1998 Fall Tour Seminar - Martin Armstrong

Princeton Economics
International
1998
Fall Tour

Economic Confidence Model tm
Defining the global business cycle
Success of PEI Global Market Approach
July 20th, 1998
April 1st, 1994
Dec 29th, 1989
October 19th, 1987
August 1985

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model
tm
Defining the global business cycle

Economic Confidence Model
Back Testing
through History
tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
US 1929
Bubble Top
Defining the global business cycle
Period Doubling
Effect of last 2 years
sign of a Bubble Top

Economic Confidence Model tm
Period Doubling
Effect of last 2 years
sign of a Bubble Top
Defining the global business cycle
Tokyo 1989
Bubble Top

Economic Confidence Model tm
Period Doubling
Effect of last 2 years
sign of a Bubble Top
Defining the global business cycle
US advance was
30% of that in
Europe for 98
European Bubble Top of 1998

Economic Confidence Model tm
Defining the global business cycle
Today’s problems have
been caused by the
disruption to global
capital flows thanks
to the:
G7
IMF
World Bank
BIS
Euro
Politicians

Economic Confidence Model tm
Defining the global business cycle
After the Plaza Accord in
Sept 1985 & birth of G5,
we warned President Reagan
that G5 would cause a
Crash in 1987 and that
currency manipulation
should not be used to
influence trade.

Economic Confidence Model tm
Defining the global business cycle
The Crash of 1987
was caused by G5
currency
manipulation
that set in motion a
capital repatriation
from Japan that led
to the Bubble Top
formation in 1989 as
foreign capital
concentrated also in
Japan

Economic Confidence Model tm
Defining the global business cycle
87 Crash caused by 40%
decline in US dollar by
G5 which sparked
major selling of $ assets

Economic Confidence Model tm
As capital returned to Japan
Bubble Top form with the
1989.95 turning point
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle
Following the
1989.95 turning
point, the next
4.3 year period on
the model marked a
global shift in
capital flows toward
Southeast Asia
in particular. This
flow of capital then
created a Bubble
Top in most of these
markets.

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle

Economic Confidence Model tm
Defining the global business cycle
Capital Flows reached
record highs in 1989 for
Indonesia & Taiwan

Economic Confidence Model tm
Defining the global business cycle
With the Mexican
Crisis, Southeast
Asia reached its peak
in 1994 and capital
began to shift back to
the West. It would
also be during this
next wave when
capital flows into
Russia multiplied
thanks to hints of
undying support
from the IMF.

Economic Confidence Model tm
Defining the global business cycle
US market reached
a precise low on
April 1st, 1994 in
conjunction with the
Economic
Confidence Model
Turning Point
1994.25

Economic Confidence Model tm
Defining the global business cycle
12 waves of 8.6 months = 8.6 years

Economic Confidence Model tm
Defining the global business cycle
As the half-cycle
approached on
May 25th, 1996
(1996.4), we at last
achieved a 2 month
correction similar in
timing to that of the
1987 Crash. This
turning point
produced a high and
as such a hint of
what would come on
July 20th, 1998

Economic Confidence Model tm
Defining the global business cycle
The final period
moving into 1998.55
(July 20th, 1998), the
market performed
precisely according
to its 8.6 month
component structure

Economic Confidence Model
tm
Defining the global business cycle
Gov’t Intervention using Interest Rates Never Works

Economic Confidence Model tm
Defining the global business cycle
The volatility in
foreign exchange
will be the driving
force behind the
major capital
flows worldwide
between 1999 and
2016 as we once
again face the
turmoil of Sovereign
Debt Defaults

Economic Confidence Model tm
Defining the global business cycle
Dollar/Yen reached
high in 1995 but the
continued economic
decline for 26 years
from 1989.95
(2015.75) will be
likely unless a Yearend
closing above
144.80 takes place for
1998 Year-End

Economic Confidence Model tm
Defining the global business cycle
Dollar support
lies at 110, 107 and
103-104
with major
historical support
at 100.83 and a
monthly close below
this will signal a
economic depression
In Japan

Economic Confidence Model tm
Defining the global business cycle
Currency hedging
will be the only
means of
surviving the
Years ahead for
Volatility will rise
with political
mismanagement

Economic Confidence Model tm
Defining the global business cycle
- - - - - - Outlook - - - - - -
1998 = Collapse of Russia
1999 = Low Gold & Oil
2000 = Technology Bubble
(Like Railroads in 1907)
2002 = Bottom US Share Market
2007 = Real Estate Bubble, Oil hits $100
2009 = Start of Sovereign Debt Crisis
2011-15 = Japan Economic Decline
EURO begins to crack due to debt crisis
2015.75 = Sovereign Debt Big Bang