QUESTION: Mr. Armstrong,
What does your program tell us about cycles of peace?

Respectfully,
SP

ANSWER: Of course. The Cycle of Peace is the counter-trend to the Cycle of War. Like the War Cycle, it is linked to the economy. If the economy turns down, that is when War turns up. I have always said when we are fat and happy, war does not surface. Turn the economy down and that is when aggression rises.

I am not here to scare you to sell you some swamp-land or whatever. If we can get just 10% of the people to understand cycles, then PERHAPS we can change the way we manage society after the Crash & Burn. The first step in surviving the downturns is understanding they exist. This is why the Goldbugs irritate me. They seek to blame others for their own stupidity. Instead of understanding that there is a cycle to begin with, they are no different than Karl Marx and assume it can be always up and never down. When gold rallies, it is real and when it declines it’s manipulation.

I spent time studying the waves in the ocean attempting to predict the next big one. I also went to art school and use to spend a lot more time painting in oil. I was not that great as you can see, but it was relaxing study. I even wrote much of the Greatest Bull Market in History from the beach at Paradise Islands, in the Bahamas. I stayed for probably a month there at the Ocean Club.

Studying wave motion in nature allowed me to see the complexity of wave motion in everything else around us. So yes; there is a Cycle of War and its opposite is the Cycle of Peace. There are always two side like male and female. This is also known as Ying and Yang in Asian culture. It is the merger of these two opposite forces which create the union that propels society. You cannot have one without the other – good v evil. Without evil, it might be very boring.

COMMENT:

hi marty, i am from india. You ve no idea how much your blogs have helped me understand the duplicity of our governments. The Government has made mandatory registering our PAN card with the dealer for any purchase made for even as low as 2 lakh rupees (3600 dollars). They are literally hunting for money.They take everything from us and provide nothing. Thanks a lot. Please keep up the good work.

REPLY: I follow India closely as well. The Pan card (Permanent Account Number) is a code that acts as identification of Indians for tax purposes. They are hunting money in all forms from cash to gold. This culminates in 2017 when the G20 begins sharing info on everyone. Anybody with a foreign account will be revealed to their government. This is why government is collapsing. There is not enough money in the system to satisfy their demands.

In part, it has been the rising aggression for taxation that help to push the stock market to new highs. When in the 2012 report we warned India would make new highs, many wrote and asked if Socrates was drunk? How could we call for new record highs in India and not in China? The markets tell you where things are going if you just listen.

COMMENT:

COMMENT:

Hi Marty,

I have followed your work for more than 7 years now and it is fair to say that you have opened my eyes and mind to how the world and global economy really functions.

This morning on my way to work I read an article in a major newspaper here in Melbourne stating that the Australian Taxation Office (ATO) is now sending employees to hide in car parks at weekend football matches in an attempt to catch taxpayers out using their ‘business use’ vehicles (typically SUVs for which they claim tax concessions) for private use.

There is seemingly no end (or ethical barrier) to this global hunt for taxes.

You cannot even exit a train station here of a morning without half a dozen ‘ticket inspectors’ dressed in para-military like uniforms over bearing the exit gates, just waiting to pounce on, and fine anyone without the correct ticket type.

You were absolutely correct when you referred to Australia having a very high Marxist influence – I worry for where this country is headed.

Ps. What is your view on the Australian economy and Australian Real Estate in the near term?

All the very best
G.

REPLY: This is the sovereign debt crisis in full bloom. In Italy, they have taxmen lurking outside of jewelry stores. Governments are desperately hunting for money as they see it as their own survival. This is becoming THEM against US. They claim the market crashed because of confidence in central banks is declining. Hello! They never had the power to control the economy. It has always been about talking the markets up and down. When G5 was established at the Plaza Accord in 1985, they came out publicly and stated they wanted to see the dollar down by 40%. They TALK the markets up or down and society is stupid enough to think they are in control. The eyes are starting to open for everyone. They will be bug-eyed and in shock by 2017.

QUESTION: Mr. Armstrong; You were named hedge fund manager of the year with the most amazing public track record which nobody has ever come close to matching. You have been named Analyst of the Year. I spoke to people in Australia where you managed a public fund for Deutsche Bank. They said if you would accept money you would get billions in a few weeks. Everyone says your model is the only real thing and that is why the government wanted it. They wouldn’t do that if it was not real. I watched the Forecaster. It was eye opening. Why do you not take money to manage?

Thank You

BB

ANSWER: Some people think that making money is the only goal in life. I have done it all. Been there done that. Being a global hedge fund manager is on call 24 hours a day. I had to watch everything and probably got addicted as did my sources. We still watch the world all the time. Yet, even now, I have a hard time sleeping more than 3 hours straight. I cannot spend what I have and there are more important things. We could sell advertising on the site and that would be more than enough for most people to live on. I prefer not to get involved for every want-to-be analyst/fund manager would be posting ads and I would not care to get involved even implicitly endorsing something I am not 100% sure about.

