There is serious trouble brewing in Saudi Arabia. They have been dumping oil and increasing their output by 3.5%. However, the cash is being kept offshore. Rumors have been in flight that members of the royal family may be creating a stash just in case there is major civil unrest that forces them to flee into exile. During his recent trip, Obama told the Saudis they should adopt democratic reform. Make no mistake about it. There is trouble brewing in the Middle East. There is no way Obama would have made such a statement publicly if the situation were not grave.

May, August, and October are highlighted as key periods ahead.

QUESTION:

Hi Marty!

I am reading and studying your blogs and Socrates for quite some time and I would really like to thank you for all the insights!

Some days I listen to bloomberg radio for knowing what ‘they’ are saying about the market developments. As I am not an experienced trader as you are, I must admit I don’t understand the ‘collective market behaviours’ e.g. besides all the traps the central banks got themselves into, my normal logical mind tells me that whenever interest rates rise, money gets more expensive, so consequently the only true reason for doing so would be that underlying economic data shows the economy is doing well and can do without ‘help’.

A simple mind like I am tells me that a stock index should rise in case of a well doing economy. Instead I only hear markets fear a interest rate hike. Seems to me that the collective wants interest rates remain low, so stockindex growth driven higher by debt.

The same for example in the case of oil. With my simple mind global economies aren’t as healthy as the financial markets might imply. So in short lower demand and risk of even demand lowering. Instead of a lower price eg. crude oil futures, the futures contract keeps on rising. I am wondering what the fundamentals are that drive up these prices?

Could you give some insights on the real fundamentals that drive markets as from a real- economic perspective I can’t figure it out!

Thnx Marty!

R

ANSWER: The fundamentals flipped after the shift from a private to public wave following 1929. Under the pre-1929 economics of laissez-faire, the government did not attempt to manipulate society with monetary policy. They attempted to lower U.S. interest rates to deflect capital inflows back to Europe, but they did not practice manipulating interest rates domestically to try to manage the economy. Therefore, raising interest rates before 1929 was often seen as bullish because it showed there was a demand for borrowing money due to economic expansion.

Today, the fundamentals are interpreted through the eyes of Marxism. Raising interest rates is now considered a punishment to society intended to deter them from borrowing. Yet, deflation involves declining interest rates due to the lack of interest to borrow. Some say that higher rates are bad for stocks, but they are solely looking at it as a punitive measure that will cost people more to borrow. You even have people cheering gold with lower interest rates.

None of this makes any sense economically. Nonetheless, we are looking at a sharp rise in stocks and gold along with rising interest rates, which will confuse everyone. Interest rates are the manifestation of expected inflation. If you think inflation will be 10%, you will lose money if you lend it at 5%. Interest rates are the price of expected inflation alongside the perceived risk.

Therefore, everything will take off to the upside and the majority, whom will be following the Marxist version of fundamentals, will feed the rally because they will be short. This view of fundamentals will eventually flip back, but only when the public at large sees this flip and goes with it. That is the point of no return where confidence in government collapses.

I should point out that these fundamentals tend to apply only to the investing class. I remember 1981 when interest rates reached their peak. My mother and her sister went out and bought bank CDs at 20% for 10 years. They did not ask me. They made the decision on their own and said they would never see that much interest again. They are countless others changes the trend and made that peak in the Public Wave 1981.35. This class of people act out of common sense and do not listen to the fundamentals applied in the investing class. This is the real group of people who are the movers & shakers. The rest of us are trying to figure out what they are doing. Keep in mind that within the investing class, they always try to assign some fundamental to explain something. Everyone wants to know WHY. I named by debut report on the ECM back in 1979 – “WHY”.

Take gold for example. How long have they been saying the dollar is fiat yet gold has not advanced to the same degree as the Dow since 1970. It is one of those fundamentals they always throw at you which become sophistry. Sounds logical and they mix in Germany with wheelbarrows of money, but omit the fact it was a Communist Revolution in 1918 where Germany invited Russia to come take their country wanting to join the Russian Revolution of 1917. Who would keep money in a bank under such conditions?  There was a collapse in confidence.

