Financial, Economic and Social Mood Update (July 1, 2018) The US stock market peaked on January 26, 2018 with the Dow Jones 30 Industrials Index reaching 26,617 on that date. The market dropped 3,272 points by April 2, 2018 which was a loss of 12.3 percent of its wealth. Its value on Friday June 29 was no less than 24,302 – just 8.7 percent off its record high. The American economy and the global economy are relatively robust. 44 percent of the human population on earth belongs to the upper or to the middle class. Part of the global lower class is not what one would term destitute – 34 percent of the globe belongs to the “working” lower class. The bottom 22 percent of the human global population is still largely destitute, being either homeless or in lack of “adequate” shelter. June’s topic largely dealt with imploding (or collapsing) global human population demographics. Much more remains to be said on this monumental problem – which will be discussed at more length in future monthly updates. Gargantuan changes are awaiting us on the economic and financial fronts as well. Populist political trends are putting an immense amount of pressure upon the post-World War 2 European experiment – the European Union or EU. The dream for the current EU was born shortly before the end of the Second World War, when the exiled governments of the Low Countries (the Netherlands, Belgium and Luxembourg) met in London in 1944. Adolf Hitler’s attempt to unite and rule Europe by the force of German arms would end in the rubble of Germany’s great capital city of Berlin in May 1945. Hitler’s Germany & its extreme right-wing politics were a very severe “reaction” to what had happened after the disaster of the “Great War” of…

The US stock market peaked on January 26, 2018 with the Dow Jones 30 Industrials Index reaching 26,617 on that date. The market dropped 3,272 points by April 2, 2018 which was a loss of 12.3 percent of its wealth. It’s value on Friday June 1 was no less than 24,542 – just 7.8 percent off its record high. In the April 2018 monthly blog I discussed the very serious issue of collapsing (imploding) demographics on a global scale. Fewer marriages, fewer children and smaller families will translate into less robust economies, less demand, falling values, falling tax revenue, and impoverished pension systems. Just as an unprecedented number of plant and animal species are literally dying out, the outlook for future growth of the human population of the planet earth is not bright. In the USA, fully 44 percent of individuals between the age of 40 and 60 are literally single – in other words, no spouse and no significant other. In Germany, 46 percent of males polled answered that the “ideal family size” is one person – no spouse, no significant other and no children. Many countries in Eastern Europe are already losing people. Not enough births, lackluster local economies, not enough immigrants, and many of the educated & ambitious local younger people migrating west in the search of a better career and a better future. The countries experiencing this to varying degrees include the Baltic countries (Lithuania, Latvia and Estonia), Romania, Bulgaria, Belarus (formerly known as “White Russia,” the Ukraine and Russia itself. The demographic economies of Southern Europe are not in much better shape. Greece, Italy, Spain and Portugal all fall into the same category. The most robust European demographic economies of Germany, Austria, Switzerland, Liechtenstein, Scandinavia (Denmark, the Faeroe Islands, Norway, Sweden, Iceland and Finland) and…

Financial, Economic and Social Mood Update (April 1, 2018) The US stock market peaked on January 26, 2018 with the Dow Jones 30 Industrials Index reaching 26,617 on that date. The market dropped 3,234 points in 14 days but it has recovered 17 percent of that initial drop since then. The overall stock market remains robust with high asset values – 90 percent of record high value. EWI analysis believes that the crash has commenced and that the next major target is Dow Jones = 18,000. Last month marked a major USD $ 4 QUADRILLION global write-down of derivative financial instruments, hedge funds or contingent liability financial instruments. These are risky “bets” which money center banks made much larger than their entire balance sheets (much larger than the balance sheets of everything in the entire world). Next in line will be both unfunded liabilities and actual mostly Dollar-denominated debt instruments worth up to USD $485 TRILLION. The value of “real” assets is much smaller – USD $99 TRILLION in the equity market and USD $8 TRILLION global supply of gold bullion. To make a long story short, this is the reason for the need to write off the inflated “funny money” of debt, unfunded liabilities and derivative financial instruments. The visible events in the global equity markets and political arena mask a much more factual 3-way struggle for supremacy behind the scenes. The “old order” is represented by the American Petro-Dollar, the European Union (EU) and the Japanese Yen. The 2 “challengers” are based largely in Asia. One of these camps is represented by the Chinese Yuan (Mainland China), China’s BRICS allies and the formerly British Commonwealth. The 3rd camp is represented by the forces behind the emerging crypto-currencies and closely related block-chain technology. The Chinese “Petro-Yuan” commenced trading on…

