Margin Debt & Trends

NYSE

The debate over the pending crash in the stock market seems endless. Whether or not margin debt as reported by the NYSE has relevance any more is an interesting question in a world in which the retail investor has abandoned investing (decline in liquidity). The real marginal buyers are hedge funds and some banks while the cash buyers remain central banks. The make-up of the market has changed and the interest rates are well below even many dividends. So talking about total margin debt nearing $500 billion cannot be compared just on a nominal basis.

Yes, we may yet see the correction from the first week of September. It would be fantastic to see all the talking heads claim they called the all-time high. That will feed the pool of bears and that is what we need to reverse the market upward for a real breakout. Markets decline not because of bears, but because of tired bulls. We lack this excessive bullishness at this time especially within the retail segment. This remains a positive development for the reversal to the upside following a shallow correction. As long as the talking heads keep calling for a high – the game is still afoot.

 

Ukraine Dividing in Two?

ukraine-ethnic-divide-data

Behind the curtain there is a growing opinion that Ukraine should just be split in two and hand the East to Russia and call it a day. This is starting to come down the pipeline and we may see this develop into open debate soon. Not everyone in the East speaks Russian. Donetsk is by far the majority. Nevertheless, it appears that the odds are rising in favor of a split and we will see how things unfold by November. Hot water is produced centrally and that has been turned off in Kiev to save money. This leaves people using stingers (electric rods) to heat the water.

 

French New Government – Same Direction – Death of Europe?

Hollande Addresses Nation on EU Failure 5-26-2014

François Hollande’s new government only stifled voices of dissent from the left wing of his Socialist Party. These marginal changes simply mean that France is headed down the dark path to meet its destiny and as the second largest economy after Germany, France will take Europe as a whole with it. Hollande’s already unbelievable weak political standing both in France and his diminished respect within the wider European economy, will only have a very chilling impact that dooms France in the future. We are watching live how empires, nations, and city states die.

marx-4These governmental changes leave the direction of Hollande’s policy intact. Hollande is desperately trying to hold on to the theories of Marx that were born there in France. Hollande cannot connect the dots that socialism and communism failed for freedom belongs inherently to the people. He cannot grasp that if you told students in school they will all get the same grade regardless of their effort, you would soon destroy the purpose of education. Individual self-worth and achievement may invoke envy in the slackers, but it creates great civilizations among the enlightened. Hollande does not understand that this same basic concept applies in economics. We are people with equal right – not equal abilities or desires.

France is collapsing and there is no possible way this country can be saved in its present economic state. If nothing else, the crisis has made the entire world look closer at France even though Hollande cannot understand that his ideas are simply dead wrong and have proven to be dangerous.The collapse of communism was far less detrimental than the collapse we are witnessing in socialism. Under communism, people distrusted government as a whole and were more self-reliant. Under socialism, people expect to be taken care of by government. They are totally unprepared for what happens when government cannot honor its debts and promises.

Hollande, since the beginning of his term in 2012, has taken the country from bad to worse. He has no effective policy tools available to him in an atmosphere within France that is simply unbearable. He has alienated the very people who create jobs and the unions who see nothing wrong about kidnapping a boss and his family until they get their demands cannot understand why nobody will build plants there with such practices.

France is actually worse than Spain and Greece and its policies are even more detrimental for the French people have depended on a greater degree of government services and aid. In Spain, Greece, and Italy, the attitudes have been to most ignore government retaining a higher degree of self-reliance.

The problem for Europe is France’s high public debt, persistent unemployment and stagnant growth that now threatens to transform the five-year euro crisis into a chronic economic death for Europe. There is nobody left to bailout France. This will ultimately split Germany apart from France even though the politicians will not admit the error of their ways.

death-Tarot-Card

European culture now hangs in the balance. Is it too late to save Europe? Well, it might take a benevolent dictator to save the day and there does not seem to be anyone on the horizon no less with the expertise of knowing how the reverse the fortunes for Europe.

