Year-end Round-Up

The Year-End closings for 2012 were in the S&P 1,426.19, Dow Jones Industrials 13,104.14, Nasdaq 3,019.51, EURO/USD 1.3191, US 10-Year Bond 1.76%, Gold $1,674.30, Crude Oil $91.59.

Economic growth will rebound in Asia including China as well as the BRICS (Brazil, Russia, India, China and South America) . Europe will be the worse on the planet in terms of economic growth and the elections in Germany come September will keep capital cautious with respect to any investment strategy in Europe long term.

2013 will be the year of the emerging markets, as a whole, they should post growth rates of at least 5% with the USA at best being around 2-3% with Europe at best reach 2% is in real terms come in at a break-even to negative thanks to France. China should come in at 8% and could reach 10%. South East Asia will also post perhaps the best gains of all.

The economy will be the greatest concern almost everywhere in 2013.China is still growing and will become the largest economy in the world  as early as 2016 thanks to Obama nonsense with insane tax hikes following France. Interest rates still appear to be poised to rise and the central banks will be powerless to stop it. This is what happens when cash leaves banks because they pay nothing and in Europe it is more akin to playing Russian Roulette.

The stock market basis the Dow shot higher. Gold closed higher than 2011 warning that 13 years up is not a charm. Support rises to 1400 becoming critical now. Oil also closed higher scoring the highest annual closing.

Washington will work out a budget compromise to avoid the “fiscal cliff” of course because the failure may cause riots. But the U.S. Senate leaders, while being very close to a deal to avert the “fiscal cliff”, appear that the compromise will heavy on tax increases and light on spending cuts.

So what else is new. Happy New Year.

Perhaps French should become a required language under Obama in schools.

Dow Jones Yearly Bullish Reversal 12567

The numbers are always the numbers. The amount of voter fraud is off the planet. Obama won in every state that did not require a Photo ID and lost in every state that did require a Photo ID in order to vote. Some places all votes went to Obama and none at all to Romney as in Philadelphia. But this is merely a sign of the times. During the elections of 53BC, interest rates in Rome doubled because of the amount of borrowing to pay bribes. Then Caesar had to revise the calendar because the high priest had been bribed to insert so many days to postpone elections that what should have been winter was then summer. And we think elections are ever going to be fair?

The interesting thing is the Dow Jones has a Yearly Bullish Reversal at 12567. Electing this will not be an immediate buy signal on the daily level, but this is warning what we have been talking about. Yes there has not been a lot to do. We are in a holding pattern churning like butter back and forth, This signal is suggesting that the low is indeed in place and that we will see higher highs.

In other words, capital will start to shift from PUBLIC to PRIVATE. Keep debt investment as short as possible. US will be the last to go, but still be careful with MUNIs. Interest Rates should start to rise in 2013. Once this takes place it will reveal that the emperor has no clothes. The Fed will be unable to keep rates low. The banks have been enjoying a huge spread paying nothing to depositors – 0.5% for 3 years while demanding 4% for 3 years fully collateralized loans..

We will report after Year-end what buy and sell signals we have for the upcoming year. It looks like the August 7th ECM date will be important.

HAPPY NEW YEAR!

The Rising Tide of Political Change

Europe-Separatist Movement

At the Berlin Conference, we provided an overview that shocked many. Most people had paid not much attention to separatist movements that were popping up throughout Europe from Scotland, which comes up for a vote in 2014, Britain talking about leaves the EU, right down to Spain. The major trend everyone has just assumed was the “unification” of Europe was in play. In our Berlin Materials (soon to be made available for non-attendees), the trend beneath the headlines is anything but unification. There is a rising trend of disunity and there are even those in Texas starting to make noise about separating from the USA.

This deunionization is actually part of the Cycle. Just posted you will find, They Watch Everything – But Why?  The Rising 3rd Party, explaining the behavior of government in light of the clinical findings of Stanley Milgram. Politics is starting to meltdown. Both the Democrats who are Marxists and Republicans who are confused and ready to start handing out flowers in airports begging for support for what purpose they do not know, are leading us down the toilet at rapid pace. Meanwhile, the bureaucrats are trying to strangle the chicken by the neck to get that last golden egg.

