A reader has contributed these charts that demonstrate why the socialist agenda is destroying the world. As the reader points out: “It seems that the optimal govt spending (share) is max 35% (US, AUS), and not >50% like in Europe. Lower govt expenditure has doubled GDP at least in the recent history.” The socialists refuse to listen simply because they are greedy. If you earn $1,000 and your rent if $200, your disposable income is $800. If government demands 10%, you have $720 to spend; if government demands 50%, you have $400. This is why we call them “public servants” for they consume wealth; they do not produce it.

The OECD has done studies but nobody ever pays attention. Any way you cut it, the larger the share of the economy consumed by the government, the lower the economic growth. So the sublime fool never looks at the data and simply regurgitates the same socialist propaganda into infinity. They live in a state of total denial simply because the core of their position is sheer material jealousy. They justify robbing other people because they lack the wealth they wish they had. It is just a question of greed.

We saw healthy performances across all Asian Indices amongst the G20 headlines. There is much talk about additional fiscal stimulus coming from China whilst Germany takes the opposite view (expressed by Wolfgang Schaeuble) stating that easy monetary policy “risks serious side effects”. Core indices closed higher on the day (Nikkei +0.3% and Shanghai +1%) but it was Hang Seng that saw a strong rally in the last hour of the week to close up 2.3%.

 
The rally in oil prices is being talked by European equity traders as the primary reason for today’s rally in stocks. We are seeing some big names (RBS for example down 8%) having a difficult day but the vibes coming out of G20 are all positive – so far. The Italian Finance Minister is at odds with Mr Schaeuble but I’m sure Mario Draghi will address that one on March 10th (next ECB meeting). DAX, CAC, FTSE and IBEX all closed around 1.75% up on the day.

 
In the US we saw some good sentiment numbers (Michigan 91.7 against an forecasted 91) and some better inflation numbers (compared to the Eurozone looking at zero) but added to the late turn in oil and dealers are concerned the FED may be in play again, later in the year. Stocks reversed their early triple digit gains to close the day little changed (DOW, S+P small down and NASDAQ small higher). The more the US markets react to this kind of data the more pressure it piles onto Emerging Market countries that import and/or are running USD deficits. The FED will be have to decide (again) against domestic or international responsibilities.

The race for USD’s is beginning to heat up. Friday’s Money Markets are always USD illiquid but are becoming even more so now that the EM capital flows have decreased so much. The USD remains the pride of the fleet with almost not competition in sight. The Euro, GBP, JPY and INR all lost around 1% in late US trading, taking the DXY up to 98.11 (+0.9%).

The reversal in stocks came a little too late in the day for the Bond markets but they will show their reaction on Monday morning. The question there is do they follow domestic data or is the international demand large enough to lift prices and lower the yield? There is a very good argument for curve flatteners so it will be interesting to watch 2/10’s in the coming few weeks (closed this evening at 97BP). US 10’s closed tonight at 1.76% with Bonds at 2.63%.

 
German Bunds closed 10’s at 0.145%, closing the TY/RX spread at 161.5BP. Italy 10yr closed 1.47% (-4BP), Greece 10’s closed 10% (-24BP), Turkey 10.38% (-8BP) and UK Gilt at 1.40% (+3BP).

All the pundits on TV are expressing they are shocked that Christie has endorsed Trump. I really cannot imagine the surprise. Politics is supposed to be their expertise. Trump needed a VP who was at least establishment to placate the elites. Cruz is a no go and Rubio is showing how nasty and immature he is to hold office. He is a lawyer so he knows how to cross-examine and he is desperate because he is losing his own home State so he lashes out at anything and everything losing his cool.

If Trump wins 8 of the states on Super-Tuesday, it is game-over. Rubio cannot swing the people for Trump in his direction because they are angry at career politicians. There is no insult he can hurl at Trump that will have any impact. Trump leads Rubio 44% to 28% in the Florida, his own State. If Rubio loses Florida, it is goodnight Irene. Trump would have to be insane to pick Rubio or Cruz for a Vice President. It looks like Christie will be his choice. He satisfies the criteria and Christie was the only one saying the country is going broke and Social Security has to be overhauled. He proposed drawing the line in the sand at 50. Let the younger people actually have a retirement plan while the over 50 crowd will just have to be paid out. That is the first honest proposal I have heard from anyone. So a Christie VP would make very good sense.

