Socrates Blog Subscribers Only

It is a sad state of affairs when, after a terrorist incident such as yesterday’s events in Belgium, how quickly the markets have accepted it and within a few hours priced out! This is both a reflection of what is becoming “a horrible accepted norm” and also the lack of market participants. Even though Asian exchanges had closed ahead of events yesterday, in today’s session they hardly moved and were actually more concerned with the 17k level for the Nikkei and 3k for Shanghai.

In Europe, dealers had a lack of data to really get excited about and were reduced to watching oil and gold again. All core markets traded in a tight range where we saw miners and energy companies decline whilst tourism and some bank stocks recovered. IBEX was a slight exception with a loss of nearly 1% on the day.

Even the U.S. session has been a slight disappointment with volume low again and what can only be described as a slow drain into the close! When markets are this quiet, dealers look around for excuses. Today, it is the long weekend ahead and the uncertainty as oil slipped into the close.

They are blaming the fall in oil prices today on increased stock piles, the fall in demand, and new players producing. This is nothing we have not heard for the past year, but the lower the price, the grander the percentage move sounds. Tonight we closed below $40 again.

Gold is selling off on rate hike fears (FED) and on rumors of more central bank selling. Gold has been one of the best performing assets, having rallied over 16% this year and so a 2% decline will hurt today. The YTD performance remains good.

As stocks drifted in late trade so the bids appeared for Treasuries. The curve flattened today from 5’s out with all (5’s, 10’s and 30’s) falling by 5bp’s. The 2/10 curve closed this evening at 102.5bp (-2.5bp from yesterday). Meanwhile in Europe we saw German 10yr Bund close 0.195% closing the US/Germany spread at +168.5bp. Interesting that todays 30yr Bund auction was another technical failure not clearing closing the day at 0.895%. Italy 10yr closed 1.29% (+4bp), Greece closed 8.48% (-5bp), Turkey 9.88% and finally UK Gilt closed 1.45%.

The final word goes to the strengthening US Dollar yet again. Main mover was again the depreciation of Cable (losing another 0.7% today) last seen just trading under 1.4100. This decline pushing the DXY stronger and was last seen trading at 96.06 (+0.5%) against the basket.

The Winds of Politics for the coming 2016 U.S. Presidential Election

QUESTION: Martin, so on this thread topic “Are Terrorist Attacks Following the 8.6 Year Frequency?”

As they say hindsight is 20/20… and you are connecting the dots and showing the “synchronicity of events” in a 20/20 way…however, I know your Socrates AI can’t predict what will happen as far as “terrorist attacks” but when is the next important attack date??? Can Socrates predict that NEXT IMPORTANT date to watch?

Thanks as always for your Great Teachings!!!

SH

-Los Angeles, CA

ANSWER: It appears terrorist groups are acting in a cyclical manner like everyone and everything else. So in part, you can most likely forecast when something will happen. However, I do not think it would be possible to forecast where since that would require a historical data series to look for repetitive patterns. There could also be some factors that cause a delay. For example, if the Madrid attack blew up the train on the 4.3-month interval, it would have been on March 1. However, that took place 10 days later. So was it planned for the first but then something delayed it? It is an interesting question. A few days seems to be within the potential of “noise,” which we may classify as an intent, but something caused a delay.

The point here is that just like markets or politics, there is always a cycle that emerges. There have been enough terrorist attacks to provide a data series from which we can ascertain a cycle to their activity.  That simply applies to whatever the activity might be. I would not say our systems can predict where without a longer data series. But the “when” seems to be a rhythm for each group like a fingerprint.

Even if we published the frequencies per group and they read that and decided to change that pattern, they would still fall into another pattern. It is much like programming where it is impossible to create a random number generator. You can create a very complex algorithm, but no matter how complex, a cycle will always emerge. So the “when” is predictable, but not the “where.”

We have many readers in Brussels who have my sincere sympathy for what is taking place in Europe. I have hesitated to be an alarmist with this aspect of our war cycle, but one reader sent this note today:

Dear Martin,

I could have been one of the victims today since I passed the Maalbeek subway station (100m from my work) 15min before the attack. This is a really strange thing to experience.

