Wednesday, January 1, 2025

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.

 
S&P 500 projection for 2025 (timing, not magnitude) with seasonally strong windows in the bottom panel.

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.
 
 EUR going to crash into 2026 low.

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.
 
 Gold upward bias from Q2 2025 onwards.
 
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.
 

Saturday, December 28, 2024

The Function of Remembering | Chris Marker

I will have spent my life trying to understand the function of remembering, which is not the opposite of forgetting, but rather its lining. We do not remember. We rewrite memory much as history is rewritten. How can one remember thirst?

 » How can one remember thirst? «
 
»
I’m writing you all this from another world, a world of appearances. «

I wonder how people remember things who don't film, don't photograph, don't tape. How has mankind managed to remember? I know: it wrote the Bible. The new Bible will be an eternal magnetic tape of a time that will have to reread itself constantly, just to know it existed.

Solar Activity and "Violence-from-Below" Events | Suitbert Ertel

Alexander Chizhevsky's 1921 claim of a relationship between solar activity and revolutionary mass behavior is examined. A Master Index of Violence-from-Below Events (MIVE) is compiled, consisting of 2,101 events and 4,000 references extracted from 18 historical sources (chronologies, timelines, etc.) covering the period A.D. 1700–1985. [...] The relationship between solar activity and violence-from-below is found to be highly significant (p < .001). 

A.L. Chizhevsky (1897–1964), Russian scientist, Soviet Gulag prisoner, and founder of heliobiology, a field dedicated to
studying the impact of solar activity on biological, social, and psychological processes. His work spanned experimental
biophysics and hematology (structural analysis of blood). In addition to his scientific pursuits, Chizhevsky wrote poetry,
engaged in literary criticism, and taught history and archaeology.
 
At the 1926 Annual Meeting of the American Meteorological Society, an American participant delivered a paper written in 1921 by Alexander Leonidovich Chizhevsky, who was then a 24-year old Russian scholar. Its bombastic title "The Influence of Cosmic Factors Upon the Behavior of Organized Human Masses, as Well as Upon the Universal Historical Process" appeared laughable. The author claimed that occurrences of social unrest, rebellions, upheavals, revolutions are significantly correlated with solar activity, i.e., with the ups and downs of magnetic turbulence of the sun. In his own words: "The greatest revolutions, wars and other mass movements which have created nations, have given origin to the turning points of history, and have shaken the life of humanity and entire continents, tend to coincide with the periods of the maxima of the sun’s activity". [...] Since 1958, after being rehabilitated from Stalin's Gulag system, Chizhevsky has been acknowledged in Russia and elsewhere as the founder of the discipline of "heliobiology." By then some of his claims had appeared less vaunting and more admissible, especially in medical science circles: Typhus, influenza pandemics, cholera, and other epidemic diseases, as well as the morbidity of animals, were alleged to be correlated with solar activity. Chizhevsky's major claim, however, the correlation of turning points in human history with solar maximum conditions, was deemed unthinkable.
 
Secrets of the Sun — A.L. Chizhevsky's legacy.

[...] In line with Chizhevsky’s hypothesis it is assumed that human behavior, if correlated at all with solar activity, would turn spontaneous and impulsive under helioactive conditions among many people at the same time. The probability of mass activation would increase. Therefore all events indicating "violence-from-below" are regarded pertinent, i.e. spectacular attempts by large groups of people at enforcing changes of their living conditions. The category "violence from below" has been adopted from Johan Galtung who distinguished between (1) violence from below (revolutionary violence); (2) violence from above (counter-revolutionary); (3) horizontal violence between equals over some incompatible goals; and (4) random violence, related neither to interests nor to goals. 
 
» An event is coded violence-from-below if the chronology
refers to it by one or more of the above verbal labels.
«
 
 » The idea of Q-analysis is simple. If historical events are independent of solar activity, their temporal distances from
the nearest solar maximum should be random. Even though a revolution might coincide with a solar maximum due
to chance, this should occur relatively infrequently. For larger numbers of historical turning points, temporal distances
from solar maximum years should not differ from chance expectation. The same applies for solar minimum years. «

Unlike Chizhevsky, we did not lump events of Galtung's four categories together. Thus, all horizontal violence acts were not considered, such as territorial or international wars, which are generally not launched by the people but by institutional authorities. Violence from above was also excluded, except if such occurrences indicated preceding acts of violence from below. Galtung's random violence events (Category 4), such as massacres and pogroms—however rare expressions of mass unrest—were also included. [...] Palace revolts, coups d’états, and similar instances of violence without involvement of the ruled masses remained unconsidered, as well as individual acts of violence directed against authorities without apparent involvement of a larger population (e.g., assassination, terror acts). [...]
 