Christie joining Trump makes total sense when the elites, such as Lindsey Grahm, never considers that the establishment may be wrong, he says the Republican Party has simply gone “bat-shit crazy” to elect Trump. This illustrates how disconnected the career politicians really are from the stirrings within the people who realize something is not right.

The computer has been warning about the 2016 election since 1985. This is Ross Perot 2.0. It is going to be a tight race. But the Republicans should have a slight overall bias. We will run our models with updated data once we get the candidates selected. Keep in mind, Rubio vows to go to the convention because he is hoping Trump is NOT elected on the first ballot and then the Elite will swing to Rubio. The delegates are only bound to vote for Trump on the first ballot. After that, they vote whatever they desire. So this game is still afoot and we cannot yet even rule out a third party. If they rig the convention, you can bet Trump will run independent.

A comment by a reader with a philosophy is interesting and delusional at the same time. “Armstrong chose not to seek any compromise but to put all the blame on government. In principle, that’s got to be an absurd point of view. So it seems to me. One more thing, to his alleged factual correlation. Government really began to grow during the Roosevelt years, including the war years, and the economy has been growing ever since. Is your buddy playing fast and loose with history and, hence, with reality?”

Corporations only have influence because they buy government and that is possible only because we have career politicians. Corporations cannot run the world for they compete against each other. We do need government, but an honest one. The only way to achieve that is with shorter one-time office terms. It should be more of a citizen government and any conflict of interest is a bar to any office in any capacity. Cruz’s wife works at Goldman Sachs. Hillary will not release transcripts of her speeches for Goldman Sachs. They buy candidates and own Washington, DC. We deserve what we vote for and stupidly believe in. We are the fools who soak up all the lies each and every time and then the press is anything but independent and free. Hillary has raised tens of millions from the very banks on Wall Street she claims she will stand against. Come on. If that was remotely true then they would not give her a dime. They call Sanders and Trump dangerous because they are not bought and paid for by the bankers.

More over, the idea that we have lived in some fantastic socialist era with GDP always expanding is an outright LIE, if not a delusional statement by someone who refuses to look at the trend. At the top is a chart of the government’s own source, the Bureau of Economic Analysis. GDP growth has been declining steadily as taxes rise. Like China, its first blast of GDP growth came at the beginning. It was true for the West as well following World War II. GDP growth has steadily declined to where a good number is less than population growth. Social Security collapses in 2017 as illustrated by this second chart, which was also prepared by government. This is the entire problem. People are clueless as to the trend and do not want to open their eyes to reality.

Why do the NY bankers fund the bulk of the candidates? Well certainly to buy their get out of jail free card. There is no possible way they will ever criminally imprison the bankers who have destroyed our future, because then who would FUND people like Hillary or Cruz? Secondly, if socialism is not a bullshit story, then why have we reached, at times, 70% of the entire national debt in accumulated interest? That money created neither schools nor roads and did not feed children or fund welfare. The bulk of the debt has been interest paid to the bondholders.

Why is the youth going for Sanders and Trump? Why do we have a generational gap in voting that first appeared in Scotland? Socialism is collapsing because the older generation has paid into a system that they do not want to believe is falling apart when it is time to get theirs. So they live in a delusional world that ignores everything factual around them and they cannot see they are robbing their own children of the very life they enjoyed.

This is a chart from the OECD which clearly shows that higher the tax rate, the lower the economic growth. I for one hope the country splits in two and we can build a wall, not between Mexico and USA, but between left and right. Let all the left socialists who want to steal from everyone because they can and so they do not have to earn in life live on one side of the wall and chase each other in circles. The rest of us can live in peace. After all, it is one of the Ten Commandments — “Thou shalt not covet their neighbor’s goods.” The pope says building a wall is not Christian. That is not one of the Ten Commandments. It is not being Christian or Jewish to drool over robbing other people’s money. Christ did not preach socialism by government force. It is no longer charity when it is involuntary.

