Over 17,000 asylum seekers in Germany have filed lawsuits, clogging the courts, that are aimed at getting their families to join them in Germany. This is the same strategy that people were screaming about in the United States where families would first send their children to the States and then seek to be reunited. Under the Geneva Convention, refugees (at least the ones from Syria) are now believed to be legally in a position where the courts must grant them relief. That means the state will have to provide full benefits that amount to healthcare and pay as if they were working. This is not going to go down well with the German people.

Having rejected the 17k level in the Nikkei we witnessed a powerful opening which never looked back. Complementing the surge was a weak JPY which very much looked as though it could have a 105 handle at one stage. Given the renewed currency weakness it was exporters that led the way with Panasonic, Mitsui Mining and Mazda Motors leading the march with 3% rises across the board. The Nikkei closed around 0.75% better on the day but has given a little of that back in late trading as the Yen flirts with the 104 handle. Shanghai and Hang Seng were pretty much a mixed bag but it was the offshore Yuan trading at 6.7893 that captured a lot of the talk. However, these levels were not to last and in late trading we are seeing the price at a more sensible 6.7750.

More losses for the GBP having heard Mark Carney’s address in front of the House of Lords Economic Affairs Committee. The market was hopeful it would hear clues surrounding monetary policy and so sold cable off once it was clear the MPC balances inflation projections against currency declines. FTSE closed up around 0.5% in balance whilst other core markets lost ground. DAX and CAC both closed almost unchanged having retraced from earlier strength following on from better than expected IFO numbers (110.5 against an estimated 109.5). IBEX was the worst performer closing down almost 1% on the day.

Despite some early gains, helped by the European markets, US indices all drifted as the cash markets opened and Europe retraced. Obviously not helped by the data – Consumer Confidence 98.6 against estimated of 101 – prices began to drift and were unable to bounce. The market seemed happy to play just in the negative all day and closed in fairly thin volume as the DXY continued to make ground. Still lots to play for as we await the more interesting (or I should say, volatile) data at the end of the week.

Fixed-Income saw 10’s find a bit of a bid today whilst 2’s lost small ground. 2’s closing 1.5bp higher yield at 0.855% with 10’s at 1.76% (-1bp). In Germany Bunds closed 0.03% closing the spread at +173bp. Italy was unchanged at 1.38%, Greece 8.21% (-6bp), Turkey 9.70% (+9bp), Portugal 3.16% (+4bp) and UK Gilts 1.09% (+2bp).

QUESTION: Mr. Armstrong; You have said that the only way to reverse the deflation is to raise interest rates not lower them. I understand that the low rates only reduce the cost of funds for banks, but it hallows-out savings and pensions. Has anyone listened to you and tried the opposite trend to raise interest rates? It seems the Fed is listening to you but the IMF and others plead to the Fed not to raise rates. Can you point to any hope in this regard?

Thank you for what you do. Truly you make us think.

KS

ANSWER: Actually, all you have to do is look at Iceland. Not only did they throw the bankers in prison instead of giving them bonuses, but they also raised interest rates unlike everyone else in the Western world. In an attempt to stimulate their economies, Western central banks lowered rates and the European Central Bank (ECB) moved to negative rates after implementing a very unconventional monetary policy suggested by Larry Summers. Meanwhile, the Central Bank of Iceland (CBI) did precisely the opposite by raising interest rates and reducing the size of its balance sheet. This stands in direct contrast to the ECB, the Bank of England (BOE), Japan, and the United States.

Just step back and look objectively at the evidence. Back in July 2011, the CBI’s benchmark rate of 4.25% was significantly higher than the ECB’s benchmark rate of 1.50%, and it was substantially higher than the BOE’s benchmark rate of 0.50%. Since that point in time, the CBI’s benchmark rate increased relative to both the ECB and BOE.

Iceland now has the strongest economy in all of Europe where its GDP has risen more than 100%, doubling since 2009. This stands in amazing contrast to the ECB where European growth since 2009 has been just 14%, and in Britain, the total GDP growth since 2009 has been 27%. This is clear evidence that this policy of low interest rates is nonsense. The rate of interest reflects inflation and future opportunities. If rates are at zero, it demonstrates that there is zero confidence in the future of Europe. I think even an ape could figure out that this is not working.

QUESTION: I am beginning to see the light. It seems as though when gold rallies strong, the sentiment is reflected in these gold promoters. Then gold drops and they preach the same thing again. This leads them to buy every high and in fact they are merely cheering the news and are not analysts at all. They are not objective in any way. So are they just news chasers?

Thank you for the light to bring

KJ

ANSWER: Yes, of course. They act more like the most novice investor just starting out. Their forecasts are based solely on emotions, and they try to look for fundamentals to fit their predetermined conclusion. We are all human and that means we are subject to the same human frailties as everyone else. So, when these people see a strong price move, it is their emotion that takes over and the forecast is not connected to reality. They are convinced about a single theory. They are incapable of learning because advancing in knowledge requires admitting mistakes.

