If US stock markets hold to these levels to slightly lower we can anticipate the birth of a large rally taking markets to new all time highs. Relatively speaking we would expect this coming rally to be weak. We view this as being the last gasp before the conclusion of The Long Game.
Should the “leave” vote win the coming UK referendum you can expect the impact to have global consequences. It will challenge the survivability of the EU. At the same time it will create massive flights of capital around the world as investors seek refuge for their money. Anticipate the USD being strongly bid. This will have a huge impact on US stock markets at the expense of peripheral markets and their currencies. The nature of global economics has been apparent for some time, though not obvious. Brexit will cause this to accelerate.
What is clear is the counter-intuitive nature of the Brexit situation. The narrative being promoted by the “in” vote is not what it seems. Democratic processes to do with EU politics have earned a reputation for not being so straight forward with several countries having the “will of the people” overturned in the last decade or so.
Should the UK decide to remain in the EU, we anticipate this will only serve to delay the inevitably. Namely the demise of the EU itself. A reading of history itself should remind that all political systems fail and a political system built on faulty premises to begin with, fail sooner. Thus, human nature expresses itself in a cyclical manner again and again.
Crude has recovered nicely and will continue to build a recover to our next resistance level around the US$70 per barrel. Significant resistance operates at this level.
Charles Hugh Smith writing on his blog Of Two Minds:
The end-state of unsustainable systems is collapse. Though collapse may appear to be sudden and chaotic, we can discern key structures that guide the processes of collapse.
Though the subject is complex enough to justify an entire shelf of books, these six dynamics are sufficient to illuminate the inevitable collapse of the status quo.
1. Doing more of what has failed spectacularly. The leaders of the status quo inevitably keep doing more of what worked in the past, even when it no longer works. Indeed, the failure only increases the leadership’s push to new extremes of what has failed spectacularly. At some point, this single-minded pursuit of failed policies speeds the system’s collapse.
2. Emergency measures become permanent policies. The status quo’s leaders expect the system to right itself once emergency measures stabilize a crisis. But broken systems cannot right themselves, and so the leadership is forced to make temporary emergency measures (such as lowering interest rates to zero) permanent policy. This increases the fragility of the system, as any attempt to end the emergency measures triggers a system-threatening crisis.
3. Diminishing returns on status quo solutions. Back when the economic tree was loaded with low-hanging fruit, solutions such as lowering interest rates had a large multiplier effect. But as the tree is stripped of fruit, the returns on these solutions diminish to zero.
4. Declining social mobility. As the economic pie shrinks, the privileged maintain or increase their share, and the slice left to the disenfranchised shrinks. As the privileged take care of their own class, there are fewer slots open for talented outsiders. The status quo is slowly starved of talent and the ranks of those opposed to the status quo swell with those denied access to the top rungs of the social mobility ladder.
5. The social order loses cohesion and shared purpose as the social-economic classes pull apart. The top of the wealth/power pyramid no longer serves in the armed forces, and withdraws from contact with the lower classes. Lacking a unifying social purpose, each class pursues its self-interests to the detriment of the nation and society as a whole.
6. Strapped for cash as tax revenues decline, the state borrows more money and devalues its currency as a means of maintaining the illusion that it can fulfill all its promises. As the purchasing power of the currency declines, people lose faith in the state’s currency. Once faith is lost, the value of the currency declines rapidly and the state’s insolvency is revealed.
Each of these dynamics is easily visible in the global status quo.
As an example of doing more of what has failed spectacularly, consider how financialization inevitably inflates speculative bubbles, which eventually crash with devastating consequences. But since the status quo is dependent on financialization for its income, the only possible response is to increase debt and speculation—the causes of the bubble and its collapse—to inflate another bubble. In other words, do more of what failed spectacularly.
This process of doing more of what failed spectacularly appears sustainable for a time, but this superficial success masks the underlying dynamic of diminishing returns: each reflation of the failed system requires greater commitments of capital and debt. Financialization is pushed to new unprecedented extremes, as nothing less will generate the desired bubble.
This stimulus works well in the first downturn, but less well in the second and not at all in the third, for the simple reason that interest rates have been dropped to zero and credit has been increased to near-infinite.
The last desperate push to do more of what failed spectacularly is for central banks to lower interest rates to below-zero: it costs depositors money to leave their cash in the bank. This last-ditch policy is now firmly entrenched in Europe, and many expect it to spread around the world as central banks have exhausted less extreme policies.
