Saturday, January 4, 2025

The Euro’s Collapse and the Greenback’s Last Illusion | Gerry Nolan

The euro’s descent to a two year low of 1.032 USD is the sound of a currency cracking under the weight of its own contradictions. Germany’s industrial stagnation, Europe’s energy crisis, and complete surrender of monetary sovereignty to DC have turned the euro into a sacrificial lamb on the altar of empire. But let’s not mistake the dollar’s temporary resilience for permanence. It’s a currency underwritten by $36.2 trillion in debt and more than $200 trillion in unfunded liabilities, a bankrupt Ponzi scheme of historic proportions, posing as stability. Both currencies are hurtling toward collapse, but Europe will go first, because vassals are always sacrificed to keep the empire’s illusions alive.

» A bankrupt Ponzi scheme of historic proportions. «

Germany, heart of the Eurozone, has been gutted. Once Europe’s industrial engine, it limps along, strangled by soaring energy costs and a U.S.-driven embargo on cheap Russian oil and gas. Growth this year will barely scrape 0.2%. Volkswagen and Bosch, industrial giants that once symbolized German power, are scaling back as LNG bills pile up. This was no accident. Europe didn’t lose sovereignty, it gave it away. Its decision to sanction its own energy lifelines was both economic folly and geo-servitude. We cannot forget the Nord Stream sabotage; Germany, fully aware of who committed the act of economic terror, chose silence over sovereignty, humiliation over defiance.

 » Europe will fall first. «
 
But while the euro collapses, the dollar isn’t sitting on quick sand. It clings to its final illusions of credibility, even as it’s underwritten by mountains of debt and liabilities that no amount of Fed magic can erase. And then came the theft, the empire’s $300 billion seizure of Russian sovereign wealth. Beyond theft; it was the opening of Pandora’s box. The empire told the world that no reserves are safe, no currency is immune if you dare step out of line. This was much more than a moment of recklessness, it was a precedent that will haunt. What was meant to cripple Russia will be used against the empire itself, as nations accelerate their flight from dollar hegemony.

»
In the Euro, an 18-month cycle low is due and will likely occur around March 2025. The subsequent 18-month cycle is 
likely to be left-translated, with a drop into the 2026 four-year cycle low, targeting below parity with the dollar. «

The euro’s plight is intertwined with this arrogance. Europe’s decision to bow to DC didn’t just destroy its economy, it ceded the very monetary sovereignty that once made the euro a contender for global relevance. The ECB has slashed rates four times, and predictably its currency keeps falling. It’s a vassal of the greenback, enslaved by policies designed not for Europe’s prosperity but for to buy the empire time.

 » The dollar’s credibility isn’t real, but enforced. «

Meanwhile, the dollar revels in its short-term resilience, propped up by faux military dominance and the inertia of global finance. But the theft of Russian reserves has shattered the illusion of dollar stability for the rest of the world. Nations across the Global South now see the empire for what it is: a bankrupt enforcer clinging to its racket. The dollar’s credibility isn’t real, but enforced. And once enforcement becomes the only tool, the system collapses from within.
 
» The dollar will be next. «
 
Europe will fall first, sacrificed to buy the empire a few more hours. DC, fully willing to watch Europe burn, has already shown its hand. The mafia-style LNG extortion racket, the indifference to Europe’s collapsing industry, and the Nord Stream humiliation are proof enough. The empire doesn’t have allies, it has dependents. But don’t think the dollar will escape its own reckoning. When the world finally moves to alternatives untethered from the empire’s whims, both the euro and the dollar will be relics of a failed order.

And here’s the final note: the theft of Russian assets was a declaration of war on the global financial system itself. It shattered the last vestiges of trust in the empire’s currency regime. The euro may be the first to collapse, but make no mistake: the dollar will be next. When the dust settles, Washington will look back on the theft of $300 billion as the moment it signed its own death warrant. This isn’t just the decline of currencies, it’s the funeral dirge of an empire that mistook coercion for strength.

Kondratiev Waves Aligned with Solar Cycles | Leonty Miroshnichenko

If cosmophysical periods influence the climate, changes in crop yields, epidemic disasters, and creative productivity, it is difficult to imagine that these rhythms would not be reflected in the economy. The economic cycles discussed in modern literature on the dynamics of economic indicators are well-known space (natural) periods. It was through the study of variations in economic indicators that it was first understood that the dynamics of such a complex system are not described by a single cycle or rhythm, but by a set of cycles, i.e., a spectrum.