These type of people claiming to be analysts give the field a bad name because they are by no means analysts, but simply news followers. They think something has to have a reason behind every move. This is where they are dead wrong. Markets move in ANTICIPATION of future events. This is why professionals say, “Buy the rumor and sell the news.” It really does not matter if the event is real or not. If people THINK it may happen, they will act accordingly in ANTICIPATION. Deutsche Banks shares crashed because people ANTICIPATED it would collapse. They did not wait for a formal announcement, as it would have been too late to act. So they act, expecting something might happen. In the case of bank runs, that fear can lead to actual bank failure even the rumor was false.

A healthy start to the final full week of October with promising data aiding markets globally. In Japan we saw better than expected September Exports (6.9% against a forecasted 10.4%) lifted the Nikkei in afternoon trade to close up 0.3% on the day. This was also supported by the October PMI which came in at 51.7 against the previous months 50.4; providing the fastest rise this year. Shanghai and Hang Seng both returned strong sessions today with closes up around 1% better on the day. Also for China the off-shore Yuan continues to weaken and this evening was trading at 6.7845.

A little clarity over the political situation in Spain certainly helped the IBEX today, closing up almost 1.5% on the day. Other European indices also saw strong returns with the CAC and DAX both closed around 0.4% higher on the day. It was not such a pleasant day for the FTSE in the UK after much talk questions the focal point of the City of London and its dominant role in the financial markets. FTSE closed down 0.5% with GBP also coming under pressure for the majority of the day only to rally into the US close. The selling remains heavy as the uncertainty continues to dominate headlines.

It was the USD that again grabs todays headlines, followed by corporate profits which all helped support the strong opening for stocks. The DOW was into triple digit gains just after the opening bell but tended to drift as the session wore on. We have seen good results for over two-thirds of the S+P index now and all look to be gaining in confidence with M+A activity the talk for many. Oil did see some drift but remains above the psychological $50 level. The DXY futures closed this evening at 98.78 having seen an intra-day high of 98.84. The target probably for year end has to be the January highs of 99.82.

Bonds drifted almost everywhere today with curve steepening the theme for the day. US 2’s closed 2bp higher at 0.84%, whilst 10’s closed 1.76% (+3bp). In Europe the German Bund closed back in positive ground at +0.02% which closes the US/Germany spread at +174bp. Italy closed 1.39%, Greece 8.27%, Turkey 9.61%, Portugal -4bp after retained its BBB credit rating at 3.12%. Finally, UK Gilt 10’s closed 1.08% (unchanged).

Our model does not factor in astronomy, astrology, nor religious prophecies. We did not select the date for the World Economic Conference to align with the biggest Supermoon for the 21st century on November 14th with the other two events being October 16 and December 14. This is when the moon becomes full on the same day as perigee. Nonetheless, if your cycles align with various other aspects, look at it as interesting. Keep in mind that astrology was most likely based upon studies conducted by the Babylonians who tracked everything that moved and then correlated it to events. The high priests could calculate when an eclipse would take place and even pretend they could command the heavens.

The influence of the moon has long been explored. After all, it causes the ocean to shift creating high and low tide. The legend of a WearWolf is based upon people who seem to be more easily influenced by the moon’s pull like the ocean than others. They would also over time call them “lunatics” since “moon” in Latin is “luna”.

The US government says it ran a $US587 billion budget deficit for the fiscal year, which was a 34% increase over last year. Deficits have simply become a standard way of life for Western governments as a whole. They see no problem with borrow more each year when they have absolutely no intention of ever paying anything off. Deficits have become an intractable part of government while nobody bothers to address it. This is just a mid-slinging contest of he said she said.

Of course I get rabid emails from Hillary supporters who have just lost their mind. Nothing of what she has done would ever cause them to blow the cobwebs from that portion of the brain that is suppose to handle logic and reason. Nobody addresses anything of substance or explain how Hillary, the poster child of the establishment, would actually make any financial difference other than raise taxes. As long a anyone who seems to have more than they do are punished for their success, then all is good to them and to hell with the future. Of course, Trump says he would renegotiate the national debt as any big borrower would do. Other than that, we are in a runaway train and we will run out of tracks pretty soon.

The latest figures of the budget deficit show that the government is actually borrowing 15 cents of every dollar it spends. So as government spending increases by almost 5% reaching $US3.9 trillion in fiscal 2016, revenues have remained flat at $US3.3 trillion. The further taxes are raised, the greater the decline in disposable income, and hence it produces deflation even as the quantity of money rises.

We can see that the Budget itself did a slingshot move first running up into an all-time high in 2000, and then it swung sharply down for 8.6 years bottoming in 2009. However, the Budget has been unable to move back to a surplus and as such it is now poised to to head sharply lower once again. The crash and burn is beginning.

QUESTION: Marty; You said Syria was the focal point for this ECM wave and the target for the beginning of World War III. I read your piece on Syria and the issue of religion rising from this single spot. I find it extraordinary how you can pick specific places like Ukraine and Syria long before something takes place. Is this all based on the historical records of war you have put together? Just curious. Does this have anything to do with the Biblical tribe of Gog and Maygog? May claim this is it. I figured you might know best.