The status quo’s primary imperative is self-preservation, and this imperative drives the falsification of data to sell the public on the idea that prosperity is still rising and the elites are doing an excellent job of managing the economy.
Since real reform would threaten those at the top of the wealth/power pyramid, fake reforms and fake economic data become the order of the day.
Leaders face a no-win dilemma: any change of course will crash the system, but maintaining the current course will also crash the system.
Welcome to 2016-2019.
The US stock market has the potential for large, rapid falls over the next couple of weeks. As long as the DJIA stays above 11258 (SP500 1219.8) the market remains in a correction phase.
Completion of the selloff phase above 11258 (SP500 1219.8) would indicate a potential move to new highs over the next few years accompanied by stronger inflation and strong prospects for the US economy.Such a scenario has the potential to unfold with rising interest rates, a strong US dollar and a strong domestic US economy.
A breach of 11258 (SP500 1219.8) followed by a corrective rally would indicate a major bear market was unfolding and provide the momentum swing to take out the 2009 lows.
While this prediction is valid for the US stock market we see signs the US dollar will continue to strengthen over the course of 2016 leading to a potential top. The strengthening US dollar and rising interest rates will have bearish implications for the rest of the world economy where funds are being sucked from the periphery to the centre.
John Mauldin looks at the latest happenings in the Chinese Economy and their significance.
China Beige Book’s fourth-quarter report revealed a rude interruption to the positive “stable deceleration” trend. Their observers in cities all over that vast country reported weakness in every sector of the economy. Capital expenditures dropped sharply; there were signs of price deflation and labor market weakness; and both manufacturing and service activity slowed markedly.
That last point deserves some comment. China experts everywhere tell us the country is transitioning from manufacturing for export to supplying consumer-driven services. So if both manufacturing and service activity are slowing, is that transition still happening?
The answer might be “yes” if manufacturing were decelerating faster than services. For this purpose, relative growth is what counts. Unfortunately, manufacturing is slowing while service activity is not picking up all the slack. That’s not the combination we want to see.
Something else China Beige Book noticed last quarter: both business and consumer loan volume did not grow in response to lower interest rates. That’s an important change, and probably not a good one. It means monetary stimulus from Beijing can’t save the day this time. Leland thinks fiscal stimulus isn’t likely to help, either. Like other governments and their central banks, China is running out of economic ammunition.
One quarter doesn’t constitute a trend. Possibly some transitory factors depressed the Chinese economy the last few months, and it will soon resume its “stable deceleration” course. It is hard to imagine what those factors might have been, though. The data is so uniformly negative that it sure looks like something big must have changed.
What does this economic weakness say for Chinese stocks? Probably nothing. It should be clear to all that the Chinese stock market is completely unrelated to the Chinese economy. They don’t move together, nor do they move opposite each other. They have no consistent connection at all – or at least not one we can use to invest confidently. I went to Macau when I was in Hong Kong a few weeks ago, just to observe the fabled fervor with which the Chinese gamble. The place did indeed have a different “feel” than Las Vegas does. I’m not the only one to think that the Chinese stock market is just an outpost of Macau, but one in which leverage and monetary stimulus can overload the system.
Let me say that there are real companies with real value in China. But the rules on the ground, not to mention the accounting, make it a particularly treacherous market to invest more than your own “gambling money.”
Source: Mauldin Economics
As crude oil falls below US$28.00 per barrel we see a selling climax developing. The final low on this sell off could be anywhere between $12.00 to $27.00 and would lead to a major turning point for the beleaguered oil market. This will complete our oil market predictions first made in 2011 when we predicted US$12.00 per barrel. The final oil market low may well occur in conjunction with a bottom in US stock markets.
Once the lows are in we will release our predictions for oil for the next couple of years. We will also shortly update our “End of the Long Game 2009-2018” scenario.
Gold is in the final phases of completing its downward run from its 2012 highs at US$1923. The three year unwind has created many false starts for the next bull market. The coming recovery will prove to be another of those events. It will however be larger in nature than the attempted recoveries we have seen over the last 2 years.
We anticipate gold, once it has completed its low, will advance rapidly to above the US$1307-$1350 level before continuing a more moderate climb towards the US$1500 mark. Lows often occur in metals, stock markets and currencies at the end of the year. When we have confirmed the low is in we can look more closely to the recovery levels. Of course this also implies some sort of political/economic crisis to drive the metal higher.