We will do a brief video update tomorrow on the general state of the markets given we have elected Monthly Bullish Reversals in several currencies. While we have been looking for the euro to reach 116, we have now clearly extended the sideways rally given that the major low for last year took place in March 2015. May has been the main target in time on our arrays for a long time. It appears we should press higher into May (dollar decline). There is a potential that exceeding the 117 level could spark a rally up to the 125 level. This is rather serious for last year’s high was 12109; exceeding that high intraday would make 2016 a REACTION HIGH since we did not make a new low this year.

The yearly array in the euro warns that the turning points are 2016 and 2018 followed then by 2022. Additionally, 2016 is a PANIC CYCLE YEAR and we have not seen anything unfold with volatility just yet. We have the BREXIT vote in June. A failure for Britain to exit would perhaps create that last rally of euphoria that the euro will survive. Nevertheless, the fundamentals that hit in 2017 globally warn that the trend thereafter does not look very bright.

Such a move in the euro to exceed last year’s high would most likely result in a tremendous setup for a FALSE MOVE and the slingshot we see that appears to be unfolding from next year onward. Everything from oil, turmoil in Saudi Arabia, commodities (including metals) to stocks, bonds, and currencies, are all warning that we will see the crazy times ahead in trading where most will lose everything.

A rare find of Roman coins was made by construction workers in Spain have found 600kg (1,300lb) of ancient Roman coins while working on water pipes in southern Spain. The coins date to the period of Maximianus to Constantine the Great (286-312AD) and were found inside 19 Roman amphoras, in the town of Tomares near Seville. The value of such coins on today’s market will vary between $75 to $300. What is rare about this find is that this appears to be money intended to pay the troops. The coins are uncirculated and mostly still show the silver plating which was done at the mint chemically.

Typically, coins found in hoards are normally someone hiding money during the chaotic period of the 3rd century for security. This find appears to be funding for the military which did not make it. Finds have been made of dies which have survived, but they too are very rare. Normally, we are looking at coinage of an individual who digs a hole to protect their wealth lacking a financial stable environment. Could we be moving into such a period once again?

 

The Canadian Dollar elected Monthly Bullish Reversals at the close of April suggesting that we can now see a rally up to the 82-83 level. Keep in mind that last year’s high was 86.03. Therefore, there is plenty of room for a continued reaction as the markets push everything to the limit.

In the Euro cash, we also elected a Monthly Bullish at the 114 level producing the highest closing so far on a monthly basis. Now we may at last see that rally up to the 116 level.

The Global Market Watch picked the low rather nicely and has been is a bullish mode now for the past three months.

In the Japanese yen, we did not elect any Monthly Bullish Reversals at the end of April. However, we did elect TWO Monthly Bullish back in February. This implies we should see a bounce but resistance will stand at the 92 level.

Overall, this is the purpose of creating a quantitative model that function without human emotion – very plain and to the point. May has been showing as the month on our timing models in currencies this year. So as we now enter May, be on point. Just play this by the numbers and do not get emotionally attached to a trade. As we make the reaction high, the talk should be bearish on the dollar and that will help trap people into buying that new high.

 

 

We have a Special Room Block if you book directly with the Hotel

Join us at the 2016 World Economic Conference at the Hilton Bonnet Creek in Orlando, Florida!

This year’s event will be a combination of training courses and forecasting Attendees with receive a proprietary tablet to take home. We will review world share markets, currencies, bonds, and commodities. We will discuss how to use the timing arrays and reversals as well as our risk model’s that provide an idea for trading options.

We will NOT be doing an introduction to the models this year. We will provide Day One of the 2015 Berlin Conference in Video format in advance for those to review ahead of the conference. This will allow our time to be exclusively forecasting world markets demonstrating how everything is connected and interdependent. We will be reviewing world share markets, currencies, bonds, and commodities going through each market reviewing the timing and reversals. Looking at the world collectively will enable you to see the trend as it emerges and acquire the CONFIDENCE to actually trade.

This year we will show you how to simply step in and out of markets in an orderly fashion while allowing the market to be your guide. Eliminating personal opinion is the ultimate goal to be a successful trader for the markets themselves are never wrong. This conference is designed to help you become a professional investor and beat the odds that most people lose because they cannot escape from their emotions fueled by the sophistry of the moment. CONFIDENCE is the key. Once you can see how the world functions, you can survive the turmoil that lies ahead. Without that understanding, you will not attain the level of CONFIDENCE necessary to survive the future.