Economic Confidence Model Rules?

ECM-Wave-2011-2020

 

The vast majority of those who attempt to use cyclical analysis to forecast create flat models and as such they cannot always see the forest staring at a single tree. There are countless trends and counter-trends all moving at the same time making cyclical analysis often bewildering. A cycle will appear to work for a while and the analyst will think he just discovered sliced bread. Then comes the devastating blow. When they bet the house, and then lose the entire farm.

I have stated countless times that the Economic Confidence Model is a composite of the entire world. It is not derived from market data at all. It emerges from the global economy, not even a single economy and has been back-tested through ancient history using our monetary database that cost tens of millions of dollars to create when a dollar use to buy something. Consequently, it cannot be discovered from simply looking at the data for the stock market. Understanding how the ECM even functions takes on yet another dynamic level of comprehension.

We may be witnessing the very power of cycles as they reveal the future before our eyes. Looking only at market data, the share market was ideally poised for a July high. Then the computer pinpointed the first week of September and the market began to elect BULLISH REVERSALS. This is what I mean that the model is the model and opinions just do not cut it. We have to trade by the numbers – not by what we would think or like to see.

CSPFOR-W 8-19-2014

The next turning point on the ECM is the first week of September. At first, it did not appear that the US Share Market would line-up with the ECM given it was poised for a July high. Now we have to question what is coming on the other side of this turning point. It is curious how the first week of September rose to be a strong target with the volatility rising thereafter almost out of nowhere – the rogue wave in a calm sea. Indeed, the majority of people have grown easy with the market assuming the days of volatility are over. That would be a giant mistake that may cost you your financial future.

You are witnessing how one cycle can be over-powered by the ECM and this is why interfacing many models allows us to see a clearer picture of the future. So hold on tight. This is starting to look very interesting to say the least. Don’t worry, the mainstream media will only put on the normal talking-heads. They would never expose a model that called into question fundamental analysis of current news and opinion. On that score, we are safe. There will always be a reservoir of fools to trade against.

Children Are Taxed on Medals Given Their Father in War

medals_tAX

The Telegraph has reported how the British government desperate for money, is taxing even medals given to soldiers for their bravery in war. The story in the Telegraph reports – “I was told to pay death duty on Dad’s medals”. There is nothing sensitive about these people in government. When I say we are in a massive collapse of socialism because these people have paid themselves lavish pensions that need funding, there is really no limit to the indignity they are imposing upon the people. At this rate, if the government wants to hand you medal, you better ask will I be taxed in the future for even having these? Just amazing.

Airborn – the way of the future

Airborn

Reuters has covered the development of exciting new technology in transportation. The UK-based Malloy Aeronautics team is preparing to test a manned quadcopter capable of outmaneuvering a helicopter. The entirely new approach for aerial vehicles could reshape the world ahead. A 1/3-sized scale model is already gaining popularity with drone enthusiasts around the world. The full-sized manned model is expected to take flight in the near future. as well. Looks like a great way to beat traffic-jams.

China to Replace Microsoft, Apple, and Android by Year-End

Microsoft_Building

The revelations of the NSA tapping into everything has long-term serious implications. This outrageous snooping will cost the United States dearly for it will lose its technology edge over the world economy. As that declines, so will the US economy and that is how the shift to China will unfold.

Computer technology became an area of tension between China and the United States after a number of run-ins over cyber security of the NSA and Obama has refused to change the course of the NSA securing the decline and fall of America long-term. China is now looking to help its domestic industry catch up with imported systems such as Microsoft’s Windows and Google’s mobile operating system Android. They will have a replacement operating system by the end of the year.

The United States has had its edge in computer science and finance. Its refusal to clip the wings of the NSA and its refusal to prosecute banks in New York City are the two critical death-blows to the US economy long-term. Once you undermine your comparative advantage, it is checkmate. Naturally, China will not compete easily outside of China in this area. Nonetheless, they will replace these companies inside China.

Of course, then the question will arise – has China done the same as NSA?