PS: Watch bitcoin perform in this coming phase. It should also peak long before gold does and begin to decline. It has performed as a useful barometer for gold over the last few years.
Our research shows the USD has further to strengthen. We are still targeting 0.98 to 1.04 for the Euro/USD, Aud/USD between 0.65-0.675 cents and US$/Yen above 125. This would place the US$ Index around the 103 level for a major top followed by a major pull back. We anticipate this happening in the first 6 months of 2016. We at Emerging Events believe selling US dollars above 103 basis the US$ Index represents good selling.
Yesterday crude oil prices fell briefly below their December 2008 Financial Crisis lows before recovering. Our target of US$12.00+/- a few dollars per barrel remains on track having made this prediction in 2011. We had predicted that oil would consolidate between US$40 – $75 per barrel which it did albeit briefly before resuming it’s slide.
So as we approach our long term target what can we expect from here?
Oil will bounce out of its lows near $12.00 per barrel sometime in 2016. It has the capacity to rally back towards the consolidation phase US$40-$70 per barrel. This bounce will coincide with a strong US dollar and a stronger US economy over the course of 2016-2017. We anticipate however this will not be the birth of a new oil bull market but the beginning of a sideways long term basing formation lasting many years before commencing a move towards US$100 per barrel.
By Greg Canavan writing for The Daily Reckoning:
–In Friday’s Daily Reckoning I mentioned Europe’s negative interest rates and how Mario Draghi at the European Central Bank (ECB) will attempt to drive them even lower in early December. That’s when the ECB next meets.
–It raises the question, is the global bond market bubble at risk of blowing up? There’s significant commentary and worry about stock markets, but not much about the risks brewing in bonds.
–Consider these worrying statistics, from the Telegraph in the UK:
‘As of late November, roughly $6 trillion of government debt was trading at negative interest rates, led by the Swiss two-year bond at -1.046pc. The German two-year Bund is at -0.4pc.
‘The Germans and Czechs are negative all the way out to six years, the Dutch to five, the French to four and the Irish to three. Bank of America says $17 trillion of bonds are trading at yields below 1pc, including most of the Japanese sovereign debt market.’
–It’s fair to say this is unprecedented in financial history. If central bankers get their wish and inflation starts to pick up, there will be billions of dollars of losses in the bond market.
–That because when yields fall, prices rise. And when yields rise, prices fall.
.–In valuation terms, a bond yielding 1% trades on a P/E ratio of 100 times. A bond yielding 0.5% is on a P/E of 200 times. And you’re worried about stocks trading on a P/E of 15 times?
–The scary thing about the global bond market is that it is much larger than the equity market. That’s a function of prolonged low interest rates and a massive increase in government debt issuance since 2008.
–Do you remember that McKinsey study from the start of the year? It found that between 2007 and 2014, global debt levels had increased by US$57 trillion. That is a huge increase.
–And such is the demand for this ‘safe’ asset, the market has easily absorbed this issuance and bid up the price at the same time. That’s frightening.
–I’m not sure where the tipping point is for the global bond bubble. It depends on what happens with inflation. If the rest of the world goes the way of Japan and enters a long, slow, deflationary phase, then bond prices will stay elevated for many years.
–But if inflation heats up and then gets away from central bankers, trillions of dollars will go up in smoke as capital escapes the bubble bust.
–Where will capital go? Property, equity markets? According to this Telegraph article, prime property will benefit:
‘The Norwegian Pension Fund, the world’s top sovereign wealth fund, is rotating a chunk of its $860bn of assets into property in London, Paris, Berlin, Milan, New York, San Francisco and now Tokyo and East Asia. “Every real estate investment deal we do is funded by sales of government bonds,” says Yngve Slyngstad, the chief executive.’
–This lends weight to Phil Anderson’s Cycles Trends and Forecasts theory that global property markets will experience an almighty boom into 2026. This makes sense if inflation starts to pick up and big pension funds want an inflation hedge.
–Stock should also do well from capital getting out of bonds. After all, in the world of finance, everything is relative.
–But if inflation gets out of control, I wouldn’t want to bet on stock markets doing too well either.
–Think of the world’s balance sheet. There’s a lot more debt than equity, meaning the global economy is highly geared. This boosts growth and return on equity when times are good.
