Princeton Economics International Fall Tour

Transcription

1 Princeton Economics International 1998 Fall Tour

2 Success of PEI Global Market Approach July 20th, 1998 April 1st, 1994 Dec 29th, 1989 October 19th, 1987 August 1985

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11 Economic Confidence Model tm

12 Economic Confidence Model tm Back Testing through History

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20 US 1929 Bubble Top Period Doubling Effect of last 2 years sign of a Bubble Top

21 Period Doubling Effect of last 2 years sign of a Bubble Top Tokyo 1989 Bubble Top

22 Period Doubling Effect of last 2 years sign of a Bubble Top US advance was 30% of that in Europe for 98 European Bubble Top of 1998

23 Today s problems have been caused by the disruption to global capital flows thanks to the: G7 IMF World Bank BIS Euro Politicians

24 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.

25 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

26 87 Crash caused by 40% decline in US dollar by G5 which sparked major selling of $ assets

27 As capital returned to Japan Bubble Top form with the turning point

28 Following the 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.

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31 Capital Flows reached record highs in 1989 for Indonesia & Taiwan

32 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.

33 US market reached a precise low on April 1st, 1994 in conjunction with the Economic Confidence Model Turning Point

34 12 waves of 8.6 months = 8.6 years

35 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

36 The final period moving into (July 20th, 1998), the market performed precisely according to its 8.6 month component structure

37 Economic Confidence Model tm Gov t Intervention using Interest Rates Never Works

38 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

39 Dollar/Yen reached high in 1995 but the continued economic decline for 26 years from ( ) will be likely unless a Yearend closing above takes place for 1998 Year-End

40 Dollar support lies at 110, 107 and with major historical support at and a monthly close below this will signal a economic depression In Japan

41 Currency hedging will be the only means of surviving the Years ahead for Volatility will rise with political mismanagement

42 Outlook = 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 $ = Start of Sovereign Debt Crisis = Japan Economic Decline EURO begins to crack due to debt crisis = Sovereign Debt Big Bang