Communism vs. Left-Wing Beliefs

Posted Apr 8, 2016 by Martin Armstrong

There are some left-wing people in Western Europe who argue that Communists are not represented in politics and this is somehow unfair. They do not understand that left-winged beliefs and communism are completely different. The left wing in the USA and Europe are really Socialists who champion gay rights and other social issues. In Russia under communism, the communists would imprison anyone who championed gay rights.
Under communism, the state is supreme and everyone is subservient to the state. There is no championing of individual rights for everyone is equal (except for politicians) and are really just the property of the state. It is true that in Russia this thinking process still exists against some groups as a residual from the days of communism. This illustrates the stark difference between left-wing socialism and communism.

Our models are starting to highlight Panic Cycles hitting in August

Posted Apr 7, 2016 by Martin Armstrong

Inside sources have relayed that from the outset, Cruz is very much disliked behind the curtain. His entire strategy from the beginning has been to be the last man standing against Trump assuming the Party will install him despite the fact most really dislike him.
All the exit polls have shown that more than half of voters in this Republican primary were merely “dissatisfied” with government, compared to one-third who were simply outright “angry.” The voters in Wisconsin seem to be more in never-never-land and said for the most part they want someone with experience. That is how the USA will implode for there is nobody in the establishment that gives a shit about the people; this is all about them. So that experience will be a vote for more of the same.
Nevertheless, we have to understand that we have two major risks in politics. First, the establishment may not select Trump or Cruz and if they can simply defeat Trump on the first ballot, then all bets are off and they can even nominate someone who did not bother to run like Romney.
If we assume that Trump will not get the Republican nomination, then if he was smart, he could get on the ballot as a Libertarian since they have already done the heavy lifting. Or, Trump can get on the ballot in a few states and win those but not the general election. This could prevent either Republican or Democrat from winning enough votes for the Electorial College who really votes for President, not the people.

If we end up with nobody winning enough Electorial College votes, then we enter the ultimate demonstration that we do not live in a Democracy by any measure. A failure for any candidate to win the required votes at the Electorial College means the current establishment on Capital Hill gets to select the next President.




The election of 1828 is the example of how the establishment can do as they like. Andrew Jackson won 642,806 popular votes of 55.93%. John Quincy Adams won 501,967 popular votes 43.68%. Neither won the Electorial College so Congress picked the president and Jackson lost. When Jackson finally became president in the 1832 election, he did two major things which were against the establishment. First, he actually paid down the national debt. President Andrew Jackson reported that the United States would be debt-free as of January 1, 1835. This marked the first and only time that the United States, or any other major nation in history, had ever been free from debt. Jackson declared:
“Let us commemorate the payment of the public debt as an event that gives us increased power as a nation and reflects luster on our Federal Union.”

In the course of this objective, Jackson generally opposed bills that allocated taxpayer money for “internal improvements” what we call “pork barrel spending” today. In the 1863 popular story, “The Children of the Public”, Edward Everett Hale used the term pork barrel as a homely metaphor for any form of public spending to the citizenry. However, after the American Civil War, the term’s usage turned derogatory.


Andrew Jackson despised the Second Bank of the United States not because it held too much power over the economy, but actually because his political enemies controlled it. Jackson set out to destroy the Bank for it had even provided loans to his political rivals. The Bank’s President, Nicholas Biddle (1786-1844), routinely used lending practices for political gain, including using Bank funds to publish newspaper attacks on opponents as some money center trading NY banks engage in to this day. Biddle openly favored the National Republicans (later to become the Whig Party), many of whom benefited financially from Biddle’s favor. Prominent National Republicans were Congressmen Daniel Webster (who was on the Bank’s payroll as a legal counsel) and of course Jackson’s arch enemy, Henry Clay, who was again his opponent in the 1832 presidential election but lost.

It is ironic that the New York bankers today own Cruz and Hillary. Both engage in funding their elections not much different from the actions of Biddle. Those who want to see the Federal Reserve eliminated citing what Jackson had done, fail to understand what really took place. The destruction of the Second Bank of the United States resulted in the Panic of 1837, the Sovereign Debt defaults of states in the 1840s, and a severe economic decline which set the stage for the Civil War. The parallel to today is not the Federal Reserve with political power, but the New York bankers.

Our models are starting to highlight Panic Cycles hitting in August. This will start just after the Republican convention. If we are going to go to the extreme in this collapse of confidence in government, then we may see a repeat of the 1828 election. However, we are also in a battle today against the establishment and Trump is closer to Andrew Jackson than anyone else running for office. So the future looks like a political war ahead that is going to turn everything upside down for the establishment are focused on just defeating Trump and they think everyone will go back to watching soap-operas and sports and they can rob us and our children blind as always.

Dow - Do not expect a breakout until 2017

The Dow What Next                  

Posted Apr 6, 2016 by Martin Armstrong

The Dow failed to elected any Monthly or Quarterly Bullish Reversals. It did elect two of the three Weekly Bullish leaving the 3rd intact. We provided these previously warning not to expect follow-through without electing all three.

“In the Dow, we have a cluster of Weekly Bullish Reversals starting at 17680, 17750, and 17846. You will notice that the top of the Downtrend Line stands at 17651.03. It appears that the Dow should create a temp high and we have a Directional Change Next Week. A closing today BELOW 17420 should signal a drop to retest support. I would expect a follow through to the upside only if we close above 17856 level.”

We also warned that closing only above 17750 reversal would see little follow-through into the next week. Why would we say such a thing? When you look at the fact that April is a turning point and so is June and then we get to August when we have concluded the Republican Convention, it does not appear that we are yet in a runaway trend to the upside. We are preparing to breakout, but not quite ready for prime time.






