As China opened after a long weekend, so it was that Japan was closed for national holiday (Respect for the Aged Day). There was also a computer issue in Australia that resulted in the ASX closing early. Ahead of both the FED and BOJ this week could be interesting. China added more liquidity over the weekend which set the Shanghai index off to the races from the opening bell. Moving away from the 3k level even the late wobble in western markets has left it to retrace just half of the earlier cash advance. The Hang Seng closed up 0.90% on the day and this evening remains higher together with the Nikkei futures despite the JPY renewed strength. Late this evening we have seen 101.50 trading.

We did see a confident day for Europe but it also drifted in after-hours trading in sympathy with the US markets weakness. Earlier in the day all core European indices performed well with the CAC and FTSE both around 1.5% better whilst the DAX and IBEX both closed just under 1% higher. Angela Merkel’s CDU Party suffered defeat over the weekend in Berlin state vote and was used as one of the reason’s the DAX underperformed other core markets today. The oil price set a promising rally today (over 2% with rumours of OPEC setting supporting measures) which many markets followed but were only to turn late in the US trading session.

Oil did set the early pace with all markets looking for reassurance ahead of the central bank meetings this week. However, this pace turned half way through trading when dealers started to doubt the OPEC news and a little nervous selling turned into crowd concerns and by close of business US indices were back to unchanged. With no, or very little, economic data to guide markets today we need more than sentiment to hold a 1% rally ahead of two central bank decisions.

A quiet but broadly weaker bond markets today with US curve returning a 1bp parallel shift higher. 2’s closed 0.775% (+1bp) whilst 10’s closed 1.71% (+1bp) closing 2/10’s at +93.5bp. In Europe Bunds saw 2-10’s all 1bp higher (yield) while 30’s actually fell 1bp. 2’s closed -0.665% while 10’s closed 0.015%; closing 2/10 Germany at ++68bp. US/Bund 10yr spread closed +169.5bp. Italy 10’s closed 1.31%, Greece 8.47%, Turkey 9.58% (+6bp), Portugal 3.34% and UK Gilt 10’s at 0.87%.

The Stage is being set for the most dramatic political change in our lifetime; or for the young in age rather than just hart, post World War II. Angela Merkel’s party came in with absolutely historic losses in elections in Berlin. Some are claiming, such as the Mayor, this will return Nazis in Germany as the far-right Alternative for Germany (AfD) comes to power. Of course, that is rather scare tactics. The AfD is anti-immigration, but have no desire to conquer Europe. Merkel has brought Europe into total and complete chaos with her refugee crisis. Her slogan “We Can Do This” has been used against her saying yes, “We can do this, take our country back.”

I have been warning that we are entering the period of political hell. This is a surge in nationalism/isolationism that is engulfing the world. Society has been drained of its lifeblood by the socialists and regulation to the point 5% economic growth is unheard of in the West. Wait til we see the results in France. This not going to be politics as usual.

The central banks have been selling US Treasury bonds at the request of the Fed to desperately try to keep the dollar from surging. China’s holdings have dropped to the lowest since 2013 as they try to help stem the dollar advance. Nonetheless, with all the manipulation trying to reverse the trend in the dollar, all we are getting is coiling. No matter what the central banks try to manipulate, the trend is unstoppable as this political year from hell unfolds.

More and more talk from behind the curtain is very concerned that Hillary indeed has Parkinson’s disease and this is why she is not having press conferences because she cannot handle multiple questions being hurled at her simultaneously. She needs help climbing stairs and is showing clear signs of tremors. This video is done by a doctor. However, we have confirming opinions by other doctors that agree with the video.

Hillary will not release her medical records in addition to refusing to do press conferences. There is talk starting to surface from behind the curtain because she is at an advanced stage and may develop Dementia sooner than latter. Some are very concerned because she only cares about being the first woman president and not the country. She is putting herself before everything.

She should release her medical records because this is a fundamental prerequisite for the job. For Democrats to hide this just to win is really deplorable. The press may be backing Hillary also with no regard for the country or the world. The press, if it were real, should DEMAND the release of her medical records and Congress should pass an act that REQUIRES medical records and independent doctors to verify someone does not have issues especially where dementia could be involved.

The judge I stood before had dementia; Richard Owen. It was totally insane. He would forget who I was and even one time said “Counselor, you are arguing admirably for your client but going too far.” The courtroom marshal was later confused and asked me if I was the lawyer. I replied; no! He forgot who I was again.