What I do is trying to take what I have learned and at least attempt to influence what comes after the crash and burn. You can have all the money in the world, but it will not do you any good if you cannot spend it. We are headed into a major crisis that society may not survive. I have a family. I thank God I am not 18 years old and have to live through what is coming. So what I do is try to help them if I can.

I wanted to just retire. I was shocked when so many people came to the WEC conference in 2011. I was told nobody gets audiences like this anymore. We had more than 1,000 people show up to the 2015 WEC. I respect their trust and am trying to port Socrates to the Web. There are ROBO type advisers coming. Funds management as well as analysis is changing. They closed the floor trading in Chicago. Everything is changing and newsletter writers are dying as are newspapers. The yelling and screaming how if you followed their letter you would make $100,000 by spending just $9.99 is coming to an end. The pretend analysts who focus only of a few markets are lost in the confusion. Even IBM’s Deep Blue vs. Garry Kasparov dates back to 1997 when it was the first time a computer beat the world champion in chess. Now a computer has beaten a human champion at a strategy game which is the 3,000-year-old Chinese board game known as Go, which is far more difficult than chess and requires human “intuition” rather than just processing power to win. We are there. A new dawn is arriving where computers can do things BETTER than humans and global economic analysis is one of those tasks.

Trying to port Socrates over to the web is a major project. There is no human analyst who can beat it. But you have to understand the full implications of this. Sure, there will be cheap tricksters claiming to be analysts who will yell and scream and even call this a fraud because they cannot beat it. They attack me personally because they are frauds themselves. I NEVER mention other analysts with all the emails coming in about their bad calls or whatever, I do not repeat them. I do not feel compelled to compete with them whereas they are desperate to compete with me or they would never mention me. What they are engaging in is being a politician saying vote for me because I lie less then the other guy. If you do not have the dignity to stand on your own and you have to try to hurt someone else, that is a refection that they themselves are hurting from the truth and are suffering with the collapse in their business.

At the end of the day, Socrates also proves that government cannot manipulate society to do as they desire. So there are a lot of things that will change with this technology. That is the only thing that interests me – technology advancement. I have more than enough money to live on. I have done this blog for free nor have I sold advertising or clients names because I have not needed the money. There are things that are just more important in life than making money. I have been told that is easy to say because I made mine. Perhaps. But it is my view. Those who do whatever just for money are indistinguishable from a prostitute and will never do what they do really well because they are only doing for money, not for the passion. I really do not want to go back to hedge fund management on call constantly. Why? Yes. The Deutsche Bank hedge fund had the highest return with the smallest draw-downs of anyone. So what else is left to accomplish?

As far as the movie the Forecaster, people do not realize you cannot make a film like that without E&O Insurance. This was not a fictional movie; it was a documentary. That meant everything in that movie had to be verified and then an insurance company had to see the proof to write the insurance. Ironically, everything in that movie had to be proven to independent lawyers before the film could be made. Here is the email demanding the source code or they would shut the company down. Tancred Schiavoni wrote: “we are doing this because Armstrong Sr. has refused to turn over the uncompiled source code for the model that is licensed.” It is true, they would not care about the source code if it really did not work.

Tancred Schiavoni tried to argue I was so smart I had calculated everything they would do to me so effectively I would win in the end. He tried to get Dr Paul Appelbaum of Columbia University to put a number on my intelligence to claim I suppose I was too smart for them to win. When someone threatens you with effectively death if you do not do what they demand, they can push you so far that you lose all fear and stare at them in their cold-blooded eyes and respond; go ahead. What happens next? You disarm them. I believe they tried to kill me. Granted, I ended up in the hospital in a coma for 3 days. But I survived to their dismay.

Dr Appelbaum even testified what my position was correctly stating what I believed the case was all about.

There are two major categories of men which are classified by what they think makes a man. The first is money. They want to make more and more to prove they are successful. The second type seeks accomplishment. I have been in the second category. I could have joined the club and made billions which is monopoly money for playing, not to live on. And you cannot take that with you. Accomplishment is entirely different. What is the fun trying to manipulate the market to make money? Pay off the right people and you have your Get-Out-Of-Jail free card. That is not accomplishment. Making money and beating the market itself is the goal with very high standards and a real mental challenge.

I do not need to compete with anyone. We do not even advertise. What I do I do for the love of analysis. Life has been like reading a thriller novel. How can I put it down before I reach the end? I just want to see how this unfolds and then I am ready to depart – enough if enough at some point. I personally believe as Socrates told the court when he was sentenced to death. It was either a mid-summer night’s sleep so peaceful not to be disturbed by a dream, or it was the migration of the soul to see all your old friends. Either way, he say, he feared not. That philosophy has sustained me through thick and thin.