–But if inflation picks up strongly it will erase real economic growth. A lack of real growth means lower returns on equity. In such an environment, global bond AND stocks markets will get smashed.
–I’m not sure how far away a pick-up in inflation is. Bond markets certainly don’t seem too concerned about it right now. The good news is, if you know where to look, you’ll see it coming.
–You just need to read charts every now and then. Actually, I mean look at them. But look at them properly…analytically.
— Take the recent share price action of listed law firm Slater and Gordon. In recent weeks, its share price has collapsed. Have a look at the chart below. As you can see, the share price began to move lower before the negative announcement.
–That is, the market knew something was brewing before Slater and Gordon released the news to the ASX. In fact, the share price lost around 40% of its value prior to the release.
–Let’s leave aside the irony of a law firm issuing an announcement after its share price had already collapsed (continuous disclosure, anyone?) and focus on the point.
–That is, the market will generally give you clues about coming moves. With Slater and Gordon, for example, you should have sold when the stock price broke below $2.50. That was a break to new lows and a sign that all was not well.
–A few days later the negative announcement about regulatory changes in the UK vindicated that sign.
–The message here is that the market will generally always give you a clue of impending moves if you know how and where to look. Of course, it’s not fool proof. Sometimes the market throws of false signals.
–But if you want to improve your odds, always listen to what the market is saying before you act. It’s much smarter than you, so pay attention.
For The Daily Reckoning
An interesting month ahead for October should see a spike down in US stock markets. Potentially this will be the low of the sell off since the highs this year (DJIA 183350.46, SP500 2132.02). The nature of the rally from the lows will reflect on the the longer term trend and we will advise accordingly. If the move proves to be larger (breaching DJIA 11258.01, SP500 1219.80), it will indicate a major change of trend.
At the same time we anticipate gold will also spike up above US$1225 and further. These events may well be precipitated by some flash news. Rumors abound at present of European bank failures and the shock of this would certainly impact global financial markets.
We are currently updating our big picture The End of the Long Game 2009-2018 and will show how this juncture represents a pivotal time for global economies and financial markets.
US stock markets have fallen strongly over the last week completing the topping process that has lasted for many long months. Stock markets are expected to move down to the 15855 level basis DJIA (S&P500 1820) and lower. Our predictions while slow to come to fruition are right on track. It is important to understand that time and prices do not move in a linear mutual fashion.
Stocks, once bottomed below 15855 (1820) will begin a counter rally. The nature of the counter rally is important and will determine the direction of stock markets and economic activity in general for many years to come.
Should US stocks fail to make a new high over the next 3-9 months will confirm a major downturn and a long term bear market. (More on that later). If it does however make new high it has the potential to run on as asset inflation leads stocks and other asset classes into a final frenzy of asset buying. The amount of money printing over the last years could force an exponential rise in asset classes if we see stock markets recover well. History repeats itself and Gold in 1980, the Tulip Craze of 1636-1637 and the South Sea Bubble of 1720.
We at Emerging Events consider that path to be a lower probability. The potential for stock markets to rebound and rollover to begin a new downward move is very high. We hold this view is supported by long term Austrian Business Cycle Theory, and the fact that the world is not producing enough income to service the amount of debt that exists (both public and private).
However we are not paid to make guesses and so now we wait and watch carefully. We will update and advise as soon as the picture clarifies.
Starting in Europe and reaching public consciousness when Japan implodes before engulfing the USA and remaining Liberal-Democratic nations.
The Great Sovereign Debt Crisis of the 21st Century is steadily gaining momentum. The forces of deflation have been steadily building since 2000 and the stage is set over the next 6-12 months where the reality of public plundering of the means of production comes home to roost. The weight of public and private debt, government regulation and leverage, fraudulent economics and fallacious political thinking that assumes that if you keep taking and spending other people’s money you will never ever run out!
Yet this is exactly what is happening. The politicians have borrowed to deliver on promises they were never going to be around to see delivered. They’ve debased the their currency and now we have reached the problem that there is so much debt in the world that the world does not have enough income to service that debt.
Historically its happened many times before of course and yet we never seem to learn. Empires grow and prosper, politicians make promises, governments and people borrow and everyone takes for granted the wealth that has been achieved until finally, it all collapses. History records the rise and fall of civilizations on exactly this premise. It’s always government and the self-seeking of leaders that cause civilizations to self-destruct.
