Monday, November 9, 2015 |
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YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET | |||||||
New Cycles of War | |||||||
by Martin Weiss | |||||||
Dear Subscriber,
I first read Larry Edelson's
treatise on the Cycles of War more than a quarter-century ago, when his
daughter and my son were attending our K-8 Weiss School here in Palm
Beach Gardens.
One day, Kari posed with Anthony for a school photo, and soon thereafter, she handed me her father's Cycles of War report, while uttering these simple words: "Please read this. It's from my Dad."
I was so impressed, I decided Larry should join our research company.
He wrote that the next major war cycle would not begin until the
21st century. But when it did, he insisted, the consequences would turn
the world of investments inside out and upside down.
The Prediction
Fast forward more than two decades to January 2013. That's when
Larry and I spoke together at our Weiss Wealth Summit at the PGA
National Resort. And that's also when he pinned down the timing more
precisely — with this prediction:At the time, few believed him. Fewer still understood how a nonfinancial phenomenon could become a major factor for financial markets. Yet, here we are, nearly three years later, and not only are wars spreading just as predicted, but global markets are also following Larry's script practically to the letter. To better understand how, let me ask you ...
Four Intriguing Questions
Q: How many major economies in the world are currently improving? With Four Surprising Answers
Answer: Virtually none.
Almost every one — including the European Union, United States, China,
Japan, Brazil, Russia and Canada — is sinking, slowing or just muddling
along.
Q: How many major world commodities are in an uptrend?
Answer: Very, VERY few.
Just in the last 12 months, energy prices have been sliced nearly in
half, with crude oil down 44%, heating oil down 40% and gasoline down
36% ... foods have been clobbered almost across the board with coffee
off 38%; sugar off 19%; soybeans off 15% ... and metals have also taken
a shellacking — nickel down 39%; zinc down
Q: What about corporate profits? 28%; copper down 26%; aluminum down 25%, and silver down 11%. All major commodity indexes — for energy, food, raw materials, and metals — are at or near the lows they made in the 2008-09 debt crisis.
Answer: We're witnessing
the first back-to-back quarters of earnings declines since 2009. It's
an earnings recession. And it's here.
Q: The toughest question of all: With all four of these powerful forces so blatantly negative, why have the U.S. stock averages been marching higher since the end of September?
There are several good
answers. But for us, the most blatant and obvious is the same theme we
have been harping on for the past three years ...
The Global Money Tsunami
This is the term we've coined for the massive influx of flight
capital that Larry began forecasting nearly three years ago — mostly
flowing from major trouble spots overseas and mostly going to large,
high-quality, U.S.-based blue-chip stocks. Tracking this giant money wave is no easy feat. But you can see it in the persistent strength of the U.S. dollar ... the chronic weakness of major foreign currencies and ... most of all, in the recent, die-hard strength of major U.S. stock averages.
One reason is the slump in their economies I just told you about. But in many countries, the most emotional and powerful reason is the war cycle. Money is rushing out of the conflict zones for the same reason that millions of migrants and refugees are flooding to Western Europe: fear.
Whether they're wealthy
investors wiring millions or they're destitute citizens clinging to
their last belongings, the giant motivator that drives them is the
wars, revolutions, and chaos.
The key facts: Fact #1. The violence is spreading. Not long ago, the conflict was concentrated mostly in two countries — Iraq and Afghanistan. Now it has spread to at least seven more — Syria, Egypt, Libya, Turkey, Yemen, Nigeria, Bangladesh, and, to a lesser degree, even Israel. Also not long ago, it was widely believed that the impact of the chaos could be strictly contained to Arab countries. Now, with the migration crisis, it's overflowing massively into Greece, Macedonia, Serbia, Croatia, Slovenia, Hungary, Austria, Germany and beyond. Until just a few days ago, it was widely assumed that the world's industry was safe. Now, with last week's crash of a Russian tourist airline in the Sinai Peninsula, a new fear is spreading that it may no longer be safe to travel. Fact #2. More and more countries are joining the war. Not long ago, most regional and world powers were involved very tangentially, supplying little more than some money and assorted equipment. Now, they're being dragged in far more directly:
Moreover, Russia itself risks getting caught up in an unintended clash with the West or being dragged into an open-ended conflict.