Data on Economic Conditions ("Kondratiev waves") versus Solar Activity (SA) shows that the turning points of
economic fluctuations are closely aligned with some maximums of the Wolf number. The dates of SA maxima
and minima prior to 1749 were reconstructed from indirect historical and geophysical data.

The spectrum of economic cycles exhibits a number of peaks, with the most significant periods being: 3.5, 5.5, 8.0, 11.0, 18.0, 20–22, and 54 years. Short periods (e.g., the 3.5 year Kitchin cycle) can have certain regional characteristics. On the other hand, long economic cycles must apply to the entire global economy. These include the long "Kondratiev waves" (54 years), named after the prominent Russian economist Nikolai Kondratiev (1892–1938). The graph above shows data on economic conditions ("Kondratiev waves") versus solar activity (SA). The turning points of economic fluctuations closely align with some maximums of the Wolf number. The dates of solar activity maxima and minima prior to 1749 were reconstructed from indirect historical and geophysical data.

Updated December 2, 2024.

The "Kondratiev waves" have been clearly traced in the world economic system since the early eighteenth century, appearing in many indicators simultaneously—such as industrial production, wholesale prices, and the number of innovations in industry and agriculture. Although the parameters of these fluctuations change slightly, reflecting evolutionary changes in the world economy, the cyclical nature persists to the present day. There are various theories about the origin and nature of these fluctuations, which indicates that the issue remains unresolved. In this book, we are primarily concerned with the possible connection between the "Kondratiev waves" and solar activity and ecology. In other words, the question arises: Is there synchronism between the peaks of the "Kondratiev waves" and the cosmophysical parameters?

» On average, the difference between the peaks and troughs of solar activity and economic cycles does not exceed six months. «
88% of recessions since the 1800s and 100% of major financial crises occurred during the downturn of sunspot cycles. 

The answer is illustrated in the first graph above. It shows the positions of the extreme points of the long "Kondratiev waves"—their maxima and minima (peaks and dips). These points are determined by analyzing a large dataset characterizing the state of the world economy since the end of the seventeenth century. In this analysis, we considered the results obtained by representatives of various economic schools, each using their own independent economic indicators (indices). The turning points in the trends of the global economy are marked with arrows, and circles indicate the positions of the solar activity (SA) maxima. Dark circles represent those SA maxima located near the extreme points of the "Kondratiev waves," while light circles represent the others.

As shown in the first graph, in only two cases out of 11, the difference between the dates of the black circles (SA) and the dates of the economic peaks and troughs is 3 years. On average, the difference does not exceed half a year. Thus, changes in the world economy are clearly associated with variations in solar activity: when trends in the development of the world economy change, they are almost certain to occur at the maximum of the solar cycle. The pendulum of the economy swings in sync with solar fluctuations. Whether economic oscillations with a half-century period are self-oscillations or exogenous rhythms is secondary. It is evident that the world rhythm is introduced into the economy by Nature.

Wednesday, January 1, 2025

The Worst Final Week of the Year Since 1937 │ Wayne Whaley

The S&P finished a 23.3% year with its worst last week (-2.62%) since 1937, when it dropped -4.61%. The last week is defined as the period from Christmas to the end of the year (Dec 24-31). There aren't many strong analogs to draw insights from, but below are the four instances, post-1930, of a double-digit year ending with a 1% loss in the final week.
 
 » Five trading days later, each of those periods saw an average gain of 2.53%. «
 
It is worth noting that five trading days later, each of those four five-day periods saw positive returns, with an average gain of 2.53%. Additionally, the 1% daily moves in those subsequent five days were 7-1 in favor of the positive side. This provides some modest support for a potential reversal bounce next week, following this week's end-of-year portfolio rebalancing and tax-selling selloff.

S&P 500 Post-Election Year Seasonal Patterns │ Jeff Hirsch

The STA Aggregate Cycle combines the 1-Year, 4-Year, and 10-Year cycle patterns. 
 
Short-term cycle composite of the 2-hour NQ chart.