Looking forward to Orlando. Have three friends who tried to get in now but can’t. You seem to also target your conferences to key periods in time.

Thanks for keeping us abreast.

ANSWER: On the prophecy of Gog and Magog, that is not the Syrians, Arabs or Turks. In ancient legend, outside the Bible, the Gates of Alexander was a legendary barrier supposedly built by Alexander the Great in the Caucasus to keep the uncivilized barbarians of the north from invading the land to the south. That was probably the Mongol tribes for they would have appeared Asian. Moscow is directly north to the east above Lebanon. Had it been the Russians, they would have appeared more white stemming from the Vikings. They would have been invading through Georgia. The Gates of Alexander may be the Great Wall of Gorgan, which was built during the Parthian dynasty or repaired at that time and new evidence suggests it may be 1,000 years older than the Great Wall of China. It was restored somewhat during the Sassanid era (3rd-7th centuries). Therefore, this wall is located north with the border of Iran and Turkmenistan. This was probably the same raiding tribes that inspired the construction of the Great Wall of China during the 3rd century BC.

Consequently, this legend of Gog and Magog is not confined to the Bible. The Romance of Alexander is comprised of several collections of legends concerning the mythical exploits of Alexander the Great. In one version of this collection of legends, “Goth and Magoth” are kings of the Unclean Nations. They were driven beyond a mountain pass by Alexander, and blocked from returning by the construction of a new wall becoming known as the Gates of Alexander. The account attributes Gog and Magog as barbarians who practice cannibalism of their conquests. Clearly, this is not confined to the Bible. Indeed, Gog and Magog also appear in the Quran as Yajuj and Majuj who are adversaries of Dhul-Qarnayn, which were generally equated with Cyrus the Great of Persia and al-Iskanadar (Alexander the Great) in Islam. So we have various attributions that have been applied over the centuries to such as Romans, the Turkic tribes from Central Asia, and of course the Mongols. The tribes of Gog and Magog remain forever associated with apocalyptic prophecy both in Christianity and the Muslim world. I am sure it will be attributed to the Russians if they invade through Turkey into Syria. Since China also constructed a wall, we might assume that these are closer to the tribes from Mongolia who were nomads rather than the Russians.

Nevertheless, with regard to Syria, this has been the crossroads between Asia and the West. It was within the sphere of Rome whereas Iran was the Persians of Parthia, which Rome never subjugated. In fact, it was Shapur I who captured in 260AD the Roman Emperor Valerian I (253-260AD) and made him his personal slave and finally stuffed him as a trophy upon his death. So this was the very place that market the collapse of Rome during the 3rd century. Curiously enough, 200 intervals of 8.6 years from 260AD was 1980 or the peak in the Public Wave. Time converges on this region from many aspects and the place has been a focal point between East and West for centuries.

Antioch of ancient Syria was indeed the third largest city in the Roman Empire and it was called “the cradle of Christianity” for it was always played a pivotal role in trade between East and West with the Silk Road, and also in the emergence of both Hellenistic Judaism and early Christianity. It was even the first city to have street lights. Antioch was located on the eastern side of the Orontes River and its ruins are near the modern city of Antakya, in Turkey. The name of the country Syria extends back to the Assyrian culture.

The Assyrian Empire was built on a warrior society model much like the Greeks of Sparta. The Assyrians produced the most fearsome soldiers were had the most innovative generals of its time. They used chariots, iron weapons, and siege equipment to dominate their enemies before others. They maintained a standing Army with every young man was expected to train as a warrior and be ready to fight. The Assyrian Empire grew by conquest employing their standing army of professional soldiers whose only job is to fight. Their soldiers were trained in siege warfare, battle tactics, and hand-to-hand combat. The Assyrians would launch a battle campaign every Spring conquering cities and stripping them of all wealth. Based upon ancient sources, the Assyrian army was probably several hundred thousand soldiers in number.

Assyria was a kingdom located between the Tigris and Euphrates Rivers that dominated the ancient world from the ninth century to the seventh century BC. Its capital was Nineveh. It was the Assyrians who destroyed the northern kingdom Israel when they besieged Samaria dragging Israel into captivity after defeating them in 722 BC. They were very smart and realized that to conquer, they must destroy the sense of nationalism. Assyrian policy was therefore to deport conquered peoples to other lands within their empire. This is how they destroyed their sense of nationalism breaking any hope of rebellion. In this manner, they would always replace the people with strangers from another conquest mixing them up. They did not build an economic based economy, but robbed everyone else making them slaves. They were notoriously known for being cruel and creating horrible atrocities. They were the first Vlad the Impaler (Dracula) who skinned their prisoners alive cutting off various body parts to inspire absolute terror in their enemies. Records have survived documenting that Assyrian officials would pull out tongues and displaying mounds of human skulls of their victims intentionally to invoke sheer horror to compel people to submit. They extracted tribute from surrounding nations and they remain perhaps the most cruel of all armies ever to have exited.

Keep in mind that this is the focal point that even Rome could not overcome. For whatever reason, this is just the place.