In my mind, the legal challenge against income tax (which requires the surrender of privacy) is that such taxes violate the First Amendment, freedom of religion. Socialism, progressive taxation, as well as the coveting and hatred of anyone who has more money violates the Ten Commandments. This is no different from communism, which preached the state was your parent, not your biological parents, and if they said anything against the state then their children were obligated to report them. Marx also said, “Religion is the opium of the people.” Socialists should admit the father of their beliefs and what he stood for — there is no God.

I have stated that Trump is the symptom and he is soaring because confidence in government is collapsing. The 2016 Edelman Trust Barometer, an annual global survey that assesses various levels of trust, reveals this shift from public to private as reported by Forbes.

The impact of the collapse in oil is having dramatic effects on taxation in the Middle East and suddenly on the issue of government debt. The UAE will implement a 5% value added tax (VAT) beginning January 1, 2018. UAE Minister of State for Financial Affairs Obaid Humaid Al Tayer made the announcement after listening to Christine Lagarde speak at the IMF conference. In fact, he made the announcement at a joint press conference on Wednesday with Lagarde. However, our sources within government have relayed that income taxes are likely perhaps within 2 years as well.

It appears that Lagarde is bringing French socialism to the world since it was the French who dreamed up communism and sold that idea to Karl Marx. What is ours is always theirs and never will they consider reform.

Shanghai was the talk between many dealers again this morning after we saw heavy morning selling accompanied by afternoon selling, which resulted in a 6.4% decline in the index. Financials were one of the leaders as the FX yuan mid-point rate was set lower at 6.5273 to the dollar on Tuesday and on Thursday at 6.5318. Uncertainty around global growth continues to nerve markets and after today’s fall in the Shanghai Index is down over 22% for the year. The Hang Seng was also under pressure, but not to the same magnitude as Shanghai which lost 1.6% on the day. The Nikkei actually bucked the trend recording a 244 point rally (1.4%) reclaiming the 16k level. Talk is the BOJ may look to direct asset purchasing as the next step as NIRP is debated. Late in the U.S. trading session, we are seeing Asian futures bouncing from previous losses with HSI and China 300 both higher by 1% from their cash close.

Given the Asian mood, one could have been forgiven if they expected a lower European opening. However, the mood was surprisingly upbeat and core markets opened strong. UK was lifted with a stronger Q4 GDP print (0.5% est. was 0.4%) resulting in a 2.5% rally in FTSE. Lloyds reported a 5% better than expected full year numbers. The DAX, CAC and IBEX all closed between 1.5 and 2.5% higher on the day.

Better than expected Durable Goods (4.9% estimates were for 2.5%) set the mood for the U.S. and we did not look back from there. Late in the afternoon session, we saw a healthy 3% bounce in the price of oil which certainly helped confidence into the last hour of trading. Dow, S&P, and NASDAQ all close around 1% higher on the day.

Gold and silver have traded in a narrow range today but the bid remains — for now! Closing on the day almost unchanged at $1234 with silver falling -0.8%. U.S. Treasuries are well bid with 10s touching the 1.7% again. The belly of the curve (5’s and 10’s) performed rallying 4.5BP whilst 2s and bonds rallied 2BP. Germany saw 10s close 0.14% closing the spread TY/RX at +156BP. Italy 10s closed 1.51% (-2BP), Greece 10.24% (-5BP), Turkey 10.46% (-8BP), and UK Gilts closed 1.36% (+1BP).

USD continues to push boundaries, especially when talking about GBP or INR. Again, these markets are drifting and both have taken out serious support later (1.40 GBP and 70 INR). We will be looking at these for month-end numbers. G20 starts tomorrow so watch screens for early clues. Also, tomorrow we see the second reading of U.S. GDP for Q4. Estimates are for 0.4% against a previous 0.7% and sales are expected at 1.1%.

When we left the Asian and European session you could not give equities away, and this evening everything has seen an about change! No, for us this is confidence and the devil you know pitted against the devil you do not. The USD has been the key achiever across all time zones and although it may be stretched at times it will always return. In Asia, we saw a mixed session with Shanghai finally making ground against both the Nikkei and HSI. All core European markets found it heavy going today. With oil prices hitting an almost 4% decline closely followed with a 1% hit for the euro and cable, it is not a surprise we saw a 2% decline across the board. BREXIT was the main talking point with GBP passing hands quicker than a hot potato. Markets feel extremely nervous and a declining oil price does not restore confidence. Miners remain the leaders with some stocks (Glencore and Anglo Amer) closing nearly 10% lower on the day.

