Private Blog

We are finishing up the “Pension Crisis – The Next Nightmare,” which is a special report outlining the next global meltdown. Germany’s Federal Finance Minister Schaeuble is now openly blaming Mario Draghi for the electoral success of the AFD in Germany, which is the Alternative for Germany (In German: Alternative für Deutschland, AfD). The AFD is a right-wing populist party that is also the Eurosceptic political party in Germany. The AFD has risen from 0% to nearly 40% in about 2 years.

Additionally, Schaeuble seems to be rumbling that the ECB is creating a huge problem with negative interest rates. If the ECB does not change its monetary policy radically and soon, Germany will be engulfed in its own major pension crisis. Central banks may be forced to raise rates to try to bail out pension funds. This has nothing to do with the economic trends.

The pension crisis is becoming a real nightmare for federal and state budgets and now depend on exceptionally low interest rates while pension funds are going bankrupt. Raising rates to help the pension funds will wipe out government budgets. This entire idea of Keynesian economics, which says that government is capable of managing the economy by raising and lowering interest rates, is a complete disaster. These people are incapable of forecasting the economy, as former Secretary of the Treasury Larry Summers openly admitted to Bloomberg TV. Those who think they are endowed with magical powers to manipulate society have created a complete mess and they are too brain-dead to realize the consequences. Our computer is extremely bearish on government. The turning point (2015.75) was the PEAK IN GOVERNMENT. Ever since that turning point, we have begun the downhill move that is destined to collapse into January 2020 (2020.05).

Schaeuble, of course, will not accept any blame for screwing up Germany. He must blame someone and he is turning against Draghi. This is to be expected as we move ahead into the 4.3-year declining leg of the Economic Confidence Model. We are likely to see pressure build until it creates a change in the monetary system as early as 2018.895. What will the world will look like on the other side of 2020.05? We will deal with that at the World Economic Conference after the elections in November. We will make an announcement once we finalize the dates and location for the next conference.

Airlines in the United States, including Delta, American, and United, are engaging in outright criminal behavior under the anti-trust laws. They charge a $200 fee to change a ticket, even if the ticket itself costs $200, and if you complain they respond by saying that all of the airlines charge the same fee. That proves that they are violating the anti-trust laws for they are not competing. Instead, they have all agreed to treat their passengers as victims.

Granted, the airlines had a bad decade after the terrorist attacks of September 11, 2001. Terrorism fears, security costs, and rising fuel prices along with hidden taxes caused revenues to decline and some U.S. carriers were even forced into bankruptcy. The airlines have tried to improve their situation by screwing their passengers to the point that it’s just unpleasant to fly on them anymore. Personally, I never use American carriers overseas anymore as they nickel and dime customers in ways big and small. I even bought a first-class ticket domestically in case I had to change it, but I later found out that only applies internationally. So, no matter what class you fly, they will screw you and leave a bad taste in your mouth. These policies do not inspire loyal customers.

Abusive bag fees and refusing to provide refunds, even when they resell the seat at double the revenue, would be fraud in any other industry. The airlines in America have been ramping up federal lobbying efforts on a grand scale. The airlines, like the bankers, buy both sides, and in doing so, exempt themselves from anti-trust prosecution. The airlines are following the course of the bankers — just buy Congress and you get to do anything.

The Yen has reversed some of its gains from last week but not before attempting more early in the day. Having hit highs early in the session it spent the majority of the day drifting lower to close over the 108 handle. The Nikkei, therefore, saw the exact reverse having hit session lows early then spent the day edging back to unchanged. We did not witness the same uncertainty in China with the Shanghai and Hang Seng both making ground on the day supported by some early inflation data, which although not matching forecasts did equal the previous month. PPI again eased but less than previous leaving the market a little perplexed.

Asia’s uncertainty rolled into Europe but was soon ignored as indices quickly moved into positive territory. The DAX, CAC and IBEX all gained ground as dealers referred to stronger oil prices which in-turn lifted bank shares. Last week we quoted the concerns many market participants had with banks exposure to the energy sector and they feel to be trading on the back of that volatility. A good day for oil therefore resulted in a healthy day for European bank shares. All core indices closed up around 0.5% with the exception being FTSE which played with unchanged all day.

US markets saw a similar pattern to Fridays trading, when – after opening strong closed on or at their lows. Prices tended to drift as dealers await earning reports and start to see a drift away and into gold but not enough yet to close above the main Daily Bullish Reversal as 1266 (it did close above the 1254 Reversal). Even the performing oil market could not help to support prices. Eventually closing down small on the day but as many traders remarked, “Above the 200 day moving average”.