Recent 21-Year January Market Performance (1999-2019) │ Jeff Hirsch, January 2, 2020.
 
 

The Earth at Perihelion │ January 4, 2025

According to Kepler's Second Law, the line connecting the Earth and the Sun sweeps out equal areas in equal times, causing the Earth to move faster when closer to the Sun and slower when farther away (Law of Equal Areas).

 
The Earth is furthest from the Sun and moves slowest at Aphelion, which occurs about two weeks after the June Solstice, around July 3-5, when the Earth is 180° away from Perihelion. Perihelion, when the Earth is closest to the Sun and moves fastest, occurs around January 3-4, about two weeks after the December Solstice. 
 
 
In 2025, Perihelion in New York City will occur on Saturday, January 4, at 8:28 a.m. EST, a day before the "Slight or Minor Cold" Chinese solar term (小寒) on Sunday, January 5, and when the short-term trend in US stock market seasonality typically changes. Both Friday, January 3, and Saturday, January 4, are Cosmic Cluster Days.

2025 Outlook on S&P 500, Cryptos, Currencies, Metals & Energy │ Namzes

In 2025, the S&P 500 is expected to head toward a multi-year major market top. The overall structure of the S&P 500 is forecasted to rise until mid-January, followed by a correction of more than 10% into late February or mid-to-late March, and then a melt-up into a major top in mid-July or late-August. This will be followed by an approximately 17% drop into late October that will trigger a bear market.


The S&P 500 is projected to rise until around January 17, reaching approximately 6,250, then experience a 10%+ correction by the end of Q1, targeting around 5,600. Key buy points are expected around February 26 and in the second half of March, with the ideal date being March 28, which will set up the final leg up. A minor buy point is likely around June 27. 
 

The major top is anticipated around July 17, with the possibility of a lower high or a double top/divergent high by August 22, with a minimum target of 6,500 and an upside target of approximately 7,000. After this, the market is expected to drop into a low around October 27, aligning with seasonal and nested cycle lows, followed by a bounce that ultimately fails. The S&P 500 is expected to end the year in the red, setting up for a challenging 2026, with a year-end target of 5,650.
 
In 2025 we face a conflict between the Decennial Cycle (years ending in "5"), which is typically the best year, and other cycles that suggest the market will peak in 2025. I will provide commentary on each cycle, starting with the 3.5-Year Kitchin Cycle (41-Month Cycle)
 
1.) The current Kitchin Cycle began in October 2022 (when we accurately called the bear market low), and 2025 will be year 3, which usually marks the peak. After that, the market is expected to decline into late 2026, which aligns with the ideal low of the next 3.5-year cycle. 
 
 2025 will be year 3 of the 3.5-year Kitchin cycle.

2.) Looking at the 4-Year Presidential Cycle, 2025 (the first year) is expected to follow a pattern of a spring dip, a summer rally, and a fall crash. I believe this is the key setup for next year, followed by the second year (2026), which is typically the weakest in the 4-Year Cycle. 
 
3.) The longer 18.6-Year Cycle is entering its peaking window in 2025, or possibly 2026. We are entering year 17 of the cycle, so we should begin watching for signs of a top, such as a marquee event like the SpaceX IPO. Market tops are a process, but we should start looking for indicators like weakening economic data, deteriorating market breadth, and earnings rolling over.
 
 The 18.6-Year Cycle is peaking in 2025, or possibly 2026.
 
4.) The Decennial Cycle shows that years ending in "5" are typically the most bullish in the 10-Year Cycle and rarely have negative returns. However, I believe we may have pulled some of the gains from 2025 into 2024 (since year 4 usually experiences sideways consolidation, setting up a blow-off top in 2025). Given the strength of the Decennial Cycle, we must be mindful that the fall of 2025 could be stronger than I currently anticipate. The average seasonality for year 5 is shown in the second chart.
 
 Years ending in "5" are typically the most bullish in the 10-Year Cycle.
 
 A close-up of the typical Year 5 seasonality.

5.)
I analyzed the years within the 4-year cycle pattern and identified the 11 most similar years, based on a high correlation score and comparable structure. From this analysis, I created a composite historical projection, shown in green. I’ve also included the composite 4-year cycle for reference, and you can see that the best-matching years closely follow the typical 4-year path.
 
