Why has China become so important? Largely because global investors are in this transition mode and do not understand how or why the foundation of everything is changing beneath them. The market turmoil in China spread around the world on Thursday as global investors took their lead from China as a contagion unfolded with no real understanding. Some try to justify this by saying China is a casino and not a real market that is trading on speculation rather than solid earnings. Those types of statements reveal the lack of knowledge of the speaker since ALL markets trade on anticipation — NOT on earnings (anyone remember the DOT.COM bubble?).
So global markets look for direction and make up excuses as they go to try to make it sound logical. As we have been warning, China is in an economic decline into 2020. Sorry, but that is the way it is. There is no dark conspiracy to suppress metals — it’s a deflationary wave since commodities became addicted to the Chinese demand that is now retreating. The rest of the world is in the same boat of deflation set in motion by rising taxes and tax enforcement as governments suck an ever-larger portion of wealth to sustain themselves at the expense of the private sector.
The euro has paused, not because of any reversal in trend, but simply because everyone became too short and it forced liquidations on what they assumed was a one-way street based solely upon fundamentals. Yet, the euro has been unable to rally to reach key resistance just yet. The Japanese yen has not risen because of a bullish change in trend, which is just capital retrenchment as markets decline. Never forget, the higher a currency rises, the greater the economic deflation. The ONLY WAY to turn the U.S. economy down is for a dollar rally — not a decline.
China is doing itself a great disservice. Government may ATTEMPT to use its iron fist to control the invisible hand, but sorry, the invisible hand will win every time. The computer picked this week for the Panic Cycle in China back in November. These fundamental excuses are made-up to match the trading activity. The mere fact that the computer can continuously pinpoint the turning points well in advance demonstrates the trends are set in motion by the overall strength and weakness of a market. You can see these things coming if you know what to look for. Why do you think people have tried to grab the code?
Our forecasting models demonstrate that we as human beings are not capable, on a personal level, of ascertaining what is really happening, for it is far too complex out there in the world. Forecasting something on a personal gut feeling is stupid and just luck when correct. There are those who pretend to take our computer forecasts to sell crappy newsletters with claims that if you listened to them you would make $1 million for $29.95. That borders on consumer fraud. Others trying to criticize me on that same personal level by saying oh you said this or that, miss the point. This is not a personal forecast and judging me on the same basis as you judge others hides the truth of what this is all about — it is not about me — there is something much bigger here to be discovered.
Knowledge itself moves in cycles. Here is a silver Miliarense of the Roman Emperor Theodosius II (402-450 AD). Note that the reverse side of the coin depicts the emperor standing holding the world as a round globe. To the right is the scepter of the only Roman emperor to have been discovered. Here too, we see from Maxentius (306-312 AD) that the world is represented as a globe and not a flat piece of land.
The Chinese and Romans knew about each other; both claimed that the world was round and they were the rulers of the world. Yet knowledge is lost in the Dark Age and we returned to the primitive idea that the world was flat. What our computer is accomplishing is an awakening of knowledge that has been lost. This is a journey to rediscover reality.
Some blame the Fed for raising rates and question the validity of arcane indicators, such as the Chinese manufacturing index, while others claim that government is manipulating the value of the Chinese yuan. Still, others blame circuit breakers in China for inducing nauseating drops in the U.S. stock market as the surprise halt to trading hit the Chinese market. Some mix all of these explanations to explain the U.S. and European markets being thrown into a tailspin. Fundamentals are too often excuses while the reality remains behind the curtain hidden between the lines.
My advice to China: stand back and allow the free markets to settle. Stepping up to the plate only reveals that the government’s all-powerful iron fist is incapable of controlling the markets and the invisible hand ALWAYS wins. The government is risks a tremendous collapse in confidence once the people see the iron fist turn to rust and crumble on the floor. Once the people realize that the government is powerless (as took place in Japan and is currently unfolding in Europe and the USA) the pain is prolonged and the recovery is far harder to unfold. You can only cry wolf so many times.
Investors are confused. They want to cling to the old idea that raising interest rates is bearish for stocks because the talking heads are always saying the same thing. This is typical of these last 8.6-year cycles in a Private Wave. The actual THINKING PROCESS reverses and confidence abandons government and turns back to the private sector. Even the rise of Trump reflects that there is a change in the wind.
We are preparing an expanded study of the world economy for the 19th century. It was originally called the “Greatest Bull Market in History” and was published back in 1986. I have expanded it greatly, since I have learned a lot more since then. I put that together by reading the daily newspapers and quoting them as I went, so you can actually read how the public were interpreting the events and trends. This way, you can see what I am talking about. This is the rediscovery of knowledge to which there is a cycle as well. The ancients knew the earth was round. How did that knowledge vanish?
The fall of Rome destroyed a lot more than people realize. It was more than just gold coins vanishing until the 13th century. Knowledge itself also vanished and we are still clawing our way back to understanding. Personal opinion is meaningless for it does not even scratch the surface. Open your mind and you just may begin to see what we have forgotten.
So look at the arrays — they show you when things go nuts.