Moreover, the weekly array also show a choppy trend just yet with the weeks of the 11th and 25th and volatility beginning to rise in May. So once again, there does not appear to be a trend with clear sailing emerging just yet.



Nevertheless, even technically, the Dow is showing it is penetrating resistance attempting to muscle its way ahead despite those yelling there will be a huge crash once again.
It does not appear that we are ready for complete lift-off until the first quarter 2017. It appears that we are looking at a collapse in public confidence and that is what we need for lift-off in this shift from public to private confidence. The Panama Papers will help with time. All governments are corrupt. That is an foregone conclusion. The question remains, when will the general public reach that reality that they are not there to protect the future, only fill their own pockets no different than the communist leaders before 1989.

So support now lies at 17434 and 17120. Daily closings below these numbers will signal a near-term correction. Holding 17434 on a closing basis in any retest of support signals a revisit of the resistance. Only a weekly closing above 17846 will signal a retest of the major high. Do not expect a breakout until 2017.

Oil inventories reached an 86 year high this year and will now begin to decline

Posted Apr 5, 2016 by Martin Armstrong

Everything has a cycle. The difference between the Triple Crown and Villanova is actually substantial. In the case of the Triple Crown, nobody won it in 31 years. You work out the cyclical pattern on the event. In the case of Villanova, the team is the basis of the cycle. Therefore, each sports team will have a different cycle. Villanova simply lined up and its time was due. The methodology between the two were entirely different. The key is what are you trying to develop a cycle on? Sports are different from the Triple Crown since there is a winner each year.

The obvious critic will say then the Cubs should win every 31 years. That is pretty shallow statement and it reflects more of a lack of understanding of cycles. Chicago won the majority of its games in 1880. It declined into 1966 winning the least amount of games completing a 86 year cycle (10 * 8.6). Then Chicago rallied for 18 years (2 * 8.6) and then declined for 16 years. It rallied against for 8 years and then fell for 4 years. Since they still won more in 2012 than they did in 1966, they remain in a trending-higher consolidation pattern which will ultimately surprise everyone and score a miracle victory.

Every team has its own cyclical pattern just like markets and politics.

BTW: Oil inventories reached an 86 year high this year and will now begin to decline.

Illinois on the Brink of Bankruptcy

Posted Apr 4, 2016 by Martin Armstrong

The pension crisis is brewing and the one state that appears to be heading toward a complete bankruptcy is Illinois. Clients should not own ANY debt from Illinois, be it city, municipal, or state. Just get out before the curtain falls. The Illinois Constitution plainly states that pension benefits, once granted, “shall not be diminished or impaired.” Thus, taxpayers are absolutely screwed and this is not a place you want to own property. Governments cannot negotiate to reduce pensions so state workers will be pitted against taxpayers. The Supreme Court has struck down any attempt to reduce liabilities based upon this clause in the Illinois Constitution.

Socialist — Fascist — Communist

Posted Apr 4, 2016 by Martin Armstrong

I have been asked to explain the differences between socialism, fascism, and communism for some people seem to mix them all up.

A “socialist” is akin to a fascist for there governments seeks to dictate control. They do not pretend to own private property. Communists seize all private property and place it in the hands of the state. There is no freedom whatsoever.

Fascists view the world as a military state and see a liberal democracy as totally obsolete. In this context, they see the goal as the total mobilization of society, and as such, the state becomes a dictator. This is closer to socialists who view private property as subject to the permission of the state and as a national resource to redistribute to those who do not earn what they receive.

Under socialism, the state assumes the capability to manage the economy, but if they do not understand how it functions, they are incapable of managing the outcome. So socialists and fascists have a lot in common whereas communism just robs everyone and deprives the individual of the freedom to even choose their own career path

Closing above 17856 would imply that the Downtrend Line might start to provide support for any retest-new highs and then pull back

The Dow for Today’s Close — April 1, 2016

Posted Apr 1, 2016 by Martin Armstrong

QUESTION: Dear Martin,

I have been reading your work for several years. since you were in prison…I was able to download it from the internet and saved it all. I bought your Gold and Banking Analyses and read your daily pieces religiously. I was not able to attend the WEC as it appears you favor conferences in cold weather climates in the winter and I live in the Caribbean due to a medical condition involving an allergy to cold weather. So I know there are holes in my comprehension of your methodology because I wasn’t able to attend. What I still do not understand is are you suggesting that we should be invested in the DJIA at this point or are you saying that no bullish reversal was elected as the Dow did not close at/above 17750 at month’s end so it potentially has further to fall.

Thank you for your introducing me to an entirely new way of looking at the world.

ANSWER: We will try to hold the next conference in warmer weather. We are looking at Orlando, which is easily accessible for everyone, and the TSA is not so harsh there because everyone wants to see Mickey Mouse.

In the Dow, we have a cluster of Weekly Bullish Reversals starting at 17680, 17750, and 17846. You will notice that the top of the Downtrend Line stands at 17651.03. It appears that the Dow should create a temp high and we have a Directional Change Next Week. A closing today BELOW 17420 should signal a drop to retest support. I would expect a follow through to the upside only if we close above 17856 level.

It appears that it is still in a consolidation phase, but it is obviously firming up. There is a potential to break out to the upside with a closing above 17846 today, but that may not be instantaneous. Closing above 17750 may see some follow through into next week, but it would not likely be sustained. Closing above 17856 would imply that the Downtrend Line might start to provide support for any retest. That pattern would warn that we could make new highs and then pull back. This would clearly put a lot of pressure on the Federal Reserve to focus on domestic policy objectives.

So pay attention here. The markets may put the maximum amount of pressure on everyone in every direction, not the least of which is the Federal Reserve.