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This is Akhil Patel, one of the co-Directors at Property Sharemarket Economics (PSE).
The reason that you’re not hearing from your regular editor, Darren Wilson, this week is because he asked if I could provide you with an update on what’s going on in the markets.
And I also have news about a membership offer for you that shaves a significant discount off the normal price.
But first let’s talk about what is happening in the world.
Because, as I explained to our PSE subscribers, at this moment in time, markets are at their most critical point this year.
And I say that even though this has already been an extremely turbulent year in both markets and the broader economy.
Let’s not forget that we began this year when it was a virtually accepted certainty that there would be a recession.
And there was also the much-heralded Ukrainian counter-offensive in the spring, which brought with it the risk of a reaction from the Russian president involving nuclear weapons.
In March we had the largest bank run in US history and the collapse of large banks, exacerbated in part by the possibility of a collapse in commercial real estate.
And then we had a surge in US mortgage rates to record highs which has caused the market (for existing homes) to slow down dramatically.
These are all big events. But despite all these, markets shrugged them off in one way or another.
But then we had the horrific attacks in Israel and the strikes into Gaza City.
It’s not my place to judge the rights and wrongs of what’s happening.
What I want to do today is give you some idea of what it might mean (obviously not all of it because that’s reserved for our members) and why markets appear to be paying much closer attention.
What follows are excerpts from my most recent PSE subscriber update. I can’t include the whole thing, out of respect to them. But I hope it gives you enough of a flavour of it to give you a sense of what to look out for in the coming weeks.
The PSE members October update (excerpts)
The news has turned rather grim in the couple of weeks, has it not?
Revellers gunned down at a festival, civilians shot on the streets, families butchered at home, people killed while sheltering in or near a hospital.
It’s horrific.
Unfortunately, the 2020s is moving forward against the backdrop of events such as these. It is quite likely that every year will bring something major like this.
Welcome to the age of turbulence, the final years of the Long Cycle.
This means investing in this decade is going to be emotional and challenging.
Editor’s note:
The Long Cycle refers to a longer-term cycle of 55 to 60 years, which is associated with technology, commodity price waves and social and international conflict. This is a cycle that all investors MUST understand because it will dictate the rhythm and pattern of international events for the remainder of the decade.
You can get an overview in Chapter 11 of Akhil’s book, which has the title “The Long Cycle of Prosperity and War”. You can obtain a copy of the book here and I urge you to do so if you haven’t already as there isn’t an investment book quite like it anywhere.
Market reactions to the conflict/Federal Reserve – important juncture.
It’s perhaps not surprising that we have had an emotional few weeks. Many time counts are in:
- The present conflict began exactly 50 years from the Yom Kippur War in 1973 (6 to 25 October)
- It is 35 years on from the huge market crash of 1987 (19 October was Black Monday)
- It was just over 15 years, or 181 months, from the Lehman Brothers collapse.
- Close to 360 weeks from the election of Trump in 2016 – which was an emotional moment globally.
It was also 60 months from a panicky market fall in late 2018 – I remember that well because many of my old newsletter subscribers were emailing me asking if the mid-cycle recession had come early.
Such events, whenever the happen, bring market reactions and the past couple of months have been no different.
Editor’s note:
The analysis of time in markets is something of a PSE speciality. I can’t say more about their significance – that is reserved for PSE members, but just bear in mind that time plays a major factor in markets and market cycles, which Akhil is pointing out here.
Here is a chart of the Dow Jones.
Source: Optuma
From a 2nd August high it had had two months down into an early October low, on or around the 6th, a monthly date.
Then it bounced up a few days but fell again into the end of last week.
Monday was a possible double bottom, on a monthly date, 23rd October.
We will come onto what might be causing this in a second. For the moment, note the dates and the pattern. We are at an important juncture.
Here is the actual curve vs. the Roadmap forecasts (the Roadmap, and associated commentary, has not be provided as that is exclusive to PSE members).
This is one of those moments where markets are drawing a line in the sand.
Markets hate uncertainty.
Which brings me into why the markets initially bounced and then fell after 6th October.
Markets initially moved up after the Israel/Palestine news. It seemed that the late summer move down was the market pricing in the start of this war.
The bounce also meant that some investors at least potentially saw this as the trigger for the US Federal Reserve to start to ease money conditions, which are incredibly tight (the US money supply continued to be very restricted).
But then the Chairman, Jerome Powell, suggested last week – on the back of continued strong US economic data – that such conditions might remain tight for longer.
Cue a few days’ sell off.
Markets hate uncertainty. The uncertainty here is not what’s going on in Israel right now – it’s that the Fed might, despite the strong US economy, cause a recession with this monetary policy.
Some of the expectations that Powell is violating are that he is being restrictive when:
- Inflation is in fact falling.
- There is a conflict in a troubled country that might escalate into a major regional conflict and draw in the big countries.
- There is a US presidential election coming in a year and an incumbent is running and needs the economy to be humming along nicely.
