Transcript Slide 1

DAVID CHAPMAN
CYCLES and TRENDS
“Those who cannot remember the past are
condemned to repeating it”
-- George Santayana (1863-1952)
“The people are turbulent and changing, they
seldom judge or determine right.”
-- Alexander Hamilton (1755-1804)
“The issue today is the same as it has been
throughout all history, whether man shall be allowed
to govern himself or be ruled by a small elite”
-- Thomas Jefferson (1743-1826)
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CYCLES and TRENDS
Long Term Cycles
Dewey & Dakin (54 Year Commodity Cycle)
Kondratieff Kwave (54-60 Year Supercycle)
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CYCLES and TRENDS
Edward Dewey And Edward Dakin
● 54 Year Cycle
● Their book charted prices from 1790 for
wholesale prices that coincided with peaks and
valleys for commodity prices
● Cycle measured peak to trough with roughly 27
years to peak and 27 years to trough
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CYCLES and TRENDS
DEWEY & DAKIN PREDICTIONS
Year of Peak Prediction –
Dewey & Dakin
Actual Peak
Peak War
1755 *
Seven Years War aka
French Indian Wars
(Britain/France)
1817
1817 (1810)
War of 1812
1871
1868 (1864)
Civil War
1925
1920
WW1
1979
1980/81 (1974/75)
Vietnam
2033
War on Terror? WW3?
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CYCLES and TRENDS
DEWEY & DAKIN PREDICTIONS
Year of Trough Prediction – Actual Trough
Dewy & Dakin
Trough War
1729/1730 *
French Colonies and Great
Britain
1790
1790 (1783)
American Revolution
1844
1842 (1837)
Mexican American War
1952
1949 (1932 and 1947)
WW2
2006
2001
Cold War/Gulf Wars/Balkan
Wars
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CYCLES and TRENDS
Kondratieff Cycle or Kwave
● Russian Economist under Stalin
● 50-60/65 year cycle
● Can be controversial
● Not widely accepted
● Ian Gordon – Long Wave Analyst
www.longwavegroup.com
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CYCLES and TRENDS
The K-Wave Cycles 1789-Present U.S.A.
SPRING (EXPANSION)
SUMMER (RECESSION)
AUTUMN (PLATEAU)
WINTER (DEPRESSION)
1784-1802
(American
Revolution)
1803-1816 (War of
1812)
1817-1834 (Era of
Good Feelings)
1835-1844
(Mexican American
War)
1845-1858
(Mexican American
War)
1859-1864 (Civil
War)
1864-1874
(Reconstruction)
1875-1896 (Indian
Wars)
1896-1907 (Spanish 1908-1920 (WW1)
American War)
1921-1929 (Roaring
20’s)
1930-1948 (WW2)
1949-1966 (Korean
War, Suez Crisis,
Cuban Missile
Crisis, Cold War)
1982-2000 (The
Information Age)
2000-? (War on
Terror? WW3?)