We saw a little curve steepening within 2/10’s. 2’s closed 0.70% whilst 10’s closed 1.73% closing the spread at 103bp. ECB starts to widen the margins between IG and others as they start their increased purchases from the beginning of April. In opening Monday trading the 10yr German Bund closed almost unchanged at 0.11%, which closed the US/German spread at +159bp. 10yr Italy closed 1.33% (+2bp), Greece 8.68% (-3bp), Turkey was better by 20bp at 9.53% and Gilts closed 1.39% (+3bp).

Those in power are simply liars; why we elect such people is beyond me. We cannot afford career politicians because they ALWAYS create a divide between themselves and the people. NO REPUBLIC has ever resisted converting into an oligarchy. It just does not work. I reported that Obama slipped and actually said the truth by mistake. In the case against Apple, he said if the government could not break into phones then EVERY American had the equivalent of a Swiss bank account in their phone. This is not about terrorism; it is about the hunt for money and their mismanagement of the economy.

Here is the proposed bill to outlaw encryption (encryption-bill-discussion-draft). While this is still in draft version, it demonstrates that it is them against us. Passage of this bill will DESTROY the world economy because of their greed. Outlawing encryption will end the ability to make secure payments online as hackers can gain access to anything that the government can.

Note: I will be speaking at the Hack Miami 2016 Conference for computer programmers in May. We will provide details later.

In the wake of the Dutch vote against allowing Ukraine into the EU, SPIEGEL has reported on the arrogance of EU ministers who criticize the people’s ability to vote. This is why I say they regard the people as the Great Unwashed who are simply beneath their level of intelligence. The leader of the Greens in the European Parliament, Rebecca Harms, explained why she and most in the EU Parliament are opposed to any form of direct democracy that would allow the people to vote. She says this would only come at the expense of Europe and will “jeopardize” the EU, which is their federalization dream. Her remarks make it very clear why Britain should exit or surrender their sovereignty.

Harms goes on to say that only 18% of the Dutch population turned out, so they should be ignored basically. The point is enough turned out in a non-binding referendum because they were passionate about the issue. This is how government becomes disconnected from the people and it historically leads to revolution. This also reflects their stubbornness to even remotely consider that just perhaps their idea of a federalized Europe will not work. Their policy of allowing millions of Muslims in is also at the heart of the Dutch referendum, but that, of course, is not considered.

These comments are the justification for staying the course. There is nothing to prevent the crash and burn for that is the only time such people can be reversed by being thrown out of office. Politicians will NEVER consider that their course of action is wrong. They will follow the course on any subject to the absolute end no matter what. Politicians, judges, and prosecutors all maintain the position that they are NEVER wrong. Nobody will admit a mistake out of fear that it would justify losing power. Hence, the crash and burn is the only possible outcome.

The revelation that David Cameron’s father had offshore accounts through Panama has continued to plague Cameron and could create a nudge toward the tipping point come the BREXIT vote in June. “I know that I should have handled this better, I could have handled this better. I know there are lessons to learn and I will learn them,” Cameron said in response to the building criticism. Yet many are starting to blame the Conservatives for protecting the rich while ratcheting up taxes on everyone else.

The protests in Britain are growing with many asking why Cameron is still there after the resignation of the Prime Minister in Iceland. This may very well influence the BREXIT vote in June. Time will tell.

The Republican elites are extremely arrogant. This is about them retaining control and power; not whatever the people may want.

A new Reuters poll shows that screwing Donald Trump, as they are expected to do, will seriously damage the Republican party. According to the Reuters poll, a third of Republican voters who support Donald Trump may simply turn their backs on the Republicans if he is denied the nomination in a contested convention. Neither the Republicans nor Democrats are in tune with the rising anger against government as taxes rise, benefits decline, and general mismanagement prevails.

The elites who assume the Great Unwashed will return to their soap operas and sports may be in for a real shock. Trump’s rivals who think they will pull this off without a hitch are dreaming. Fools simply vote for Hillary, as if she would ever do anything for anyone besides herself, and refuse to listen to why people have gathered behind Trump. This will result in a devastating outcome for the Republicans, not merely in 2016, but in Congress for 2018.

The Reuters poll asked Trump’s Republican supporters two questions: if Trump wins the most delegates in the primaries but loses the nomination, what would they do on Election Day and how would it impact their relationship with the Republican Party? The majority (66%) said they would vote for the candidate who eventually wins the nomination. However, 33% said they would split between a number of alternatives such as not voting, supporting a third-party candidate, and switching parties and voting for the Democratic nominee. Only 58% responded by saying they would remain in the party while 16% said they would leave and 26% said they did not know what they would do.

Those in Washington like to blow their own horn by claiming the American president is the “leader of the free world,“ but all they do is talk among themselves and the journalists covering politics in Washington who do not actually investigate anything. Let’s just look at this chart as if it were a market. Notice that the Democrats (blue line) peaked with FDR and the Great Depression. They have been making lower highs and have actually made new lows. If this were a market, we would call this a bear market for a bull market requires making higher highs and higher lows. The Republicans crashed and burned into the Great Depression. They have made a reaction high, which is defined as trending higher, but have not made new highs.