Conclusions
Evidence has been accumulated in this study supporting the claim of Chizhevsky of a connection between solar activity and violence-from-below. A comprehensive Master Index of Violence Events (the MIVE database) was compiled, and influence of bias was strictly excluded. The procedure of analysis circumvented methodological artifacts arising from autocorrelations. In addition, the distribution generated by randomizations allowed for straightforward significance judgments. Finally, results obtained from genuine data were compared with results obtained from various controls. It turned out that the hypothesized connection between solar activity and violence-from-below is positive (the more solar activity, the more social violence), and the correlation is generally not lagged. 
 
 » The more solar activity, the more social violence, and the correlation is generally not lagged. «
A p-value of less than 0.001 indicates the very strong statistical correlation between solar activity and violence-from-below, 
making the result highly reliable, with the likelihood of the relationship occurring by chance being less than 0.1%.

In sum, history text references to violence-from-below events tend to coincide with the years of maximum solar activity. However, a number of ensuing problems need to be solved:
  1. Physical Variables: Which variables are actually effective? Are solar emissions responsible? Are mediators like geophysical disturbances or climate involved? Solar activity effects on the world’s climate are too small and too slow to explain unlagged revolutionary behavior. Geomagnetic influence is somewhat more likely, but cycles of geomagnetism peak about two years later than solar cycles. Cosmic radiation, whose intensity is attenuated by solar magnetism, might be an effective variable.
  2. Physiological Variables: Which psychobiological structures underlying violence-from-below are responsive to such hidden stimulation? Neural structures for sensory or subsensory perception, for emotional processes, or for cognitive processes?
  3. Effect Size: How strong are solar correlated (external) factors compared to social-political dynamics (internal factors)? The external factors are apparently strong enough to emerge despite internal political dynamics. If the external effects were weak, they would be diluted.
  4. Effect Limitations: Why is solar maxima not always associated with violence-from-below? Why did high violence-from-below sometimes emerge despite low solar activity? Historical incidences of unexpectedly high or low violence — “unexpectedly” in view of deviating solar conditions — might be of foremost interest for investigating the range of heliodependence of social-political dynamics. 
  5. Concomitants: The role of revolutionary events in broader societal and historical contexts must be considered. Long wave oscillations have been claimed between liberal and conservative worldviews, and economic cycles of the famous Kondratiev type ought to be put into perspective. The connection between violence-from-below with conflicts of horizontal extension (international wars) needs investigation.
  6. Generalizations: Revolutionary movements are generally seen as expressions of new ideas rather than as blind valves releasing stowed-up aggressions: “Revolution is ... a war of ideas”. The question arises whether ideational activity in other domains, aside from the social-political domain, may oscillate with changing solar activity-related conditions.
  7. Present and Future: How strong is solar activity in 1996? We find ourselves in the midst of a solar minimum. Applying our above observations, we may be tempted to conclude that presently the probability of major world revolutions is low. The most recent turning point in contemporary history occurred in 1989, a solar maximum year. The 1989 revolution brought to an end an era whose beginning was the Bolshevik Revolution of 1917, a solar maximum year. The next solar maximum is expected for A.D. 2000 or 2001. The probability of revolutionary upheavals on this globe should then be greater. It seems advisable, however, to postpone predictions and to rather await further conclusions from research conducted by macroecologists, i.e., by a team of experts from all those disciplines of science, social science, and history whose contributions to solving the solar activity riddle are badly needed. Regrettably, such a team does not yet exist, but researchers in chronobiology/chronomedicine and in biogeomagnetics are not far from setting the stage: "An international and truly interdisciplinary effort will be required to ascertain the validity of biogeomagnetics ... to scrutinize physiological harbingers and their possible correlations with 'space weather' parameters."
 

Tuesday, December 24, 2024

2025 US Stock Market Outlook │ Larry Williams

My outlook on the US stock market in 2025 uses the metaphor "Clint Eastwood Market," representing a mix of good, bad, and ugly factors:
  • On the positive side, there are no immediate signs of a US recession, with strong employment figures and a labor market expected to improve in early 2025. Business conditions remain stable, and historically, stock markets tend to perform well in the first year of a presidential term. 
  • However, there are risks, including potential profit-taking after a strong 2024 market, the uncertainty surrounding trade policies and tariffs, and the unpredictable actions of the Fed, Congress, and business leaders like Elon Musk. 
  • On the negative side, market valuations, such as high price-to-earnings and Shiller CAPE ratios, suggest that the market is overvalued, which increases the risk of a correction. Additionally, industrial production is underperforming, which could hinder economic growth, and inflationary pressures from the excessive money supply expansion since the COVID-19 pandemic may contribute to market volatility.
 