The most immediate risk, BMI
writes, is "some sort of incident between Russian and NATO/Gulf aircraft
in and around Syria, such as a collision or provocation, especially if
it results in fatalities." Another risk, they say, stems from ground
forces that Moscow has sent into Syria to assist its air campaign.
Plus, adding momentum to the escalation, last week Russia sent anti-aircraft missiles to Syria to safeguard its jets. The death and succession of Muhammad, splitting Shias from Sunnis in the 7th century ... The Crusades that pit Christians against Muslims in the Middle Ages ... The fall of the Ottoman Empire, as Britain encouraged an "Arab Revolt" against the Ottomans in the early 1920s. Cold War proxy battles between the United States and the Soviet Union — a time when the CIA provided arms to Osama bin Laden in Afghanistan, and now ... A free-for-all series of military actions by two opposing military forces: The key point: These two global alliances are split along the same fault line between Sunni and Shiite Islam that first appeared after the death of Muhammad 1,383 years ago. It's obviously not a new conflict. It's not going away any time soon.
And now, two major world powers — the U.S. and Russia — have not only taken opposing sides, but they've also joined the battle.
"Peace" Talks?
Yes, there were Vienna talks on Oct. 30. But they were everything but peaceful. Instead, it was mostly a forum for Saudi Arabia (Sunni) to directly attack Iran (Shiite). And the two sides vowed never to agree about the critical issue in the war — the fate of Syria's dictator, Bashar al-Assad. The Saudi foreign minister restated the Saudi position that peace could not be achieved as long as Mr. Assad stayed in power: "He should leave this afternoon. The sooner the better." The Saudi official also insisted that Iranian forces would have to be withdrawn as part of any agreement ... threatened to step up support for moderate Syrian rebels ... and vowed to send them more lethal weapons. Meanwhile,
The Islamic State continues to score victories.
Despite peace talks ... despite thousands of air strikes by both the
U.S. and Russian sides ... despite the direct intervention by so many
nations in the region and beyond ... the Islamic State continues to hold most of its gains and even advance in some areas. Just recently, Islamic State fighters captured the Syrian town of Maheen and mounted a major offensive against Sadad, a mostly Christian town. This brings the Islamic State to within 13 miles of the main road linking the Syrian capital Damascus to their main base in Homs.
And this expands their hold on
the North and East of Syria after the group overran the town of
Tadmur, home of the ancient ruins of Palmyra in May and took the town
of Al-Qaryatayn in August.
Moreover, despite U.S.– and Russian-lead campaigns against rebels in
Syria, neither side has done hardly anything to stop the spread of
terrorist organizations beyond that war zone.
What would you do?
If you're an investor in any
of these countries, in any of the regions near these countries, or any
of the economies impacted by their chaos, what would you do?
Would you stand idly by and let your money lay fallow in their
banks, stock markets or real estate? Or would you make every effort you
possibly can to get it the heck out of there?That's what a growing number is now doing — not only with their money, but with their families, their life and their entire future.
And that's the key factor that's driving U.S. markets higher despite negative economic cross-currents.
We have no doubt the Global Money Tsunami will continue to be an important factor for months to come.
Whether or not it will continue to be the prevailing factor, however, remains to be seen.
Good luck and God bless!Martin
P.S. Click this link
before 2:00 PM Eastern Time TODAY to join Jon Markman's urgent call and
find out how to profit from this technology Revolution!
The
investment strategy and opinions expressed in this article are those of
the author's and do not necessarily reflect those of any other editor
at Weiss Research or the company as a w
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Thursday, November 12, 2015
New Cycles of War
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