Stocks & Equities
Our Panic Cycles began to turn up this week moving into next week. If we penetrate last year’s low of 15370, then we may see a drop to retest the major support area in the 12875-13100 area. We should break the market FIRST and this appears to be setting up for the extension beyond 2017. A monthly closing below 16013 will signal that the market should crack and then we will be set up for a really wild rise.
Our view is that the risk-reward for equities has worsened materially. In contrast to the past 7 years, when we advocated using the dips as buying opportunities, we believe the regime has transitioned to one of selling any rally. Yes, stocks had a rough time most recently, and some of the tactical indicators, such as Bull-Bear at -16 which is at the bottom of its trading range, argue for a short-term respite. Clearly, equities are unlikely to keep falling in a straight line, with periodic rebounds likely. However, we believe that one should be using any bounces as selling opportunities.
On December 16th 2008, in what Ben Bernanke said took a tremendous amount of “moral courage,” the Federal Reserve officially arrived at its Zero Interest Rate Policy. ZIRP was a huge win for borrowers because it drove down the carrying cost of debt to historic lows. Unfortunately, savers didn’t fare as well…
Those frantic savers were forced to reach for yield far out along the risk curve. And an obliging Wall Street issued over $1 trillion in new junk bonds at the lowest spreads to Treasuries in the 35 year history of the junk debt market. To put this in perspective, the entire high-yield market had previously hit its frothy peak of $1.2 trillion in the bubbly days of 2007. But in October of last year.…
Many were talking about the market crashing last week and the mainstream financial press were waxing hysterical, but as we will now see the crash hasn’t even started yet. If the press got like that last week, imagine what they will be like when it really does crash – last week was just a “warmup”, the 2nd and final warning, the 1st warning was the plunge last August.
On the 10-year chart for the S&P500 index, we can see that while the market did indeed drop hard last week, it still has not broken down from its Head-and-Shoulders top, the lower boundary of which is shown by the thin black line. When it does break down from the top area, there is an awful lot of air below it – it has a long, long way to drop, and the decline is likely to be precipitous.
The ‘Crisis of Trust’ Signals a ‘Failure of Leadership’
Recent research released by both the Pew Research Center and Gallup warn of an accelerating erosion in confidence in the US government, politicians and the political process. It is clear to most Americans that we have a growing “Crisis of Trust” which is signaling a “Failure of Leadership” as governments steadily exert increasing power and authority over our lives!
Four Years Ago We Became Seriously Alarmed!
In the fall of 2012 having become seriously alarmed, we wrote our annual thesis paper entitled “STATISM” and laid out the frightening direction we saw in US political leadership. We had initially hoped it was a cyclical pattern which had reached a cyclical bottom.
We Focused, Mapped & Tracked It
Our subsequent research efforts have resulted in a large supporting video library of expert guest interviews at Macro Analytics embellishing on each of the sequentially emerging boxes in the following road-map and additionally the creation of the Financial Repression Authority to understand how our sacred public freedoms were being unwittingly surrendered through financial bondage.
The detailed research included a focus on the driving linkages between the identified stages as the developed economies (and the US in particular) accelerated towards more centralized government control of almost all facets of our lives.
Where We Find Purselves Today
The facts are overwhelming and indisputable for anyone taking the time (which we did) to do their ‘due diligence’. Time and space which we don’t have here.
As we now agonizingly watch the US Presidential Primary Campaigns, cognoscente of what we previously witnessed in the UK (Jeremy Corbyn), Italy (Beppo Brillo), France (Marie Le Pen) and a raft of other political hot areas, we see a now unquestionable deteriorating shift. A shift firmly rooted in a Crisis of Trust and a direct result of a Failure of Leadership.
One Crisis Way From A Monumental “Totalitarian” Mistake
The Financial Repression Authority is presently concerned that a Geo-political event, conflict or crisis could soon abruptly catapult the developed economies into a mistaken political direction and a deeper cyclical low. A cycle which is presently already on a dangerous trajectory. Paul Craig Roberts (a former US Assistant Treasury Secretary) just frustratingly penned “The Rule Of Law No Longer Exists In Western Civilization” outlining the seriousness of criminal and immoral actions by the US government. He illustrates that the dictatorial methods and unlegislated executive orders by the current President to overturn the Second Amendment are now the political leadership ‘order of the day’ and writes: “He (Obama) has the corrupt US Department of Justice, a criminal organization, looking for ways for the dictator to overturn both Congressional legislation and Supreme Court rulings.”
Conclusion
Paul Craig Roberts and the Financial Repression Authority (FRA) sadly concludes – “Out of Evil comes Dictatorship”
As the insightful Canadian National Anthem warns so well, we must all now “Stand on Guard for Thee!”
Never more than today.
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