While we observe the rise and fall of empires due to reasons of currency debasement or war, we can also observe that these are merely the mechanisms that cause the problems. Behind them lies the cyclic nature of humanity. Deep in the limbic system of the human brain reside deep impulses that play out at individual and aggregate levels.
We might look back at the Tulip Mania Bubble of the Dutch Golden Age (1634-1637) and wonder how people might have been so crazy as to invest in tulips. The Tulip Mania occurred on the back of a Europe-wide debasement of coins (1619-1622) used to finance war. Yet they did and future historians will look back at early 21st century share, commodity, real estate prices and wonder “how could they have been so blind?”Debasement of the currency has occurred this time by closing the link between gold and paper money and the massive printing of money that subsequently occurred. Each era brings the usual excuse “this time its different”. But the same debasing of money, the same political hubris, the same grasp for political power create the same drivers that cause the boom and the bust.
We watch at the moment the European debt drama playing out in Greece. Other nations sit on the edge of potential debt crises including Spain, Portugal, Italy, Puerto Rica and various cities of the US. This is just the beginning. Soon we shall see the debt crisis spreading to northern Europe, Japan, China and the US. Its about sovereign debt of course, the debt accumulated by generations of politicians spending other people’s money.In Japan they experienced this in the early 1930’s when massive money printing operations inflated their economy. It resulted in the assassination of the Finance Minister and Prime Minister, the establishment of the military as the power brokers of Japanese politics and the beginnings of the build up for for WWII. That didn’t end well for the Japanese people.
Between 1740 and 1783, the French experienced it with the massive indebtedness of the monarchy, high taxes, high levels of regulation and cronyism led to the French Revolution, Napoleon and a final defeat in 1815.
Pax Romana followed a similar path where eventually the debasement of the currency and accumulated debt caused the empire to implode. To look at Pax Americana is to see an identical script unfolding. Massively unsustainable debt levels, vast militarization, endless monetary debasement, constitutional decay and subjugation of citizens by taxation, regulation and blatant spying signal, as it has in many previous civilizations, the demise of this short lived empire.
Using financial markets as a barometer we observe markets in major topping patterns, working out of main trends. The next 3-6 months will prove critical in determining if the Great Sovereign Debt Crisis has truly arrived or if there is still enough gas in the tank for one last sprint before the weight of debt, regulation and political hubris bring down the liberal – democratic nations of the world. Once again the cyclic nature of human egress and regress is playing out at individual and aggregate levels and from where we stand, major and minor cycles of human endeavor are changing direction. Crisis bring danger and opportunity for those so prepared.
Martin Armstrong writes:
The greatest crisis we face is the destruction of liquidity that government is causing by their hunt for loose change. Their desperate need for money is tearing the world economy apart at the seams. Even in Europe, the attempt to force a political union upon people by denying them the right to vote is ripping apart the cooperative connections established following World War II with the Treaty of Rome. The forced monetary and political union in Brussels undermines what they were trying to create – European Peace.
By Martin Armstrong of Armstrong Economics:
Further evidence that 2015.75 is really the peak in a Massive Debt Bubble: The Middle East has always been on a cash basis as their revenues from oil exempted them from ever borrowing money – that is not the case today.
As oil prices rose, spending programs also anticipated no end in sight. So as oil peaked and has begun a technology-shift bear market, those spending programs are causing budget deficits to appear in the Middle East for the first time. Not only has Saudi Arabia issued its first bond issue of $4 billion to cover budget deficits, other countries may follow in the region.
The May turning point has indeed been a profound turn on the long-term setting the stage for the reversal in the short-term come 2015.75. If you can comprehend how everything is connected, you can see these events coming. Since May, Saudi Arabia’s foreign assets have entered crash mode. In May, foreign asset holdings fell over $672 billion. Saudi Arabia sold assets drawing down its reserves to cover the budget deficit.
You are now watching newspapers, TV shows, and other forms of media preparing for the coming cashless society. This is a marketing campaign, and may indeed be what October 1, 2015 is all about – 2015.75. I doubt that the USA will be able to move to a cashless society as easily as Europe. The dollar is used around the world and cancelling that outstanding money supply would bring tremendous international unrest. Additionally, the USA is not in crisis financially, as is the case in Europe.