We are fighting beliefs. It matters not if we agree with those beliefs, all that matters is what THEY (opponents) believe in something even if they are confused. Adds are being attached to YouTube videos preaching to join them to hunt down and tax the rich so they do not have to pay. Nobody seems to have read Atlas Shrugged. What happens if those who produce and create jobs go on strike and say enough is enough? They are doing that by hoarding their cash and waiting to invest. Liquidity has collapsed in Europe and America as capital sits with record levels of cash befuddled without a clue of where we are headed.

Empires-3rdCentury

While the chart on the collapse of the Roman Monetary System has been illustrated many times on this site, behind that stands the breakup of the Roman Empire, which is also largely overlooked by most historians regarding its role within the cycle and its causes. The Roman Empire actually split into three parts because of the collapse of the monetary system. Economics is the great mover and shaker of society. It forms nations by synergy to cause people to come together, but when politics turns nasty and corrupt extracting from the people more than they BELIEVE is fair, economics becomes the great destroyer as well, In Europe, there was the Gallic Empire that broke away from Rome led by Postumus (259-268AD) composed at first of Britain, France (Gaul) and Spain. In the East, there was the Palmyrene Empire led by Queen Zenobia who has been the inspiration for all the various Warrior Queen movies and cartoons.

Postumus-Restorer of Gall

Here is a coin of Postumus. It portrays him on the reverse as the great restorer of the economy and security of those who had enough of taxes and nonsense from Rome.History repeats because the passions of man never change. Separatism is on the rise as is the trend toward the rise of a third party for 2016 based on bottom-line economics,

To Purchase Coins of the Gallic Empire Click Here

Fiscal Cliff & More Nonsense

The lawsuit by Hedge Funds against Porsche for manipulating Volkswagen shares was dismissed in NY State Court, while the Feds is still going and in Germany they charged directors of Porsche with insider trading. The charts do not support any such manipulation – just sour grapes (see PDF Volkswagen-Porsche).

The real manipulations of our future continues in Washington. The markets are pausing because as usual the politicians are incapable of ever doing the right thing. Obama is hell bent on following France down the toilet and Boehner is going along for the ride.

House Republicans are hoping Obama may offer to extend the Bush-era tax rates for incomes under $400,000, which is where he was before negotiations blew up. Obama has been pushing for a threshold at $250,000 while Republicans insist that it be set at $500,000. Even France is 1 million Euro. The Republicans are also hell bent on raising taxes because they know there is no money.

Republicans are praying for an extension of the current estate tax, which is a 35 percent rate over a $5 million threshold. Obama wants a 45 percent rate on a $3.5 million threshold. However, even the congressional Democrats are afraid of this one.

Obama wants an extension of unemployment benefits and various tax breaks for businesses and lower-income workers. The Republicans do not want to include the infrastructure funding that Obama has requested to help “stimulate” economic growth, which of course it will not do. The current payroll tax cut is also due to expire, meaning that individuals would see larger withholdings in their paychecks.

If a deal is reached, this would delay sequestration, which if left in place would result in roughly $1 trillion in spending cuts over the next decade since both sides could not agree on what to cut. It would leave the debt ceiling issue unresolved just to keep the drama for the financial markets and the press to sell papers. The Republicans hope to keep this as leverage with the Democrats to secure additional spending cuts and entitlement reforms. Sources on the Hill say this will most likely take place keeping it politics as usual.

Economic Growth – China wins hands down

When we look at REAL GDP growth on a city by city basis, the top five are all in China – Hefei, Baotou, Changchun, Anshan, and Dalian. It may surprise you, but the top two cities in the bottom five around the world at Miami and Las Vegas followed by Athens, Abu Dhabi, and Dubai. It would be nice if government just for once looked at what works for the people than how to win the next election. The tax hikes emerging around the Wetsern World are killing the economy, scaring capital, and contributing to the trend that will make China the number one economy in the world.

Propaganda that China puts up buildings that are just shell for show is just that. In many areas the buildings are raw just as commercial real estate is done in the US. You get the raw space, a building allowance, and fit out the place to what you need. China has the same model but also extending it to the residential market in some areas.

There is little doubt that Asia is the place for economic growth.

 

Brain Trade

According to the  National Bureau of Economic Research in Massachusetts who conducted a Web-based survey of over 17 000 published scientists in 16 countries, the result showed that where are the smartest people moving to? They call this the Brain Trade.

1) Switzerland

2) Canada

3) Australia