October 31st. The last high on the weekly level was 1996643, which was created during the week of December 12th. On a broader perspective, this market remains in an uptrend posture on all our indicators looking at the monthly level. We see here the trend has been moving up for the past 15 months. The last monthly level low was 1537033, which formed during August 2015, 2015. The last high on the monthly level was 1922529, which was created during November.

Thursday, December 15, 2016

Strongest uptick in the War Cycle co-inciding with the end of the sixth wave in the Economic Confidence Model both on the 51.6 year level as well as the 309.6 year fractal level

Obama is Deliberately Trying to Upset the Election that never Ends

White House press secretary Josh Earnest has made constant repeated jabs at president-elect Trump and his team during press briefings. He even went as far to say this week that Trump knowingly benefited from Russian hacking into computer systems of the Democratic National Committee and the Clinton campaign. Unbelievable! Let’s put this in perspective.
If someone is robbing your house, they are loading everything into a van, you pull in your driveway and catch them. Should they be allowed to keep what they stole because they would have gotten away had you arrived 3 minutes later and they would not have been caught?
This is the amazing argument of the Democrats. They are crying that Putin hacked the DNC and exposed to the world that they were corrupt, and Hillary interfered with the Republican primary to ensure Trump would become the candidate, then unleashed the press on him to defeat him, but all that came out from the emails exposed from the DNC. That just backfired so it’s Trump’s fault and Hillary should be made president because she would not have been caught but for Putin? Stunning logic.
So in other words, they would have succeeded in manipulating the entire election process and voters but for the release of the DNC files. This is like saying the thief should get to keep all your stuff because he would have gotten away with it if you were 3 minutes late.
This is the MOST outrageous argument I have ever heard in my life. We have Podesta, Pelosi, Whoopie and Behar along with the press trying to shove this down our throats. I would understand if they said Putin hacked the voting machines, but even Obama has come out and said that did not happen. His Administration plainly said“We stand behind our election results, which accurately reflect the will of the American people.”
So if the votes were not hacked, only the DNC files, then where is there ANY grounds to tell electors to vote for Hillary and overturn the election? Who is this patriotic and not fraud? The DNC files showed the Democrats were corrupt. So it’s not somehow fair that the people learned this was the truth?


I just do not see the logic here. The fact that the Press is not questioning this further proves they are still in the conspiracy against Trump to shove Marxism down our throats. This is dangerously approaching fighting words. There would be an uprising no doubt.
But assuming this fraud fails on Monday, they will still not give up. We are looking at the real peak in government and I fear this is the strongest uptick in the War Cycle coinciding with the end of the sixth wave in the Economic Confidence Model both on the 51.6 year level as well as the 309.6 year fractal level. This is how empires crumble.
It is starting to look like we all join together and bring some rocks. We dump them in the Caribbean and start our own country. No Marxism allowed.