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The BIG Global Economic Picture


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#1 tsharp

tsharp

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Posted 28 October 2018 - 09:08 AM

 

This may be the most important financial article I’ve written to date.  Please take the time to read the entire article and

examine each corresponding chart… there’s a coming storm, and understanding what is happening when it arrives AND

being prepared for it, could make a huge difference for you and yours.

 

 

In my last post about gold, I alluded to the interdependence in the global economy, meaning that like in a nation’s financial

market/bourse, there is a continual rotation in sectors, as one gets overbought, rotation into another that is not occurs.

 

 

Likewise, in the world economy, not all markets or regions are necessarily bullish at the same time, and as one begins to

roll over, then money managers and high-net-worth individuals seek out where there’s an acceptable (risk) ROI and move

their assets there, whether in their own country or another, and it can be in equities, bonds or commodities (precious metals,

oil, etc.).

 

 

I’ve been saying for the past many months that the perfect storm is brewing that will make the US dollar and equities the safe

haven (ROI) of choice; consider the confluence of these markets:

 

 

The US dollar just began a new bull market in 2011…

 

 

US-Dollar-LT.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link 

 

 

The US equities market is still in a bull market, which by my fractal and momentum analysis, should continue upward until ~2021

 

 

SPX-LT.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link 

 

 

 

SPX-M-10-26-18.jpg?zoom=1.125&w=656&ssl=

Link to larger chart:  Link 

 

 

The US bond market just began a bear market – this is very important to understand, because bonds have historically

been the safe haven (rotation) for when the equities are slumping.

 

 

Interest rates are at multi-generational lows, and bond yields are inverse to price, so as rotation out of bonds takes

place, that money will need to find somewhere else to go, and interest rates will continue to rise.

 

 

 

US-Bonds-LT.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link

 

 

Gold has been in a bear market since its Wave-III peak in 2012, and I anticipate a Wave-IV low in the 900-1000

range in ~2021.  With gold also in a bear market, it will not be a safe haven choice for those seeking ROI.

 

 

 

Gold-LT.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link 

 

 

 

GL-W-10-26-18.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link 

 

 

Europe is also in a bear market.  On 9.9.18, I wrote an article revealing how that by my momentum trend

standard, the three major indices/bourses in Europe had all entered into their respective bear markets.

 

 

As of last Friday’s close (10.26.18), the DAX closed down 15.3% from its peak on a closing basis.

 

 

 

DAX-W-10-26-18.jpg?zoom=1.125&w=656&ssl=

Link to larger chart:  Link 

 

 

The problems in Europe are many, including the politics of the EU, Brexit,  the refugee crisis, emerging market

debt exposure, the Italian, Spanish and Portuguese national budget issues, etc, and these issues are not going

away anytime soon, so European capital will migrate to whatever perceived safe haven ROI they can find.

 

 

These long-term charts of the DAX, CAC 40 and FTSE 100 are as current as I could find, as I do not subscribe to

these kinds of data feeds.  The lines I’ve drawn in catch the charts up from the time they were published to now.

 

 

Germany long-term:

DAX-LT.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link 

 

 

 

France long-term:

CAC-40-LT.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link 

 

 

 

UK long-term:

FTSE-100-LT.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link 

 

 

 

Asia is also moving into a bear market.  This is one I have to admit that I mis-interpreted Japan’s peak in 1980,

thinking it may have been a Wave-I, when in fact it was a Wave-III.

 

 

I had to go back to find historical charts, because if Japan (Asia) had only completed a Wave-I, it would still be

in a bull market and Wave-III is the strongest of the waves, so Asian would become the magnate for capital, rather

than the US.

 

 

However, if Asia is in the same fractal count as Europe, just completing their respective bull markets – just ahead

of the US markets, which may still be 12-24 months from being done – then they too would be looking for a safe

haven ROI, since their own markets are beginning to roll over.

 

 

In light of the longer-term charts below, I re-interpreted the Nikkei 225 as completing or nearly completing an

ending diagonal triangle, truncated Wave-V, to complete its bull market.

 

 

 

JP225-W-10-26-18.jpg?zoom=1.125&w=656&ss

Link to larger chart:  Link 

 

 

 

Nikkei long-term:

JP-225-LT.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link

 

 

 

Hang Seng (Hong Kong) long-term:

HK-LT.jpg?zoom=1.125&w=656&ssl=1

Link to larger chart:  Link 

 

 

 

As a post script on Asia: Martin Armstrong’s (Armstrong Economics) computer model is long-term bullish

on Asia, saying Asia will dethrone the US, and become the economic powerhouse of the world by ~2032.

 

 

So let’s put the pieces of the puzzle together and see what we see:

  • Europe is in a bear market and its capital will be seeking somewhere to invest (a safe haven).
  • Asia is about to slip into a bear market and its capital will also be seeking  somewhere to invest (a safe haven).
  • Interest rates are at multi-generational lows, and because bond prices are inverse to yield, when bonds sell-off (bear market), interest rates will rise, which we’ve been seeing since the bottom in 2015.  Bonds are NOT a safe haven choice at this time.
  • Gold, which in times past has also been a safe haven, is now also in a bear market since 2012, with several more years to go, so gold also is NOT a safe haven choice at this time.
  • The US dollar just started a new bull market in 2011, and is STILL the Reserve Currency of the world, so the US dollar can be a choice as a safe haven, and I suggest has been so, more of late.
  • US equities are still in a bull market, and by my TA work, appear to be in an uptrend for another 12-24 months, so US equities can also be a choice as a safe haven.

 

If you see what I see, the pieces of the puzzle seem to present a picture, as I have been saying for the past year or so, that global capital will migrate to the US currency and capital markets, since there are really no other safe haven plays going forward.

What do you think?


Edited by tsharp, 28 October 2018 - 09:18 AM.


#2 tsharp

tsharp

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Posted 30 October 2018 - 08:20 PM

The DXY just completed a back-test of the RH&S neckline... it seems the DXY bull is alive, the previous pivot high has been surpassed AND the target for this move is ~98.50.  I have a target for this fractal (wave-iii) up to the mid-130s... twt.

 

DXY-D-10-30-18.jpg