We will be hosting two back-to-back conferences with a day of technical analysis in between. The first day (Thursday, Nov. 10) will begin our Institutional World Economic Conference that will focus on global correlations, currency based asset allocations and international indices. This session will be separate so we can deal with issues for global portfolios and how to strategically survive the interest rate crisis and the under-funding nightmare for pension funds. How will insurance companies cope with claims cross currency? These and other professional questions will be addressed. There will also be included an Institutional dinner for a meet and greet event.

The second day of the event (Friday, Nov. 11) will be dedicated to our proprietary form of Technical Analysis Training Course. This will be a key training course where you will be learning how to identifying trends, charting trends, and analyze channels analysis. Institutional clients may choose to attend one or both days of the session (see below for more information). We will be using the Socrates platform to conduct this session so you can see technical analysis in its true form – mathematics. Instead of guess where support and resistance rests, we will be demonstrating the difference precision analysis makes in help you to see the trend at a glance.

The general 2016 World Economic Conference will begin on Saturday, Nov. 11, and will feature an introductory workshop that will discuss how to trade markets. We will be providing a workshop on using Reversals and Array Analysis using Socrates. Once you understand the basic model, you can apply the same system to any market in the world.

We will also be reviewing the Global Market Watch and how that provides yet another layer of analysis employing Pattern Recognition. The exciting introduction of this system establishes that all markets trade creating the same patterns be they stocks, bonds, commodities, or general data trends.

The second day of the 2016 World Economic Conference will focus ONLY on forecasting world share markets, currencies, fixed-income and commodities based on individual markets. We will be reviewing each of the main markets going over the reversals and timing arrays. In this manner, you can see the entire world and how everything is connected. There will be NO historical introduction this year. That will be provided by a video link for everyone to watch prior to the conference so we do not waste time of others who have attended before.

There will also be included our famous World Economic Conference Cocktail Party. This has been touted as the international event for networking. This will be held as part of the weekend 2016 WEC.

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Pricing and Packages:

• Institutional World Economic Conference (Nov. 10) and Technical Analysis Seminar (Nov. 11): $5500
• Institutional World Economic Conference Only (Nov. 10): $4000
• Technical Analysis Seminar Only (Nov. 11): $2000
• Technical Analysis Seminar (Nov. 11) & World Economic Conference (Nov. 12-13): $4000
• World Economic Conference (Nov. 12­-13): $2500

Ticket prices include breakfast, lunch, pre-conference materials, a proprietary tablet, and a collector’s mug.

Schedule:

Location: The Hilton Bonnet Creek in Orlando, Florida

Please note that you are responsible for booking your hotel accommodations. Upon completing your purchase, you will receive a confirmation e-mail containing a group discount code for the Hilton Bonnet Creek.

Institutional World Economic Conference with Martin Armstrong (Thursday, Nov. 10, 2016, 9:00 AM to 5:00 PM)

• The Institutional World Economic Conference will center on timed, global investment currency allocation.
• The conference will include projections for world share markets, currencies, as well as the fixed-income and commodities markets.
• Dinner with Martin Armstrong (time TBA)

Technical Analysis Seminar with Martin Armstrong (Friday, Nov. 11, 2016, 9:00 AM to 5:00 PM)

• Learn how to identifying trends, chart trend lines, and analyze channels.
• This seminar will also provide an advanced analysis of the arrays.

World Economic Conference (Saturday and Sunday, Nov. 12-13, 2016)

Day 1: Introductory Workshop & Socrates Training hosted by Erwin Pletsch (time TBA)

• Learn how to use the forecast arrays, reversal system, Global Market Watch, and indicating ranges.
• This session will provide an overview of Socrates, including how to navigate and trade with Socrates.
• Cocktail reception (time TBA)

Day 2: Market Forecasting with Martin Armstrong (9:00 AM to 5:00 PM)

• In this session, Martin Armstrong will forecast the world share markets, currencies, fixed-income and commodities based on individual markets.

To purchase a ticket, please visit our “conferences“section. If you have any additional questions, you may contact us at [email protected].

 

 

It was the turn of the Hang Seng to play catch-up with Japan today and probably the perfect opportunity with the Nikkei closed for a national holiday. The HSI dropped over 1.5% that could have been a reaction to the Yuan fix (6.489 is the highest in over 10years) but also impacting from the JPY strength! The JPY saw another day of positive gains (1.4%) despite Tokyo closed for Golden Week (Nikkei closed now until the end of next week). In late US trading we are watching the JPY trading with a 106 handle whilst Nikkei futures fall -1.4%, China 300 and HSI both around 0.3% lower.