We do not need someone like that in charge of the country. No other judge would admit Judge Owen was nuts, so they turned a blind eye since they were of the same age.In the end, they were forced to “reassign” my case to another judge since I was getting into the Supreme Court and they feared he would never release me to end the case. So they handed my case to another judge who basically overruled Owen who said contempt is always coercive and not punishment in his mind.

The Democrats on the Hill already defend Hillary because she is a Democrat regardless of fact or any obvious truth. She can say invade Canada because she has secret information that they are harboring terrorists and the rest will just agree.

We cannot allow such a person to be in charge of the nation. This is becoming an outrage. To be a Democrat before an American is absolute treason. The chatter behind the curtain is no longer whispers. It is becoming screaming and yelling. When will the press do their dam job and protect the country no less their own families.

The joke running around is Hillary was really president while she let Bill have his bimbos, which is why every financial scandal involved Hillary, while Bill had the sex scandals. This time if the Clintons get in the White House, it will have to be Bill who is really president as they keep Hillary doped up and staff give all the press conferences. Trump holds press conferences. Why not Hillary?

Haitian President has come publicly to expose the corruption of the Clintons and their Clinton Foundation. Of the billions of dollars donated to help the Haitian people, he has stated publicly that only about 2% was given to the people. He further exposes the drugs sent into the USA from Haiti and the money was then sent back to pay lobbyists of the Clinton. Here comes a new scandal. They just never end.

If Hillary actually wins, we are looking at the real fall of Western Society consumed by corruption globally.

On the yearly level in Wheat CBT Futures, the last important low was established during 2010 at 4254, which was down 2 years from the high made back during 2008 at 13494. However, the highest closing was during 2007 at 8850. Right now, the market is trading below last year’s low of 4606. Overall, the market has been in a long-term bearish trend. At this time, the market is trading in a bearish position below our yearly momentum indicators warning resistance starts at 5990.

Honing in on the longer term yearly level, we see turning points where highs or lows on an intraday or closing basis should form will be, 2017, 2020, 2023 and 2025. Considering all factors, there is a possibility of a decline moving into 2017 with the opposite trend thereafter into 2020. This is a realistic potential since we have already penetrated last year’s low of 4606. The Yearly Bearish Reversal lies at 3110. Wheat has fallen to 3866 so far here in 2016. As long as 2016 holds 3110 for the year-end closing, then we should be looking a forming as early as 2017. We have already penetrated also the 2010 low of 4254.

Focusing an important timing model, the Directional Change Model target is 2017. This model often picks the high or low, but can also elect a breakout to a new higher trading zone or a breakdown to a new lower trading level.

YEARLY TECHNICAL ANALYSIS
01/01/2016… 2198 4523 5450 8460
01/01/2017… 2219 4656 4445 8510
01/01/2018… 2240 4790 3439 8560
01/01/2019… 2261 4923 2434 8610
01/01/2020… 2282 5056 1428 8660
01/01/2021… 2303 5190 423 8710
01/01/2022… 2325 5323 8760

YEARLY ANALYSIS

In the event of new intraday lows developing beyond this year, then the final low could extend into 2017. Broadly speaking, a month-end closing BELOW 3070 is where the critical support lies. Only a monthly closing BELOW 3070 will confirm a long-term bear market is in motion. Otherwise, here lies important dynamic support within this market and holding this level is a clear line of demarcation in long-term trend. Make no mistake about this key level. If it is breached on a closing basis, then a continued decline is the most likely broader outcome. However, this appears to be a remote possibility. An annual closing back above 7997 will confirm a breakout to the upside is unfolding into the years ahead. Nevertheless, we have penetrated last year’s low of 4606. A year end closing below 4606 will warn of a further decline ahead ideally into 2017.

In A$, the key monthly closing to watch lies at 4190. This is actually equivalent to the US$ number 3070. In terms of A$, wheat has also made a new low so far in 2016 reaching 5111 during August. We need a monthly closing back above 5733 to signal wheat will rise in A$ terms. The only thing to unleash that result requires the dollar to rise sharply.

The Australian Wool market is poised to make new highs in nominal terms, but it is still nowhere near the 1951 high in real terms. The Australian wool industry peaked in 1950-51 when the average greasy wool price reached 144.2 pence per pound, (about $37 per kilogram). Today’s prices in the area of $3.20 per kilogram illustrate the stark difference. That major high in terms of wool was created by a two-prong influence. First, the British pound was devalued in 1949 from $4.86 to $2.80. The British demand for Australian wool had consumed about 50% of the annual production. The prices reached in 1950-1951 surged initially, as always, to reflect the devaluation of a currency. This was 9x the 1945-46 United Kingdom contract price, and almost 14x the average for the 10 seasons ending in 1938-39. Nonetheless, the rally in wool was also furthered by the short-lived surge in American demand created by the Korean War.