Will this be an important, post 2015.75, game changer since it was in the middle of the European district?

I’m disappointed that mankind, not only in Belgium, can be so cruel. Luckily, there are also good people who care.

Thank you for teaching so many of us via your blog.

TM

It is time to reveal what appears to be taking place with incredible precision, which has surprised me. The Paris attack was November 13, 2015, which is 2015.868. Today’s attack in Brussels was 2016.221. The difference is .353 which of 365 equals 128.845 days. Divide that by 30 and we get  4.2948. If we look back 4.3 months from Paris, we arrive at July 7, 2015. On that date, the al-Shabab Islamic extremist rebels from neighboring Somalia conducted a terrorist attack in Kenya. That same day, there was a terrorist attack on a NATO convoy in Afghanistan.

Putin invaded Syria precisely on September 30, 2015, which was to the day of 2015.75. That warned that whatever takes place right on the day becomes the main focus. Putin then withdrew precisely on pi day. So what is taking place from the Middle East will break the back of Europe economically as governments seek to raise taxes to pay for the pretend “refugees” as well as extremists who have infiltrated Europe and destabilized its borders and security. This is unwinding the entire freedom of movement within Europe which was the cornerstone of the EU concept. With borders resurfacing, Brussels begins its decline.

Even 9/11 took place right on our pi target from the peak in the ECM. This is starting to demonstrate that there is, in fact, a cycle to this type of activity that is following the 8.6 frequency. The Madrid attack on the train was March 11, 2004, or 2004.19. If we project target dates from the USA 9/11 incident, we arrive at 2004.16, which was March 1 or 10 days earlier before the attack. We have been running various terrorist attacks through our models. The list is indeed long (see Wikipedia). Nonetheless, it appears that certain groups do fall into unique cycle frequencies. This appears to enable one to determine which group was behind what.

2002.780 Indonesia Bali Oct 12, 2002
2002.810 Moscow October 23, 2002
2003.372 Morocco, Casablanca May 16, 2003
2003.361 Riyadh Saudi Arabia May 12, 2003
2003.887 Turkey, Istanbul November 20, 2003
2004.191 Madrid March 11, 2004
2004.668 Beslan, Russia September 1 – 3, 2004

Let’s face the facts. The Economic Confidence Model works with such precision it is often mind-numbing. This is monitoring human activity as a coherent, collective economic entity of “civilization” that materializes by people coming together. I suppose it makes sense that we are influenced collectively to respond with a cyclical rhythm. It appears the same is reflected in terrorist activity.

QUESTION: Dear Mr Armstrong

An anecdote and a question If I may…..

My parents were selling their average 3 bed terrace house in Tooting Bec, SW London for £800,000 in Summer 2015. My mother got ill and poor weather meant roof repairs were needed so they took it off the market.

In February they relisted it and on the advice of the agent put in on for £900,000. If the price of £800,000 wasn’t eye watering enough for an average home in an average neighbourhood, it rose £100,000 (12%) in six months.  I told them to take the hand off the first person to walk through the door!! It was bought in 3 weeks.

The price rise spike is largely due to a 3% increase in Stamp Duty Land Tax that will apply to all second home buyers on 01 April 2016 so there is a mad stampede to buy before this deadline.

I wondered if the date of 01 April 2016 corresponded to any particular cycle as it seems that it might the date of a spike in (London) house prices?

Thanks for the writings.

I learn a little more each day

J

ANSWER: London property, where all the foreign capital rushed to, peaked with 2015.75. The peak in the peripheral markets comes later. That appeared to be the first quarter of 2016. The foreign capital first causes the core to rise in value. When people begin to see downtown London rise in value, they will begin to buy the peripheral markets that the foreign capital does not. This is why the core is always the first to rise and the first to peak as well. This is standard in everything globally. In the stock market we warned that as we entered 2014, the S&P 500 would start to take the lead from the Dow. The Dow was the attractive market for foreign capital. That will lead the way back up as well.

The politicians also respond to rising prices with new taxes. They never saw a profit they did not want to grab. For those outside of Britain, they would be horrified to learn what the stamp tax is all about. I dare to say a basic family home has effectively a 5% sales tax. I hate to even show this one because I fear other politicians will get the idea and say, “Wow! Found money!”

