📝Long cycle thoughts (2024+):
✅Liquidity cycle turned in late 2022 at the bottom of 3.5Y Kitchin cycle and will be in uptrend for several more years 🔄Both 18.6Y and 3.5Y cycles have ~2 more years after which we re-assess if we have more time in the long cycle
✅Fed started easing exactly on time with presidential cycle working out well so far. In fact, I expected them to start cutting H2 2023, so surprised they lasted this long. I noted in December 2022 that they have to do QE soon due to bank reserves hitting stress levels - this played out exactly that way. Draining liquidity will remain impossible task keeping inflation elevated.
✅Fed over eased, then overtightened, 8%+ mortgage rates/ 5% 10Y spooked them, now making up by easing too fast and signaling further accommodating policy. Powell going for glory.
✅Any signs of banking stress, economic weakness or market crash will trigger further easing and new round of QE (powell looking for an excuse to do it)
⚠️I expect we’ll get several 10% type and at one 20% type shakeouts all within secular bull market - with 1st one being in early 2024
🛢️Mid-late 2023 was 4Y cycle low for most Commodities. Now trend is up till 2025 at least, potentially 2026. I’m looking to allocate to commodities after being out of it most of 2023.
🏠Housing cycle should also start its final leg up
✅There are still trillions of excess M2 in the system and 1T gov deficit making deflationary recession unlikely
🛢️With both oil/commodities and housing back in uptrend and 1T fiscal deficit and easy Fed in the election year, we have a set up for 2nd wave of inflation cycle within 5.34Y cycle (see chart below)
🌽Watch agris start moving up and oil spiking back to ~$100 by spring - sending first warning shot
💡One hypothesis I had past 2 years is this 18.6Y economic cycle ends with 2nd wave of 5.35Y inflation cycle and Fed tries to tighten again (yes they will hike again thinking they can repeat 2022-23), but this time there will be no excess savings and we’ll be in late stage economic cycle and this will trigger economic collapse.
🚨When Fed realizes they are on the brink of economic collapse they flood system with money triggering even bigger inflationary cycle (10%+ CPI)
🇯🇵BoJ will likely drop YCC making yen is significantly underpriced which is supported my my cycle work
💦My plan for next 2 years is stay liquid, save and have a back up plan for the crisis and assess if your job is safe due to Ai and upcoming economic collapse. Most people will be blind sided, not prepared and will overextend financially due to mass euphoria. Stay humble when everyone else will try to keep up with the joneses
⚠️Assets will become extremely overpriced and will pull decade worth of returns forward. Investors will give back most if not all gains from COVID lows.
📝This has been my working hypothesis past 2-3 years and hasn’t changed much - most of these ideas have been shared here.
👇SQUARE OF 9👇
1) Gann’s Pyramid is a trading system developed during the 1920s by William Gann. Although his theory was never published in a scientific journal and some traders view it as something close to astrology.
#GANN#squareofnine#timeforecasting#astrocycles
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Quote of the day: "There is a Time in the Price of Certain Products and Commodities, Which, If Taken by Men at the Advance, Leads on to Fortune; And if Taken at the Decline, Leads To Ruin." Samuel Banner