Europe, on the other hand, has an entirely different problem. The failure to have consolidated the debts of member states meant that the reserves of the banks were constituted from a politically correct mixture of debt. Instead of fixing the problem, politicians who are lawyers always move one-step forward with laws. To them the logical solution is to eliminate cash to protect banks from a panic run that would collapse Europe and take Brussels with it.
This is now a deliberate marketing campaign. I know how these things work and pay attention. They are selling this idea everywhere and that is the preparation for the inevitable action. With the speed at which they are moving, it certainly appears they are gearing up for October 1 on our model. It is also interesting that some German press misquoted our date as October 17. I was not sure why they would do that, but perhaps that was intentional as well. This is very curious, for when they take that final step, it will most likely be sudden and overnight. They would announce it and give everyone some time frame to take their paper currency and deposit it into their bank accounts.
For European readers, swap to dollars for hoarding and you can open accounts in the U.S., which for now is a safety valve. While gold makes sense for local hoarding, it may have lost its movability.
Advances in nanotechnology will be a key enabler of technological advance in the next decade. The integration of information technology, biotechnology, materials sciences, and nanotechnology will generate a dramatic increase in innovation. Read this Alert to see how your personal and business life might be affected pretty soon.
- Older technologies will continue lateral ‘sidewise development’ into new markets and applications .
- Current high-visibility investments and technology breakthroughs will be needed to realize the full potential of nanotechnology.
- Technologies like nanotechnology will be used to establish a maintenance free environment (i.e. self -cleansing glass, self-repairing concrete).
- Nanotechnology will produce new goods with new properties at a smaller scale that may use far less resources.
- Future uses of genetic data, software, and nanotechnology will help detect and treat disease at the genetic or molecular level.
- Modern healthcare technologies and prevention strategies will have the potential to extend the life expectancy of people.
- Molecular ‘robots’ could be designed to enter the body and eat plaque.
- Nanotechnology will enable lives to be saved by digestible cameras and machines made from particles 50,000 times as small as a human hair.
- Smart nano-materials will facilitate the development of textiles that detect biotoxins.
- The global market for nanotechnologies will reach $1 trillion or more within 20 years.
- Progress in nanotechnology will depend heavily on R&D investments.
- Robotics, synthetic biology, nanotechnology, and molecular manufacturing really will lead to an explosion of wealth and resource availability.
- Printed electronics and electrics will be a $335 billion business in twenty years i.e. 2029
- Bioscience, information technology, and nanotechnology will be applied to meet agricultural and food challenges.
- There will be 400,000 jobs in the nanotech sector across the European Union this year.
- Nanotechnology, 3D printing, smart materials and a new generation of composites will be a $1.3trn (£805.8bn) global manufacturing battleground this year.
- In the coming future nanotechnology will certainly have a colossal effect on the ceramics, metals, polymers, and biomaterials industries.
- As personalized medicine becomes more affordable expect to see the coming of age for genomics, nanotechnology, robotics, and other innovations.
- The use of nanotechnology could herald an ‘exciting’ breakthrough for patients with heart disease.
- Nanotechnology could completely transform conventional economic activity from healthcare and renewable energy technology to food production.
- Applications that are likely to be widely diffused in 2025 will combine different technologies such as biotechnology, nanotechnology, materials technology and information technology.
- New applications and reinventions will trigger market take-off and shape further development of collaborative technologies for governance and policy modelling.
- Nanotechnology is expected to have a major impact on sustainability in the near future.
- Nano- technology will enable different types of electronics.
- Nanotechnology will allow chip manufacturers to continue upholding Moore’s Law.
- Nanoscale piezoelectric materials could provide the lowest possible power consumption for on/off switches in MEMS and other types of electronic computing systems.
- Relying on nano-sized robotics will eventually become commonplace.
- Advances in nanotechnology will require long time horizons and continued investments in materials, platforms, and applications across manufacturingindustries.
- Expect the greater use of new materials with an emphasis on not just boosting performance but also improving efficiency.
- Materials and nanotechnology will enable the development of new devices with unforeseen capabilities.
- Nanotechnology will replace most current wearable technology.
- Discoveries in nanotechnology will lead to unprecedented understanding and control over the fundamental building blocks of all physical things.
- Nanotechnology could be used to help reduce battery weight and lighten other products.
- The U.S. Air Force believes that nanotechnology will have a direct application for both flight and space travel.
