In the Dow, we have technical support at 17573 and a Daily Bearish Reversal at 17568. At the time of this posting, the Dow is trading at 17633 and the low has been 17580. A closing beneath this level will warn we could see a decline into the week of the 16th. The primary Weekly Bearish Reversal lies at 17120. Electing that would signal  a potential sharp drop of 1,000 points. Otherwise, we are churning. Holding this technical support today still leaves this market in a position for a two-week rally and new highs cannot yet be eliminated. We would not expect any major follow-through. This topping pattern is similar to when the Dow tested the 1000 level four times before it finally broke out to the upside in 1985 with the start of this Private Wave.

When we look at timing, we can see that the weeks of the 16th and 30th are the key targets, with a Panic Cycle coming into play the week of June 6. We have a Directional Change also the week of the 16th, so ideally whatever we get the week of the 16th should be followed by the opposite trend for two weeks thereafter into the week of the 30th. We do see Directional Changes clustering in mid-June and a rise in volatility the week of June 20th, which just so happens to be the BREXIT vote. We will be putting out a special report on BREXIT shortly.

So do not anticipate. Let the market confirm its decision. We are in a choppy period right now so do not get committed.

Private Blog Update for the close today in Euro – Gold – Silver

If I do not mention something on the blog, some people think it means I missed the move. Sorry, but this is not about me as an individual trying to forecast everything.

Apple shares fell right down to the Bearish Reversals, which was a huge gap. They held and then bounced.

My goal is to deliver you a system. Socrates covers everything globally. There is no possible way for me to mention every market every day or make specific forecasts. I am doing this to leave something behind. I am not in need of money to surrender my life in such a manner. To create a viable company with staff, we need to charge as our staff needs income to earn a living. On the Trader level (coming soon), we have adopted a per-click payment structure so you can click on any stock or market in the world, rather than having to pay for a subscription to a market. Subscriptions will be available to those who are focused on a given market. However, the object is to provide a model of the world. Do not expect me to mention absolutely every move and every trade in the world. That is what computers are for.

Are you ready for this one? Google was approved for a patent where they can remove the lenses in your eye, fill it with fluid, and then place a device in there. You will no longer need to wear glasses with the device, and you no longer need a camera since it comes equipped with a camera and video recorder. I suppose the government will figure out a way to include an x-ray feature so that they can walk down the street and see who has money on them.

Many people do not realize that the global warming/climate change deals in Europe will eliminate gasoline and diesel cars on the streets come 2020. From Norway to India, the year 2020 will mark the end of petrol and diesel vehicles. This is part of the long-term bear market in energy. Germany wants to put at least a million electric vehicles on the roads. However, this energy policy presents a crisis. They never realized that to prevent cars from using oil-based energy, they have to get ready for a 25%-30% increase in power consumption. Shutting down nuclear power plants means you are trading one pollution source for another.  Meanwhile, Germany wants to shut down all nuclear power by 2022. Nobody seems to have figured out the coordination of these two trends.

A relatively quiet night in Asia with China PMI (51.8%) marginally under the April  52.2% reading. Although this had a short-term influence just ahead of lunch but it really did not alter the bounce and we closed the session marginally better. Hang Seng however, was lower on the day closing down 0.37%, which actually was not a bad performance and well off of the openings low.

With much of Europe on holiday for Ascension Day and so volumes were poor on most exchanges. Dealers took this opportunity to ready the books ahead of tomorrows main event – US Non-Farms. The DAX and CAC were both open and here we saw a mixed performance. At one stage we did see the DAX up over 100 points but that rally had been scuttled by the close of business this evening.

Oil had seen a 3% rally as the US markets opened but as that turned-around, so did US equity markets. Soon we were back negative on the day and dealers were focusing on tomorrow numbers. We had a host of FED speakers today and all are indifferent and happy to watch data as far as rate movements are concerned. We have been waiting all week for the NFP’s so lets see how this moves us tomorrow. VIX back below 16, last seen 15.8.

US Bond market did see a healthy gain (in price; lower yield) more because equity markets have entered a lull and there is yield for the taking. US 10yr notes closed this evening at 1.74% (-3bp) whilst 2’s closed only 2bp lower at 0.72%. Closes 2/10’s at +102bp. German 10yr Bund closed 0.16% closing the US/Germany spread at +158bp. Italy 10yr closed 1.49%, Greece 8.28%, Turkey 9.57% (+20bp as the result of last nights political news), Portugal 3.24% and UK 10yr 1.46%.

DXY starting to turn with a bounce today of 0.7% and was last seen at 93.77. Euro one of the main losers today falling 0.8% against the USD. The South African Rand came under pressure today breaking 15 per Dollar upon expectations that the credit rating may come under renewed pressure. The Rand fell 1.2% today and is down 4.7% this week. Currently, South Africa is rated BBB- by S+P. PBOC fixed the Yuan at 6.5128 per USD today whilst off-shore trades 6.5159. The Euro closed in a bearish mode for now whereas the technical support comes in as 11290. A closing below that would tend to warn that the May high may be in place. The dollar has declined from its December high on the index for 5 months. So if this May low now holds, the trend will reverse.

Silver continued to close in a negative position. Technically, a closing back below 16.80 will also warn that the May high may be in place, Resistance in gold continues to stand at the 1285 level intraday and on a closing basis.