In the U.S., we saw weaker prices with the Dow off over 250 points at one stage. However, all was not lost and there was a bounce in the price of oil after the Venezuelan oil minister declared he did not believe the oil glut would continue and that producing countries would eventually work together to restore confidence. Also, the DOE weekly crude was about half the number expected. The bounce in oil later in the day was a huge relief to many and, from a 4% drop, we eventually closed up 1.5% higher. A healthy bounce across the board saw Dow, S&P, and NASDAQ all off their lows to close up on the day.

Gold saw the reverse roller coaster ride having seen daily gains of around $30 ($1252 intraday high) we eventually closed with small gains at $1226. Fixed-income benefitted again but that was also not to last. U.S. 10s traded as low as 1.65% intraday only to close almost unchanged at 1.74%. By the close and after the rally had settled-back the curve eventually closed small changed with 2/10’s at +100bp. Germany 10s closed 0.15%, taking the spread to +159bp. Italy 10yr closed 1.53% (+1bp), Greece closed 10.30% (+3bp), Turkey 10.54% (+8bp), and finally UK Gilt 10yr closed 1.36% (-7bp).

Overnight the markets remain jumpy but confidence has probably been restored for the European open if Asia behaves. Tomorrow we have small data; Italian Industrial Orders early, UK Mortgage approvals, and they are closely followed by German long bond tap of DBR 2.5% 2044’s at 10:30 AM (London time).

QUESTION: Mr. Armstrong; The World Economic Conference was outstanding. Your theme that Europe was the focal point for the coming chaos has been proven valid with each passing day. You have mentioned this is the time that will begin the collapse in public confidence within the EU even surviving. I must ask. Do you believe if they call you in and followed everything you have said, is it just too late to save Europe?

Thank you so much

PB

ANSWER: Unfortunately, I know how to restructure Europe so it would function, but I do not believe that would even be sufficient at this stage in the game. We have probably reached the point of no return. All that is now left is the crash and burn. Only then will society reform. I simply believe we crossed that line last year. We began a new declining cycle in 2008 and that was the peak in the euro as well. The start of the real decline in the euro where mainstream capital begins to question when negative rates can really reverse or stimulate the economy unfolds after 2016.202. This comes into play March 13/14, 2016. This is not my personal opinion. This is just the modeling.

This seems to be so important that we will try to put together a video on this matter.

COMMENT: Marty; it has taken me some time to digest your thinking. I just wanted to say you have opened my eyes and I can see the connections. Trump is a symptom and not the cause. The press and politicians treat it as if they can defeat him they will reverse the trend. They do not understand what is going on. Step back and you see it clear as day.

Thank you for your enlightenment

BB

REPLY: Trump is rising in the polls not due to anything BUT the trend in motion. If it were not Trump, it would be someone else. This is Ross Perot 2.0. Even if Trump loses, there will then be Trump 2.0. This trend is non-stoppable. The political process has degenerated into blathering and patronizing speech that lacks substance.

Candidates are taught how to deliver speeches written by their handlers that sound like they are saying something by implication, yet indeed, there is never any commitment to a specific policy by which they can be judged. They love sayings that refer to how they will make the rich pay, despite taking most of their money from the rich. Would Wall Street donate half the money a candidate has if they were concerned that the candidate would prosecute the very people who gave them money?

Others lash out at Obamacare without a clear plan to replace anything. When it came to the Supreme Court decision, the Republicans were happy the Supreme Court retained Obamacare. Why? They are relieved of any responsibility and they do not have to come up with an alternative. Hence, declaring an intention to speak and act with such resoluteness criticizes the current president, which capitalizes on their constituent’s suspicions. Yet, there is no obligation to pursue a specific policy once in office. It is a way to imply a policy and retain the ability to say they never promised such a policy. This is our modern-day politics.

Trump is speaking from the inside and those running from the establishment either lack such ability or are so use to memorizing what to say that they are no different than an actor in a movie. The public is yearning for clarity and truth for once.