- Nanotechnologies will pave the way for developing hybrid energy solutions.
- Nanotechnology could provide solutions for sensing.
- Nanotechnology will also spawn new technologies for manipulating DNA.
- Biotechnology and nanotechnology will provide greater potential for destruction.
To find the sources and more resources on Shaping Tomorrow about ‘The Future of Your Workplace’ some of which were used in this Trend Alert, ‘Small is beautiful – Nano futures surround you’, or ask us for a customised, in-depth GIST report on this or any other topic of interest to you. Also, click here to find out how Shaping Tomorrow can help your organization rapidly assess and respond to these and other key issues affecting your business.
The failure of the ASX SP200 to make new all time highs at 6851.5 whilst US stocks are at all time highs is highlighting problems for the Australian economy and may even be the ‘canary in the coalmine’ for all stocks. This divergence reflects Australia’s national issues including lack of diversity in its production base. It reflects the ending of the mining boom along with the high demand for US dollars sucking cash from peripheral nations to the centre.
Currently battling resistance at 5900-6000 it would appear that any international downturn at this time will bring the ASX S&P 200 down towards our initial long term target of 2295 – 3075. We’ll reassess from there. However, for now there is a long way to get back to all time high territory. And this reveals the major weaknesses and restructuring needed in our economy. We can anticipate the ASX S&P 200 moving to the 6000 level over the next several weeks finishing the final stages of it’s upmove since 2009.
A case can be argued that the Reserve bank of Australia over extended its mandate to control inflation and unemployment during the commodity boom that came to an end in 2012-2014. By maintaining higher than needed interest rates the RBA at that time, funds were redirected to higher yielding investment opportunities in the mining sector at the expense of other, lower performing sectors such as housing. This put stress on banks, the mining industry and its supporting industrial base as oil and iron ore prices have fallen through the floor.calling into question the viability of many of the projects initiated in the last 7 years. This is the hubris of central bankers and politicians alike and what Nobel Prize winning economist FA Hayek called ‘the pretense of knowledge’.
Shortly we will see global stock markets completing their major tops. We believe our prediction for a major cyclical top spanning over 200 years is on target. We had projected this top occurring between 2015 – 2018. Indicators are now warning that this top is completing now. By late October we shall see front page headlines as financial markets capture people’s attention once again.
Updating and revising our financial markets forecasts (here and on our Financial Markets Predictions page):
US Stock Markets
As per our 3/23 update, US stocks peaked just 5 days later and has since entered a series of lower lows punctuated with short rallies. Its still to early to determine if a major top is in place but we wait and watch.
The downward move targets DJIA 17,721 (already achieved), 17460, 17,037 to potentially test the mid October lows at 15,855. (S&P500 2061 (already achieved), 2045, 1980 & the October lows at 1820).
It appears gold will bottom at or around the previous 11/07/15 low at US$1131 this coming week. If confirmed we can anticipate a resumption of the counter rally from the September 2011 highs at US$1920. Our target of US$1430-1440 remains in place.
The US dollar has rallied strongly in the last few months. The US$ may already peaked and begun a consolidation phase lasting many months. Specifically:
– US$/Yen: We are anticipating one more high to 124.50+/- before beginning a consolidation phase lasting months.
– Eur/USD: From here or slightly new lows (1.02-1.0495) we view the market has completed its move down and anticipate a major bounce. We anticipate a test of the 1.60 Eur/USD level.
– Aud/USD: anticipating marginal new lows below 0.7560 before a move back towards 0.9500.
Oil is continuing its consolidation phase before resuming its down move to our US$12/barrel target we first determined in 2011. Short term we view the market making equal lows (US$43.58) to slightly new lows before rallying back to continue its consolidation phase. Our upside focus is US$68.00 with an extreme case push to US$75.54.
US interest rates have the potential to also spike sharply in the near future. Using futures as our proxy a move on 10 year notes to 110 -115 in 2015 is very doable.
The potential for some markets to rally (gold, silver, oil, Euro, Au$ (US$ weakening) suggests inflationary pressures emerging in 2015 in the US. This is in line with our money supply analysis and Austrian Business Cycle Theory. Alternatively, a crisis in the next 6 months may cause markets to spike in response to some international political event. Several scenarios are potential: a Greek default and/or Grexit in the summer months, Ukraine/Russia troubles and China.