The Nikkei re-opened after yesterday’s public holiday but again was sold from the open. The key banks suffered yet more liquidations eventually closing Mitsubishi UFJ -2.3%, SMFG -4.1%, Mizuho -3.7% and the main Nobel House (Nomura) was down 9.2%. Exporters also suffered Toyota, Nissan and Sharp all down between 6 and 10%. The Nikkei closed down 4.8% just below the 15k level to end an 11% decline for the week. It is worth noting that late Friday evening the Nikkei futures are currently bounced 3.5% since the Tokyo close.
European shares produced a much needed bounce ahead of the weekend and saw all core markets closing between 2 and 3% higher on the day. Energy prices were the main excuse used by dealers but prices were very stretched on the week and so profit-taking was probably expected. Oil bounced almost 11% at one stage in the day. Given the bounce in commodities shares such as BP, Tullow Oil and Total all saw healthy buying producing returns of between 8 and 11%. Anglo American was one of the better showings (+17%) but also Glencore (+12%) and some banks benefited. Deutsche Bank and Soc Gen closed +11.8% and +18% respectively.
In the US all cash markets opened firmed following Europe but then went from strength to strength. The DOW eventually closed up over 300 points (+2%) closely followed by the broader S+P (+1.9%) and the NASDAQ (+1.7%). Everyone was talking about the UAE’s proposed handling of an OPEC production discussion and it was very healthy to see them stepping-up. Monday will be interesting as we have finished an extremely difficult week on a much better note. However, as the Chinese market re-opens on Monday the US market will be closed for Presidents Day. In late trading the VIX dropped back to around 26.

Gold held onto most of Thursdays gains, traded in a very narrow $1235-40 range closing mid-price $1238. The US Treasury market however, lost a lot of their mood and closed over 9bp higher (lower price). US 10’s eventually closed 1.74% against a close Thursday of 1.65%. In Europe the German Bund faired a little better (still working that the biggest buyers remains the ECB) closing tonight at 0.265%. The US/Bund 10yr spread closes +147.5bp. Italy 10yr closed 1.64% (-6bp), Greece 10yr 11.03% (-9bp). Turkey 10yr 10.42 (-6bp) and finally 10yr Gilts closed 1.41% (+11bp).

Talk between dealers this week has been around the JPY, stocks (obviously), oil and then a huge discussion as to whether QE actually works! Especially having heard Janet Yellen’s response earlier in the week and the fact that Japan has been “active” since the mid 90’s and now the 10yr JGB trades negative! We have the G20 end of February and given we have seen huge volatility become the norm – Central Banks must be questioning the whole process themselves.

We have two Weekly Bearish Reversals in play today. The first is a key level at 15994 and the second is short-term at 15942. Certainly, a closing beneath both will warn that the Dow may break to test under the 14000 level going into as late as the week of February 22 near-term and possibly extending into March.

The Monthly Bearish Reversal will come into play if we break and that lies at 13937. This is the number that would mark a more sustainable break to the downside rather than a short-term correction. So pay attention to this number for this defines the broader-term for now. We also have a Monthly Bearish Reversal at 16015.  This is short-term. The Monthly Bearish Reversal that would signal a bear market trend into 2017 would be a Monthly closing BELOW 12470. This is where we draw the line in the sand for this move. Because March would be 10 months down from the May 2015 intraday high, that potential remains in play.

Using our What-If models, if we manage to break and test the 13000 area, then the corresponding Monthly Bullish would be generated at about the 16505 to 16590 level. From a timing perspective, the final intraday low could extend into March if we elect both of these Weekly Bearish Reversals today. So pay attend and get ready to rock and roll.

QUESTION: Mr. Armstrong. Are you calling this rally in gold a false move? What does it take to get you bullish? Will you ever be bullish?

ANSWERWhen all markets line up and display that there is a trend in motion, which is then definitive, I will clearly state so. Gold has performed in a typical manner. When it closed ABOVE our year-end number of 1044, I stated it was not as weak as it appeared. It then started to elect ONLY the Bullish Reversals, not Bearish. There was a turning point coming up and it was moving higher into it. So what is the big deal? The Dow closed lower at year-end, warning of a correction, and the euro should rally back to the 113 to 116 level. Everything was in line for a reaction, not a major long-term change in trend. That would require political reform in Europe at the very least. Here is the technical analysis for today. It shows the extreme resistance at 1315, and underlying support at the 1216 and 1207 levels. It simply is what it is. This is not opinion nonsense.

Your problem is you see the world through the eyes of gold and ignore everything else. If you dared to be objective and study the past market movements, you would see that real SUSTAINABLE trends are coordinated. You have a reaction in the euro that I warned would unfold when we elected the Yearly Bearish Reversal at 116 for the close of 2015. I said we should go back to retest that number BEFORE moving lower.