Financial, Economic and Social Mood Update (March 2, 2018) The US stock market peaked on January 26, 2018 with the Dow Jones 30 Industrials Index reaching 26,617 on that date. The market dropped 3,234 points in 14 days but it has recovered 26 percent of that initial drop since then. The overall stock market remains robust with high asset values – 91 percent of record high value. EWI analysis believes that the crash has commenced and that the next major target is Dow Jones = 18,000. In recent monthly updates I have discussed the major technological changes coming our way. These include Artificial Intelligence (AI which is projected to eliminate 70 to 80 percent of all existing jobs over the coming 2 decades) and the revolution in energy whereby nuclear fusion electricity will eventually eliminate much but not all of the need for fossil fuels such as crude oil, natural gas and coal. Crude will still be needed for things such as asphalt pavement (roads and the like) plus the production of everything plastic which includes much of the physical goods produced in the world today. Both governments and major auto manufacturing companies worldwide have committed a tremendous amount of capital and they have set real timetables for the coming transformation in transportation. These changes are already underway. Geely (the number 8 automaker in China with annual output of 1,266,456 units) owns both Volvo Cars and Volvo Truck of Sweden. Starting in the 2019 model year Volvo will only manufacture either plug-in hybrid or gasoline-hybrid engines. Brazil is the largest country in Latin America with 209 million inhabitants. 94 percent of all new motor vehicles in Brazil run on sugarcane-based ethanol (they refer to this fuel as alcohol). This burns much cleaner than either gasoline or diesel, and has resulted…

Financial, Economic and Social Mood Update (February 1, 2018) The US stock market continues to be very robust – the Dow Jones 30 Industrials Index reached a new record nominal high of 26,617 on January 26, 2018. The NASDAQ Composite Index hit a new record nominal high of 7,506 (on January 26), as did the S&P 500 Index at a level of 2,873 (also on January 26) and the Wilshire 5000 “Total Market Index” at the level of 29,761 (on January 26 as well). A major failure of Elliott Wave International has been the timing of the forecast collapse of the equity market – it must happen at some point, but the truth is that the equity market has skyrocketed in nominal value for the last decade. And when this crash does come it may manifest as a collapse of the real value of our currency as opposed to a collapse in nominal value. Here are a few examples of the increase in nominal value in the last 10 years. The Dow Jones 30 Industrials have gained 293 percent, the NASDAQ Composite has gained 470 percent, the S&P 500 Index has gained 312 percent, the Wilshire 5000 Total Market Index has gained 239 percent, and Berkshire Hathaway (a huge conglomerate holding company with equity stakes in most major industrial sectors) has gained 339 percent. The Bitcoin Investment Trust has gained a whopping 6,344 percent since its inception in July 2016. This month’s topic is the future of the automotive industry, especially with respect to AI (artificial intelligence), ride-sharing and all-electric plug-in vehicles. Since 2010 I have written and published three books about Volkswagen AG, the largest automaker in Europe and the manufacturer of my favorite automotive brand name (their core brand of VW). VW (Volkswagen) and many other carmakers with…

Financial, Economic and Social Mood Update (January 1, 2018) Happy New Year to all of you! The US stock market continues to be very robust – the Dow Jones 30 Industrials Index reached a new record nominal high of 24,876 on December 18, 2017. The NASDAQ Composite Index hit a new record nominal high of 7,004 (on December 18), as did the S&P 500 Index at a level of 2,695 (on December 18) and the Wilshire 5000 “Total Market Index” at the level of 27,870 (on December 18). My good friend and fellow William & Mary MBA Class of 1989 Edward George “Ted” Kaufman had a comment to last month’s financial update. Ted is a broker with Scott & Stringfellow in Norfolk, Virginia (a subsidiary of Branch Banking & Trust Company out of North Carolina). After reading my post about the huge historical fluctuation in foreign exchange rates, Ted said that I should say something about Bitcoin and other similar electronic cryptocurrencies. Bitcoin was introduced to the world on January 3, 2009 and began trading in April 2010 at the value of USD $0.003 per one Bitcoin. Bitcoin is a cryptocurrency, a worldwide payment system and a decentralized digital currency. Its critics claim that it is not backed by anything, but in all fairness, neither are the fiat paper currencies of the world ever since the gold standard was abandoned. Fiat paper currencies have the taxing authority of governments behind them, as well as the ability of quasi-national “central banks” to issue ever more credit out of thin air – giving us the horrendous credit inflation of the last 3 centuries. There are now many more cryptocurrencies in addition to Bitcoin such as Etherium, Ripple, Litecoin, Monero, Etherium Classic and more than 1,300 others. Some national governments such as those…

Financial, Economic and Social Mood Update (December 1, 2017) The US stock market continues to be very robust – the Dow Jones 30 Industrials Index reached a new record nominal high of 24,328 on November 30, 2017. The NASDAQ Composite Index hit a new record nominal high of 6914 (on November 28), as did the S&P 500 Index at a level of 2,658 (on November 30) and the Wilshire 5000 “Total Market Index” at the level of 27,508 (on November 30). A friend on Facebook suggested that I take a slightly different approach with the monthly financial update. He suggested that I concentrate on one main issue in each blog, so that important concepts will become clearer to many more readers. I agree that this is an excellent suggestion, and we will therefore start with this right away. Currency Exchange Rates Currency exchange rates have existed for hundreds of years, but in today’s world they have become far more common and much more precise. The foreign exchange market (much like the bond market) is actually far bigger and thus perhaps even more important than the stock market in many ways. Most independent countries have their own unique national currency. Some countries use the national currency of a different country, and some countries have pooled their resources to create common “supra national” currencies, such as the European Euro or the SDR (Special Drawing Rights) used by major countries such as the USA, the European Union (mainly Germany), China, Japan and the UK. Unfortunately, foreign currency exchange rates (much like everything else in our world) are used as “tools” by major world powers to influence and control other countries with less power. Major powers use foreign exchange rates much like they use diplomacy, military might, warfare, foreign trade, monetary policy, immigration policy,…