Very Long-Term Market Wave in the DJIA and US-stocks down into 2038.
 
 Shorter Long-Term view on the DJIA with major lows in 2025 and 2028.
 
2025 will be a trading range market with a bullish bias.
 
 Selling pressure in Q1 of 2025. Second half of the year strong. Overall gains.

Given the current very high valuation ratios, the 2025 forecast indicates slower growth and market underperformance compared to historical averages. Therefore I don’t foresee a runaway bull market in US stock indices in 2025, and volatility is likely to be a key characteristic, with short-term rallies and corrections. Very long-term market cycles suggest we are at the beginning of a prolonged period of sideways movement, with the next major bull market not expected to begin until around 2038. 

Regarding a major crash that some are constantly talking about, I don't see it occurring in 2025 either. While the market will be challenging, the overall bias will lean toward the upside.


2025 Bitcoin forecast.

See
also:

The S&P has traded above its 200-DMA all year. This has happened 11 other times since 1952, and the next-year move has been about
half the average. Last time this happened was in 2021, and before that, 2017  —
Bespoke, December 24, 2024.

Monday, December 23, 2024

Outlook for 2025: Depression, Debt, Default & Destruction | Martin Armstrong

The year 2025 marks a critical turning point, with a global economic crisis on the horizon. Our computer models predict a major downturn, particularly in Europe, and a prolonged US recession extending into 2028. This crisis stems from long-term mismanagement by central banks, especially the Federal Reserve, which kept interest rates too low for too long, forcing banks to hold risky government debt. While analysts focus on short-term rates, the Fed has little control over long-term rates, which continue to rise despite rate cuts. Tensions in Europe, including the threat of World War III, are exacerbating this issue and pushing rates even higher.

» While financial elites are aware of the looming collapse, everyday people will feel its full force. «

The rise in long-term rates reflects a loss of confidence in government debt. For instance, corporate bonds in France are now offering better returns than government bonds, and even Greece's debt is becoming more attractive. This points to systemic weaknesses within European governments. Meanwhile, the US faces its own dilemma: raising rates to combat inflation only makes its national debt more expensive. As the world's largest borrower, higher rates simply add to the debt burden rather than reducing spending. This crisis underscores the failure of Keynesian economics, which Paul Volcker acknowledged in 1979. Today, the US government borrows far more than in the past, and raising interest rates does little to curb spending—it only adds to the debt.


The financial system is now in deep trouble, and the average person will bear the consequences. Europe is headed for a depression, and the US is facing a severe recession. Unemployment will rise, wages will shrink, and basic goods will become more expensive. The gap between the rich and poor will widen, and financial instability will increase. A sovereign debt default in Europe by 2025 is likely to trigger a broader collapse, with massive financial instability by 2026-2027. Many banks and pension funds are heavily invested in government debt, and a default could lead to the disintegration of European financial systems. Insiders are very much aware of the crisis and fear that public panic could worsen the situation, potentially triggering bank runs. While not all banks are equally at risk, poor management and political interference in banking have worsened the problem. The Federal Reserve, designed to act as a backstop for failing banks, may be overwhelmed by the scale of the crisis.
 
The impact on ordinary Americans will be severe, with rising unemployment, shrinking wages, and higher living costs. While financial elites are aware of the looming collapse, everyday people will feel its full force. The US government’s failure to roll over its debt could spark a chain reaction, causing widespread bank failures. The interconnectedness of the banking system means one collapse could trigger a broader financial breakdown. Cash will become essential, as digital transactions and credit systems may fail, as seen in previous disruptions like the Canadian trucker protests.

I strongly recommend preparing for this crisis by having physical cash and at least two years' worth of food stored. The collapse of the financial system will lead to widespread losses in banks and pension funds, and the government and central banks will be unable to protect everyone. Those who are unprepared will suffer the most.

 November 2024: A Norwegian task force has advised against the immediate adoption of a central 
bank digital currency, while South Korea has launched a CBDC pilot with seven major banks.

As the debt crisis worsens, geopolitical instability will exacerbate inflation and push capital into the US as a safe haven. The dollar will strengthen, and sectors like gold, food, and bonds will see increased investment. However, emerging markets with high foreign-denominated debt, such as Brazil, will be particularly vulnerable to financial crises.

I also caution against the growing threat of Central Bank Digital Currencies (CBDCs), which would grant governments unprecedented control over personal finances. The rise of gold as a long-term safe haven, coupled with rising long-term interest rates, will create significant risks for those holding variable-rate debt. People should prepare by securing tangible assets like cash, food, and gold, and locking in fixed-rate debt where possible. The coming crisis is inevitable, and those who prepare will have the best chance of weathering the storm.