The green composite line represents a historical projection based on 
the 11 most similar years within the 4-year cycle pattern.

6.) The 5-Year Liquidity Cycle, proxied by the M2 year-over-year (YoY) change, is expected to peak in the second half of 2025 and then decline until late 2028 or early 2029. The Reverse Repurchase Agreement (RRP) is nearly drained, and while the Treasury General Account (TGA) could provide a temporary boost if it’s spent down, the Fed will soon halt Quantitative Tightening (QT). However, other central banks can't ease much due to the strong U.S. dollar. Maintaining historically overvalued equities will require a significant liquidity injection.
 
 Maintaining historically overvalued equities will require a significant liquidity injection.

The ideal bottom of the 5.3-year inflation cycle falls around the end of 2025. It largely depends on oil, which should begin its multi-quarter run sometime in 2025:
 
 The bottom of the ideal 5.3-year inflation cycle falls around the end of 2025.

7.) On the macro front, GDP growth is expected to peak in mid to late 2025, with rising unemployment signaling a recession in early 2026 or late 2025. The 5-year liquidity cycle is expected to peak around mid-2025 and roll over, which will create challenges for overpriced equities and crypto. The Fed’s actions regarding liquidity will be crucial, particularly if it continues supporting asset prices without real economic justification. 
 
 GDP peaking phase around mid to late 2025.

Bitcoin will experience a deep retest into a March 2025 low, followed by one more run at the 2024 highs in early summer, after which crypto will enter a multi-year bear market. In my opinion, there is a high probability that the next 4-year cycle (2026+) will be left-translated, with Saylor and MicroStrategy (MSTR) being liquidated and the Tether-fraud (USDT) likely exposed. Meanwhile, almost all altcoins will lose 99-100%. It is currently unclear whether Bitcoin will act more as a NASDAQ proxy or a monetary hedge in the years ahead. Many altcoins may have already peaked for the cycle, but some, like Ethereum (ETH), still have more upside.
 
The Dollar is likely to remain in an uptrend into 2025-26. There is a potential pullback early in the year, helping risk assets push higher, followed by a rally into spring (and a subsequent sell-off in risk assets). Then, a big correction in the USD is expected into the July-August low, which should coincide with the stock market top.
 
In the Euro, an 18-month cycle low is due and will likely occur around March 2025. The subsequent 18-month cycle is likely to be left-translated, with a drop into the 2026 four-year cycle low, targeting below parity with the dollar.

The Yen is expected to begin a multi-year uptrend, leading to trillions in capital flowing back to Japan in the years ahead.
 
 » ¥ strength leading to repatriation or repatriation leading to strong ¥? «
 
Bonds remain in a secular bear market, so any rally in bonds will be cyclical (driven by a growth scare or recession), followed by a significant rally in rates. A potential counter-rally in bonds is expected in Q1 2025, but it is likely to fail. The technical target for TNX is 5.5%.

Given that 2022 was the 8-year cycle low in Gold, we now have a bullish intermediate and long-term bias. There is a potential low in the spring around the 2,400 support, followed by a push higher towards 2,800–3,000+ into 2026. Central banks won’t stop buying as the war cycle and geopolitical tensions intensify, while governments debase currencies.
 
Silver is expected to reach 38.00 within the next 6 quarters.

All energy should be in an uptrend over the next 6-8 quarters, with Natural Gas likely leading (reaching a new all-time high in 2026).  
 
 
The next best entry opportunity in Natural Gas is likely to occur
at the end of January to early February 2025, with a confluence of
the 100-day cycle low and the seasonal low. The above is composite
cycle chart from December 3, 2024 for reference.
 
The 3.5-YearCrude Oil cycle (left chart) is starting with long consolidation. 
Leading indicators (second chart) pointing to expansion move due in 2025-26. 
 
Crude Oil is expected to reach the 80 in the spring of 2025, then 100, and 150 by 2026. 
 
» Energy will outperform after big tech tops. «   

My Crude Oil leading indicators and cycles suggest a big move in the next 2 years, but the exact timing of the expansion is hard to pinpoint, potentially around the end of 2025 into 2026. [see also HERE]. Uranium is likely to return to 100+ in 2025, and Coal should also see gains.