The wave is coming
THREE weeks from now two events will take place. They are not connected but it is interesting. Vladimir Putin’s next presidential inauguration is set for May 7, 2024. In addition, there will be another minor peak in Wave 935 of the Economic Confidence Model, which incidentally began on January 18, 2020.
Trending on January 18th 2020 on Twitter, the Internet in general, and on Social Media: “Women’s March 2020,” “NFL Playoffs schedule” and “Coronavirus.” On page 10 of the New York Times was an article, “Three Us.airports to Check Passengers for a Deadly Chinese Coronavirus.”
I wrote several times in 2019 that this turning point would bring a wave of Economic Chaos, my last column on the subject published in September 2019.
The current year, 2024, is the “Year of Uncertainty.” The coming minor peak of wave 935 begins a “downtrend” until the beginning of wave 936 on August 15, 2028. Never fear. I fully intend to be around for that day.
The wave pattern that we are experiencing now is the same—a minor peak with a major wave turning point to follow—that I warned about in mid-2015, which happened in October 2015. That minor tuning point created a time of Political Chaos in 2016, best illustrated by the words “Duterte, Brexit, Trump.” A year before the votes were cast, those three outcomes were a delusional fantasy.
Then came wave 935 and “The Virus” in 2020. Note that 2016 to 2020 is four years, as is 2024 to 2028.
The current year, 2024, is the “Year of Uncertainty.” The coming minor peak of wave 935 begins a “downtrend” until the beginning of wave 936 on August 15, 2028. Never fear. I fully intend to be around for that day.
“The Year of Uncertainty.” Politics is always expected to be chaotic and always in a state of flux because it is run on emotions. Unsurprisingly, those emotions are greed and fear. There is the “greed” of wanting to have (or keep) power and the “fear” of losing that power if you do have it. Therefore, any government policy that is political in nature—meaning unquestionably to get votes—has a short-term motivation normally without any concern for future consequences.
But economic policies are supposed to be for the long term. External forces that influence policy are normal and often difficult to predict and even harder to adapt to. Nonetheless, mistakes have to be corrected without any regard to the “politics.”
The US Consumer Price Index in the 24 months prior to the start of the tightening cycle in March 2022 increased by 11.4 percent. In the 24 months since the start of the tightening cycle, the CPI is up 8.6 percent. Something is not right.
The inflation rate in the US peaked in June 2022. Post-pandemic GDP growth peaked in the fourth quarter 2021. But inflation has not returned to pre-pandemic levels. Something is not right.
It was firmly expected that the Federal Reserve would reduce interest rates by the first quarter of 2024 or as ING bank said on December 1, 2023, “The Fed will start cutting interest rates in the second quarter of next year, delivering as many as six 25-basis-point rate cuts totaling 150 basis points.”
December 12, 2023: “Futures markets predict four to five quarter-point rate cuts in 2024.” American financial services firm Morningstar on December 15, 2023: “We predict 6 interest-rate cuts in 2024.” January 15, 2024: “Goldman Sachs expects the Fed to cut interest rates 5 times this year, starting in March.”
Now, April 9, 2024: “Markets are pricing in two quarter-point or less rate cuts by the Fed in 2024.”
Two takeaways. Federal Re
serve interest rate policies failed to contain inflation during the last two years. But the Fed should not feel bad. There currently seems to be two types of “successful” economies. There are countries with relatively high annual GDP growth and relatively high annual inflation—us (3.2 percent/3.5 percent), India (7 percent/4.85percent), and Indonesia (5.0 percent/3.05 percent).
Then we have relatively low GDP growth and relatively low monthon-month inflation, such as Canada (0.6 percent/0.3 percent), Japan (0.1 percent/0.0 percent), and South Korea (0.6 percent/1percent).
However, the uncertainty is completely uncontrolled as witnessed by stock and bond trading and price movements as well as (no hate mail please) in the crypto market, also up and down like a PSE basura stock, which is super profitable for crypto traders.
There is nothing wrong with “uncertainty” and trading it makes fortunes. But expect more fun times ahead and be prepared both mentally and financially.