There is no question that the establishment will deliberately try to hand the election to Hillary because they are scared to death of an outsider coming in who might start vetoing their pork deals. All my sources are screaming that the establishment will do whatever it takes to stop Trump. By no means is this about ideology. They will not accept an outsider at the helm, no matter what the people want. They are now talking about creating their own third party candidate that they can pretend to vote for so they do not have to publicly support Hillary. This is getting really interesting but it is highly questionable if the Republican Party will survive intact.

The Democrats are composed of various groups from women and minorities to gays  and socialists. Somehow, they are all pointing in the same direction. The Republican Party is not so blended; they have the staunch neo-conservatives, libertarians, religious right, and the Tea Party just to name a few. They constantly clash over issues, and as a result this is the party that tends to split. This time, it appears they are signing their own death warrant. This is even becoming public news.

Will enough Americans become angry at the attempts to manipulate them away from Trump? A surge of new voters support Trump just because the elite are trying to prevent him from becoming president. We live in interesting times. The computer is showing very high volatility come November.

We have prepared a special report for our Canadian clients on the Canadian markets that includes the currency, share market, and real estate by city. The cities covered are Calgary, Halifax, Montreal, Toronto, Vancouver, and Winnipeg. This 35-paged report will be delivered within three business days by email. The price will be $125.00.

To purchase the report, please visit our store or click here.

Note: We are working on the instant download function for reports. That is a top priority. It is not quite ready for prime-time just yet. We will let you know when this delivery system will be ready. For now, this report will be sent manually.

Shortly after the European open news broke of the Belgium terror attacks and we saw the usual flight to quality. Treasuries rallied, as did Gold and the US Dollar while stocks fell and in particular airlines and travel companies. At one stage we saw the DAX down over -1.5% with CAC, IBEX and FTSE not far behind. By the close of business most indices had recovered as had Gold and Bonds but the USD has held its ground – especially against GBP.

Barclays stock was a talking point between dealers today after they suffered a price cut by Goldman resulting in a 2% decline on the day. On the data front we saw German IFO (Business climate indicator) and then an hour later the ZEW (confidence) release. The IFO was mildly better than forecast (106.7 against a 106 estimated) but that was balanced by the ZEW which was estimated at 53 but released at 50.7. Despite the early confusion and a mixed bag of data releases most core indices closed better on the day. However, the DAX remains below the psychological 10k level.

Japan’s return after a long weekend was a relief for Asian market by providing a 2% amist a sea of declines. China returned some of yesterdays gain and closed down just -0.6% and the HSI almost unchanged. Shanghai continues to play around the psychological 3k level and in late US trading China 300 futures are edging better +0.5%.
We saw another mixed session in the US markets eventually ending with small gains. After the initial concerns over the terror atrocities in Belgium, the nervous cash open was fortunately the lows of the day and prices rose with confidence throughout the rest of the session. Markets are hearing more from Fed speakers after today, we heard from Charles Evans (Chicago President) and so it is not surprising the market watches the spread between rates and the presented “Dot Plot”.

In the Treasury market the curve saw an under-performance in the belly as 5’s and 10’s gained 4bp whilst the 2’s and 30’s gained just 1bp. 2/10’s closed tonight at +105bp whilst 10/30’s closed at +76bp. The nerves in Europe kept the bid present for Bunds with 10yr closing tonight at 0.21%. That closes the spread US/Germany at +173bp. Italy 10yr closed 1.24%, Greece at 8.53%, Turkey 10yr 9.88% and UK Gilt closed 1.45%.

The USD returned a lot of the early gains made when we saw the flight to quality but not against GBP. The UK CPI print at 0.3% it was a disappointment as market was expecting a 0.4% print. The more talk we hear from Fed members the more the trend will continue. Against the backdrop of a quarrelling British government, an obvious slowdown in UK growth, the BREXIT debate heating up and now talk of US rate rise possible next month GBP does not have many friends.

Brussels Airport was attacked and we are getting reports that there were explosions heard in the rail station.