It is very clear that Australian Wool has been greatly influenced by the cycle in gold and thus mining. The low in wool coincided cyclically with gold in forming a 1999 low. The peak is also 2011 as was the case in gold. We are pushing against resistance at this point and we need to close above 1300 to maintain a bullish posture at year-end. However, unlike gold, the decline was confined to the two-year reaction phase. Therefore, wool is in a better position than gold. Breaking through the 2011 high should see the price test the high 1500s to 1600.

When we look at Wool expressed in US dollars, we can see the significant difference this makes. Overall, we do see 2017 as a potential turning point also for the wool market. Take the lead from wheat in A$ terms for now.

We have terrorist attacks in Kashmir against the military and what may prove to be a home-grown terrorist attack using pressure cookers in New York City, similar to Boston. Unfortunately, as we move into 2018, we should expect terrorism to escalate, especially in Europe. However, terrorism based upon religion should be on the rise.

COMMENT: Mr. Armstrong, I read your piece published in the German Press Fuldaer Zeitung yesterday how “When increasing money supply causes deflation”. Thank you so much for publishing in the German media. This has opened my eyes to why we continue to decline into deflation. This proves the old saying a prophet is never recognized in his home country.

Alles Gute

REPLY: Well I am not a prophet, just a forecaster, but I see what you mean. The media is the USA are beholding to the government and banks. They cannot publish a piece like this without getting those who hold their chains angry.  Even Snowden had to go to the Guardian in London. Any press organization in the USA would have offered him a coffee to stall him while the NSA rushed over after their call. That is just reality.

We are in danger of going into a Dark Age. It is absolutely imperative to understand the root causes or we will turn toward more authoritarian power to emerge as a totalitarian state. We are in grave danger because the press has surrendered the very fundamental role they were to play in protecting our liberty. The surrender of the press is the surrender of all checks and balances against a corrupt government. The press vilified Richard Nixon for erasing 18.5 minutes of a tape while they coronate Hillary who cannot even hold a press conference because of her Parkinson’s disease. They have doomed their own children all to obey their masters.

Sen. Derryn Hinch (Vic-DHJP) was thrown in contempt and imprisoned for standing up against corrupt judges. He was elected to the Senate and made his Maiden Speech on September 12th, 2016. He immediately said he would fight to reform the system and even opposed the law that journalists can only photograph a senator when speaking so they are not embarrassed sleeping on the job.

The next great crisis will have a greater impact than derivatives or failed banks. This is the knife through the heart of Marxist-Keynesian Economics – the end of socialism, as we have known it. Many pension funds around the world are compelled by law to invest vast portions in government debt despite the insanity of negative interest rates. As always, those who pretend to be in power never see the next step forward in their walk. They are incapable of managing the economic. With each crisis they create a solution which becomes the next crisis. And who is more brain-dead? Those who pretend to rule the world? Or perhaps is is those who vote for such people thing they are even capable of doing what they claim?

The Pension Report is available for $395

Police are starting to use Harris Corp’s Stingray. The company has fought to keep its manuals private and an exception to the Freedom of Information Act under the pretense that this would help criminals and terrorists. Of course, the number one police action is rapidly becoming the hunt for money under the presumption that the mere possession of cash is suspected criminal activity. Not paying taxes is criminal and hiding a portion of your money is also criminal. Having an account overseas that is unreported is money laundering. So the catchall phrase “criminal” is not limited to drug dealers.

Stingrays and competitor cellular surveillance devices are rather powerful and clearly threaten civil liberties, no less communications infrastructure. They could even be used against government and would obviously present a potential national security risk. What they can do to you, others could do to them.

The latest version known as “Stingray II” can even impersonate four cellular communication towers at once, monitoring up to four cellular provider networks simultaneously in 2G, 3G, and 4G networks. So your call may be going entirely through the police and not a tower at all. You would have no idea that this is even taking place. It turned out that the San Bernardino Sheriff’s Department alone has used it more than 300 times. 

We are not talking about the NSA or some national agency like the FBI. We are now talking about local police departments. If the experience at the NSA with employees interception nude photos girls sent to their boyfriends, the security behind local police department to prevent abuse of civil liberties or to take bribes from a friend to listen in on a spouse’s conversation would be a huge money pit for corruption.

(for more details read the Intercept on this issue)