Given we saw some poor results ahead of the opening (RBS £-968mio loss compared to previous £-469mio) for example and also mixed data all core indices saw profit-taking ahead of the long weekend. DAX,CAC and IBEX all suffered near 2.75% declines whilst the FTSE lost 1.25%. Interesting that fixed-income core and peripheries lost ground also but more on that below. Miners and Basic Resources all rallied as we saw strong gains for precious metals and energy (as Europe closed).

Disappointing data also in the US and we saw the kind of profit-taking many had been expecting. We were in danger of witnessing a panic afternoon at one stage but selling volumes died late in the day and we saw the DOW recover over half of its intra-day moves to close just down 0.35%. A lot of talk this week about the US Dollars weakness against the majors. The JPY has seen a 6% move in 36hours, an 18month low. As a result we have seen rallies in oil, gold, sliver and EM currencies. Gold this evening closes at $1295 a rally of $30 (2.4%) and levels not seen in over a year and silver pressed higher implying a pop into next week is likely.

This evening Portugal managed to retain its credit rating, a relief for many European banks market-makers commented. US 10yr notes closed today at 1.83% (unchanged, having traded a 5bp all day). German 10yr Bund closed 0.27% (+2bp). This closes the 10/10’s spread at 156bp. Italy closed 1.48%, Greece 8.25%, Turkey 9.02%, Portugal 3.13% and UK Gilt 10yr at 1.59%.

There is a lot of volume focusing on the yen and the Nikkei. It appears someone is trying to push the markets through support and there is a lot of volume taking place. They seem to be trying to crack the Nikkei and are selling the dollar. It appears they are trying to crack the Nikkei attempting to create a lot of blood in the streets. This is curious for we are at extremes in markets and they can easily get trapped if they fail. There is no viable sustainable trend to be had here. Where do these people think the markets will go? The odds are greater for a rise in interest rates than a sustained decline long-term. So either they are insane, or they are fishing to push the markets and play off the stops they elect. It may be the latter like the good old days of trying to run the stops.

The Dow is now testing key technical support at the 17624 level and breaking this level warns that a correction becomes possible. We have two very important Weekly Bearish Reversals at 17434 and 17120 level. A weekly closing beneath the 17120 level will signal a sharp sell-off of about 1,000 points or down to the 15400 area. Gold has finally exceeded the March high and silver reach 1802. How they respond now to the 2015 high of 1307 and 1850 will be important to determine if we have an extension of this chaos in all markets or are we just pushing everything to the maximum.

May/June has been a key target for this year on our timing models followed by August. Now, will we see as a low or a high on the first target? Key monthly support lies at 17579 and we are trading right now at 17693 at this moment. We have a Weekly Bearish at 17434. If we close beneath 17579 today, we should expect a correction that will increase the odds that the next turning point should be a low with a rally then into August. Quarterly timing models have highlighted the 2nd quarter here in 2016 for a Direction Change so that will be for the June closing.

(See private blog for metals numbers)

 

Since our model turned up in March for activity around the Ring of Fire in the Pacific, there have been near-simultaneous earthquakes opposite of each other in the Ring of Fire. An earthquake with a preliminary magnitude of 5.8+ hit the Kumamoto prefecture in southern Japan on April 18, according to the Japan Meteorological Agency. Then a near 7.0 earthquake hit Ecuador on April 20. A major earthquake 7.0-7.3 hit the Pacific nation of Vanuatu early on Friday, April 29 (their time), briefly prompting a tsunami warning that was cancelled after locals reported no significant damage. There was also an M6.6 earthquake on the Northern East Pacific Rise in the ocean about 800 km from Mexico. We are starting to see activity within a day or two on opposite sides of the plate. Our preliminary computer models are showing an uptrend in activity for earthquakes and volcanoes from March of 2016. Something seems to be brewing.

We monitor such events because they can be very profound economically – at least the big ones. The 1906 San Francisco earthquake  led to the Panic of 1907 and ultimately the formation of the Federal Reserve in 1913.

The 1923 earthquake that devastated Tokyo was a monumental event. The Japanese stock market peaked with that event and collapsed never participating in the rally we saw in the USA into 1929.

Such events are part of the system. They have produced the wildcard in the financial game of monitoring the world economy.