Synchronicity: Earthquakes, Bond Crashes, Equity ATHs and Social Unrest

Living so far away from the buzz of Wall Street has its advantages.  As I sit on the side of my volcano (which is dormant) I am witnessing a synchronicity of events.  These events are seemingly unrelated.  From where I sit many long term cycles are asserting themselves.

Earthquakes: Earthquake and volcanic activity is off the charts this year.  We have had the disaster in Nepal and more concerning we have had an increase in earthquakes in North America this year especially in rare places.  For example, Ohio and Texas had one as well as Nevada on Friday.  The ring of fire has been increasing in activity for years, however much of that activity has occurred in the Pacific Rim and Asia.  California is in the ring of fire and it is likely to see a 5.0 or greater mag earthquake over the next 12 months given all the related activity in North America.  The common reason cited for this increase in activity is climate change.  Somehow human activity is responsible for this increase is what the proponents of this theory espouse.  I have also heard that it is caused by celestial alignments that occur with cyclical regularity over hundreds and thousands of years.  Another theory is that the sun is going into a cyclical dormant period which will cool the earth and increase the earthquake and volcanic activity of the earth thus the sun is the cause (record cold winters lately).  Regardless of the reason something dramatic is happening to the earth and it is cyclical in nature.

Here is a video of a guy predicting increased activity in North America over the next several months.

Bond Crashes: On the 8th and the 11th of May in the wee hours we had Global bond crashes that were fixed before the New York open.  Massive Central Bank intervention was needed.  I watched both these crashes occur in real time.  How can bonds crash with massive CB purchases and ECB and BOJ QE?  Well they did and you should be concerned.  The ECB was so concerned they announced that they were going to accelerate their bond purchases in May and June.  My guess is that the speculators have front run this trade so much that their is more supply than the ECB can handle as they go to purchase in the open market.  Have rates bottomed after a 30 plus year bull run?  It remains to be seen but the whole advance in stocks is predicated on cheap money and buy backs.  Higher yields will not support that trade in my opinion and stocks should suffer.  All cycles eventually end.  Keep an eye on rates.

Equity ATHs: Last Monday night on the S&P futures we hit the 161.8% Fibonacci level incorporating the 2007 top and 2009 low.  This level is huge resistance.  We also have time resistance as well: from the 2000 top to the 2007 top was 91 months and from the 2007 top to now is 91 months.  Additionally, the Dow Transports have taken out important support today and we have had a Dow Theory non confirmation for six months.  Non confirmations are not good timing indicators but they have occurred at all market tops except one-1929.  The longer non confirmations go on in time the more meaningful they are.  The longest non confirmation occurred in the 1919-1920 top which was 11 months.  The breadth and internals are also flashing huge warning signs as well as the lopsided sentiment and huge complacency demonstrated by the low VIX.  I am massively short and have been for awhile.  The bulls are banking on continued CB largess and easy money.  The global economy is rolling over and S&P revenue and earnings estimates are coming down but yet we hit new marginal ATHs.  The bulls should consider this fact: we have had 27 CB’s ease this year, a dovish Fed, ECB QE, China rate cuts and continued BOJ QE but yet we are basically unchanged for the year.  The momentum of this market is pitiful and the P/E multiple is expanding as the earnings estimates ratchet lower.  Liquidity is an absolute joke and should the herd come around to my point of view this market will become unglued quickly.  I will cover if I am wrong.  A marginal new high does not make me wrong given what I am seeing.  Remember all market tops begin from new ATH’s.

Social Unrest: The disparity in wealth is at record levels and real unemployment is high.  The masses are becoming increasingly restless and as I have said before we should continue to see civil unrest and mass demonstrations and protests across the country.  Also the government corruption is coming to light as scandal after scandal breaks as the most recent pay to play Clinton Foundation highlights.  The government appears to be preparing for civil unrest given all their ammo purchases by DHS and now the Jade Helm 15 drills occurring across the nation.  When I have casual conversations with people and we turn to politics the common theme is the total lack of trust in government.  Civil unrest is cyclical in nature and it is on the rise.  War is also cyclical and our Nobel Peace Prize President seems to be racing us towards conflict with the Russia and China.

Conclusion:  Are these four things related? Maybe, maybe not.  What I do know is that everything is cyclical and change is constant. However, it does seem to me that a number of cycles are converging.  You are not awake if you don’t have a sense that something big is going on.  Change is coming and it is coming fast.

 

 

 

 

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