1966-1981
(Vietnam War)
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CYCLES and TRENDS
Kondratieff Phase
Best Investments
Worst Investments
Characteristics
Spring (Expansion)
Inflationary Growth
Stocks, Real Estate
and Commodities
slowly rising
Bonds
Low inflation,
healthy banking
system, growing
savings
Summer
(Recession)
Stagflation
Commodities, Gold
and Real Estate
Stocks and Bonds
Inflation, debt
growing (corporate),
stagnate growth
Autumn (Plateau)
Deflationary Growth
Stocks, Bonds and
Real Estate
Commodities and
Gold
Debt levels soar
(consumer), wealth
disparity, stock
market euphoria,
low inflation
Winter (Depression)
Deflation
Gold, Cash and
Commodities in late
cycle
Stocks, Real Estate,
Bonds (until end of
credit crunch then
they fall again)
Deflation, debt
collapse, trade
conflicts, social
upheaval
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
Other Cycles
● Kuznets – 15-25 Year Real Estate/
Infrastructure
● Juglar – 7-11 Year Business Cycle
● Kitchin – 3-5 Year Inventory Cycle
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
Commodity Cycles
● Gold
● Silver
● Oil
● Natural Gas
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
Bubbles And Panics
● South Sea Bubble
● Roaring 20’s Bubble
● Tokyo Nikkei Bubble
● NASDAQ Bubble
● Housing Bubble
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
Intermarket Technical Analysis
● Dow/Gold
● Dow/Oil
● Oil/Gold
● Gold/Silver
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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SOME INTERESTING CHARTS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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CYCLES and TRENDS
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SOME ECONOMICS
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Declining Consumer Confidence
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Rising Household Debt Declining Savings
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Rising Household Debt as % of Disposable Income
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Declining Household Net Worth as % of GDP
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Declining % of Homeowner Equity
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Record High Total US Debt as % of GDP
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Real Estate Decline
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More Mortgage Resets to Come I
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More Mortgage Resets to Come II
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Lots of Housing Supply on the Market
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Housing Prices have taken a Pounding
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And there is More to Come
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Owner’s Equity Keeps Declining
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Owner’s are not Getting as Much Out of their Homes
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Home Ownership is in Decline
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But the Houses just kept getting Bigger
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Growing Commercial Vacancy Rate
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Rising Real Unemployment
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Declining Real Earnings
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Declining Automobile Competitiveness
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Declining GDP
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Rising International Trade Deficits
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Growing Control of US Assets
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Explosive CDS Exposure
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Explosive Derivatives Growth
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Record Federal Reserve Liabilities
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Bubble in Financial Assets
World Financial Assets vs. Nominal World GDP
250
World Financial Assets
Nominal World GDP
200
00%
$195
Financial Depth
(% of GDP)
$167
150
Trillions $
$142
$94
100
$45
$43
50
$48
$55
$32
$22
$12
$10
0
119%
201%
295%
317%
346%
356%
1980
1990
2000
2005
2006
2007
Note: Asset and GDP figures have been rounded for simplicity. Financial depth percentages were calculated using nonrounded figures.
Source: McKinsey Global Institute
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High Real Inflation
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Rising Long Term Inflation
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Expanding Money Supply
U.S. Money Supply
US Government-calculated M3 1971-2006 ; SGS* M3 calculation 2006 - March 31, 2009
16
14
12
Trillions $
10
8
6
4
2
0
1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
*SGS is Shadow Government Statistics, a private economics firm specializing in calculating US money supply and consumer price
inflation figures, using government-supplied data. SGS has calculated the M3 Money Supply figures since the Federal Reserve
stopped publishing this figure n 2006.
Bullion Management Group Inc. © Copyright 2009
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Growing Global Money Supply
Annual Increase in Money Supply
As of March 30, 2009
Japan
United States
Canada
Money Supply as Reported
Mexico
Russia
UK
China
India
Brazil
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Source: Bloomberg
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Growing Federal Obligations
U.S. Government Debt vs. Obligations
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Gross Federal Debt
Total Federal Obligations*
Trillions $
50
40
30
20
10
0
2002
2003
2004
2005
Source: www.shadowstats.com
2006
2007
2008
* Including Social Security and Medicare
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Total Government Debt
Government Sector Debt
Federal Government Sector
Debt
10 Trillion
State & Local Government Sector
2 Trillion
Un-funded Social Security contingent liabilities looking forward
7 Trillion
Un-funded Medicare contingent liabilities, estimated
Total Above Government Debt
37 Trillion
$56 Trillion
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Exploding Federal Budget Deficits
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Escalating Federal Spending
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Gold, Silver and Platinum
Percentage Increase 2002 - 2008
400%
350%
300%
Gold
Silver
Platinum
250%
225%
200%
196%
150%
119%
100%
50%
0%
2002
2003
2004
2005
2006
2007
2008
2009
Bullion Management Group Inc. © Copyright 2009
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Thank You
David Chapman
www.davidchapman.com
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