Metals Update for Today on the Private Blog

Merkel’s failed refugee policy is destroying the fabric of Europe and raising international concerns that Europeans may need visas because she has introduce the prospect of ISIS using Europe as a stepping stone to get into the USA. Now, Merkel’s policy is forcing other countries to take refugees. The European Commission now wants to compel European member states to accept refugees by imposing a fine of 250,000 euros per applicant they deny.

Instead of admitting a huge mistake, they are creating a mandatory option that will only bring in more “refugees”. About 80% of the “refugees” are not even from Syria. Merkel’s policy is tearing Europe apart at the seams. Unless they deal with the issue directly and publicly by stating ALL refugees will be turned away, the crisis will only get worse. These are people migrating to Europe from northern Africa and other places who are using this policy as a gateway to the promised land.

The euro has been collapsing as a result of this brain-dead idea where politicians REFUSE to ever admit mistake. They will take their countries down in the process. Friends in London are starting to say if Britain does not exit the EU, they will migrate to the USA. This is becoming completely insane; the member states who do not get out of the EU are out of their minds. The economic union has become a political union with dictatorial powers from Brussels, as the Troika never even stands for election so there is no way to vote the people out of power.

A number of people have been buying tickets to all three sessions of the 2016 World Economic Conferences. We did not have a payment option for that possibility. We have now created that function and processed a $500 refund to those who bought all the packages. This will include the Institutional dinner and the cocktail party on the weekend. We put in a lot of effort to ensure our conferences are always first-class events.

COMMENT: Bill Gross says you are wrong and helicopter money is coming and the Fed should print trillions to buy government bonds. Any comments?

REPLY:Gross is not making a forecast without self-interest. Gross’ “helicopter money” calls for the Federal Reserve and U.S. Treasury to engage in another round of quantitative easing (QE) by printing trillions of dollars to buy government bonds. This is his Hail Mary play intended to boost the economy. How will that stimulate the economy? He runs Janus’ bond fund. It will only bail him out of losses on bonds.

Printing money to create “stimulation” is a fallacy. It has never worked. The theory of the quantity of money increasing or decreasing is pure nonsense. This typical one-dimensional thought process is incapable of understanding complexity.

The missing element is the velocity of money. If people hoard money without spending, then increasing the quantity of money will fail to produce inflation. Creating inflation, such as what Japan saw one month before raising the sales tax, demands that people see the price of goods rising so they spend the money faster because they fear it will cost them more tomorrow. Why did Roosevelt confiscate gold and devalue the dollar? People were hoarding money. There was such a shortage of money, more than 200 cities began to issue their own money known today as Depression Scrip.

This idea of “helicopter money” is rather pathetic and fails to dive deep into how the economy functions. Irrespective of the quantity of money, the velocity of money is what always distinguishes deflation from inflation. You could increase the money supply and nothing would happen. Alternatively, you could leave the money supply unchanged and people would suddenly lose confidence in government, causing the velocity to increase thereby producing inflation. This is not an opinion. This is the simple evidence that emerges from correlating everything.

Above is the Fed’s latest chart on the Velocity of Money. It peaked with the Economic Confidence Model high in 1998. Despite the increase in money supply, the velocity has been declining. First, we have seen pervasive tax increases reducing the disposable income so people have less to spend as government consumes everything. Then, you have price deflation thanks to the internet. Countless stores have closed because they cannot compete with the internet. That reduces jobs and we have over 60% of the people graduating college who cannot find jobs in the field they obtained a degree. Bernie’s idea that education should be free will be a disaster for it will will only subsidize a system which is failing to begin with like Obamacare. What the Clinton’s did to students should be reversed. Students should be allowed to declare bankruptcy on student loans like any other debtor. We have to undo this mess created by subsidizing education which has become pointless.

Clearly, you are trapped in your one-dimensional world within this theory of the quantity of money. There is more to everything than this simplistic reduction of how the world functions to a single cause and effect. You have good days and bad days, but are they always due to the same exact cause? All this talk about “helicopter money” means nothing. Inflation only emerges when people DO NOT HOARD cash and spent it faster because they fear it will buy less tomorrow. There is ZERO evidence such a fear has emerged with QE at any stage. It is pure sophistry. They are hoarding money because they fear the future, not inflation.

Welcome to the world of complexity. It takes just a bit more thought and unbiased investigation to see how things really work. If you really want to stimulate the economy, stop bailing out bondholders and bankers and REDUCE taxes to create jobs and raise the disposable net income of the middle class. They use to call Reaganomics “trickle down” economics. Sorry, that was the correct way. This is real “trickle down” where the “helicopter money” only helps bankers and bondholders and nobody else.

Princeton Economics International became the largest global advisory firm in the world with over $3 trillion under contract for advisory work for one reason. A Swiss banker explained it to me. He said everyone used us because we did not care if the dollar went up or down. I am a trader. I can make money in either direction. I refused money management roles of equity funds when I would be prohibited from flipping everything into a short. Long-only positions were stupid and dangerous to me.

So stop trying to prove me wrong and take a fresh look at the evidence. If you do, you might learn something that saves your family’s future. It’s your choice. There is just more to this game than one cause and effect. It’s called complexity. The Quantity of Money Theory does not work. It all centers around what the public is doing – saving for a rainy day, or spending as fast as it comes in because it will buy less tomorrow.