The lack of a bull market since 1933 is significant for it shows the gradual decline in the confidence of government. Look closely; the Democrats actually peaked in a failed attempt to rally with Jimmy Carter going into 1980. This is when Reagan came to power. The Economic Confidence Model turned in 1985 and the Democrats have been declining ever since, despite Clinton and Obama.

As part of the accusation that I manipulated the world economy, the government blamed me for the takeover boom because I advised many of the takeover guys. Back then, people thought our forecast that the Dow would rise to 6,000 from 1,000 was nuts. Yet, look at the chart on book value. This bottomed in 1977 with the shift starting in 1985 from public to private; the Dow finally broke through the quadruple top at the 1,000 area and it was off and running. They attributed this to the takeover boom and the government blamed me while ignoring the fact that all I was doing was pointing out that the market was UNDERVALUED because you could buy a company, sell its assets, and double or even triple your money.

This breakout in 1985 was clear evidence of a public v private wave shift where people ignored the private sector for 51.6 years until the public wave peaked on 1981.35. When we correlate everything, notice the shift in politics that has taken place since 1985. Neither party has scored a bull market type of trend; both are dying by slow torture but the majority is not looking at this closely. They do not even realize that this is by no means a bull market for the two-party system.

1964 Lyndon Johnson Democratic……  61.05%
1936 Franklin Roosevelt Democratic..   60.80%
1972 Richard Nixon Republican……….  60.67%
1920 Warren Harding Republican……   60.32%

Above are the elections that scored over 60% of the popular vote victories. We have never seen a real landslide (defined as 75%+). The Democrats and the Republicans have their core constituents who will vote for them because they lack any objective reasoning. Less than 10% of the voting public THINKS before they vote. The rest pretty much regurgitate whatever they are told.

The demographics are obviously changing. Less of the younger generation act without thinking. Just as newspapers and mainstream press are dying, we are witnessing the same trend among voters. The elderly are beginning to die off and the core of indoctrinated believers of party politics are diminishing with their exit.

Sanders and Trump are demonstrating this shift but the establishment does not get it. They say Trump is bringing in new people, but he is not so popular among real Republicans. This demonstrates their ignorance of what this trend is all about and how the two-party system is dying from old ideas and too much corruption. The establishment blames individual candidates like Sanders and Trump and never themselves. They are incapable of looking in the mirror. They cannot see the trend and always see themselves as far more intelligent than the stupid, Great Unwashed.

What is unfolding here is terribly important for in order to have a phase transition, a slingshot move (as we did with the beginning of this private wave in 1985), or even a rally in gold, the key is the collapse in confidence among the MAJORITY; not just the core believers in something like gold. This is the shift from public to private, and as it unfolds, you can see the trend before your eyes if you are unbiased. I have constantly stated that if you just step back and look objectively, the markets reveal the future. Despite all the nonsense, neither the Republicans nor the Democrats have scored any new highs post-Great Depression. Hence, the phase transition in politics and the crash and burn for Republicans in 1932 came precisely at the turning point between the previous private wave and the new public wave that peaked into 1981.35. We saw a phase transition in 1985 with the beginning of that wave and the breakout of private assets.

When we look at the Senate, the Democrats crashed and burned into the Civil War since they were the slave owners. They then became cross dressers and amazingly became the party for Socialists after peaking with FDR. The former slave owner party then changed dresses again and became the champion of minorities. The Republicans were the religious right in the Civil War, became anti-socialist party into the Great Depression, and then became a confused coalition of everything from the religious right to Libertarians.

Gold needs a closing ABOVE 1254.50 to signal a rally. A closing below 1225 would warn of a decline. Between these two numbers is still neutral.

In Silver we nee a daily closing above 1551 on a daily basis to signal a rally but a closing above 1531 today will keep silver in a neutral position. It will take a weekly closing back below 1483 to signal new lows ahead near-term.

The Dow shows a daily close below 17433 will signal a further decline whereas today our number will be 17421. Holding those numbers leave the Dow still neutral.

In crude, we need a Daily closing above 3985 to signal a rally ahead. A weekly closing below 3452 will signal back to the downside.

In the S&P500 Cash, a Daily closing below 203194 will signal a decline. Our weekly number for today will be 201720. Holding these levels keeps the market neutral for now.

In the Euro, we still see the 11695 level as the key area of resistance. Our Weekly Bullish still stands at 11450 and until that is elected, then there is no rally to the 11600 zone. Support is now 11135 and a weekly closing below that level will signal a retest of support ahead.