These are the factors that would have caused chairmen of the Fed in the past to ease money conditions and lower interest rates.
For example, when faced with similar conditions at this point in the last cycle, in the run-up to the Iraq War in 2003, then Chairman Alan Greenspan lowered interest rates and opened the monetary spigots.
Will Powell do the same (eventually, and despite the tough talk)? The fact that there is no clear answer is the issue that I believe is causing the main jitters in the US now.
Nonetheless, I won’t diminish the fact that the conflict in Israel/Gaza might end up causing some real mayhem unless someone finds a way to de-escalate pretty quickly.
Editor’s note:
This is what investors need to look out for. Akhil then discussed his forecasts on the Nasdaq, UK, and Australian markets and also the future of the US dollar.
Humanity gets the outcomes it deserves.
Back to the unfolding conflict for my final comment.
Judged by the perspective of politics, these events are incredibly complex. Behind them are centuries of violence, with intermittent attempts at reform and reconciliation (often ending in betrayal).
It’s virtually impossible to untangle it all and I am not going to try to.
But the one thing people really don’t do well enough is to understand the land issue and see how that might (have) prevent(ed) the problems from arising or escalating.
Land is more than about territory, it’s about space – a social space that is vital for human existence because its where human beings come together to exchange the goods and services on which our lives depend, and to enjoy the bonds of fellowship.
A piece of land can be privately owned but it’s still a social space that is vital for our lives and co-existence.
This means that ownership or occupation of land is an important thing – because one’s use of it means the denial of the use of that land to someone else.
Older societies understood this very well and put in place practices to ensure that those who occupied land had obligations to their community to ensure that the benefits of land were widely shared. It was only that way that communities could evolve and grow.
Henry George, in 1879, exactly 144 years ago, set out how this community obligation should work in the modern world of absolute private land ownership.
The way to address this issue was to charge each occupier of a piece of land with the obligation to return the value of the land back to the public. Value that was, after all, created by the public in the first place (through investment in the local economy).
This is otherwise known as a land service charge or a land value tax.
It’s the way that societies should fund themselves, not by taking people’s wages or business profits.
We have forgotten all of this, for reasons that I set out in Chapter 5 of my book.
Now, imagine in 1948, this approach had been applied to the Israel-Palestine issue, and the laudable aim, after centuries of persecution (and denial of land rights), of creating a homeland and social space for the Jewish people.
Who gets to occupy territory is of course an emotive issue. There was no way that it would not have caused some major problems given that it involved removing the Arab population from the land to make room for the State of Israel.
But….
If everyone occupying any land in the region had had to pay the rental value of it into a common fund and that fund would then either distribute the proceeds back into the Israel/Palestinian economy (further making land valuable) or paying it out as a citizen’s dividend, what do you think would have been the effect?
I’d rather suspect that a very large proportion of the Palestinian people would quite quickly have welcomed the presence of Israel and the Jewish community.
Why? Because their highly innovative economy would soon start generating enormous rents, particularly as it brought access to the vast American and European markets.
It would create plenty of opportunities and it would have meant a large flow of land service charges/taxes back to the community.
In turn, do you think that the Israelis would require a blockade on Palestine? Hardly, not least because Palestine would be a source of access to the large Arab markets in the local region as well as a source of labour and cheaper land.
It could have been/be a perfectly symbiotic relationship.
An organisation like Hamas, preaching conflict, wouldn’t stand a chance at persuading or cajoling people into disrupting a status quo based on joint prosperity.
But we don’t have anything like that. Instead, we have walls, and prisons and mutual fear and enmity, and ceaseless conflict.
The solutions have been known of for centuries, but we’ve chosen, for one reason or another, not to apply them.
Thus, humanity gets the outcomes it deserves.
Yours sincerely,
Akhil Patel
I hope that this gives you some ideas of why markets are set up as they are today and what is required for it all to resolve itself.
If they don’t things could get very ugly into the remainder of the year.
At times like this it’s extremely important to have a clear roadmap and structure for the year, both to give you a sense of what is coming next but also a framework that allows you to judge market events in case external shocks move things “off track.”
This is what I try to do in my annual stock market Roadmaps, which forecast for the coming year, the expected curve for the US, UK, and Australian markets and how they are set up in the context of the 18.6-year real estate cycle.
I also provide forecasts and updates on commodities markets, include gold, and a quarterly review of what I think are the main economic indicators to show where things are in the economic cycle.
The combination of all of this provides our subscribers with insights into what’s going on and where things are likely to be heading next.
And if things are going off track we will use our chart-reading skills to see it quickly.
I’d love for you to join the PSE family.
Remember that membership offer I mentioned at the start of this newsletter?
The normal PSE membership price is US$1,440 but I am going to take 40% off that price so that you pay US$864 to join for one year.
That is a saving of US$576!
But this is a limited time offer which ends on Monday the 6th of November 2023.
To take up the offer, just apply this coupon at the cart after clicking the Buy Now button on the link below:
Below is a list of all the benefits available to you as a PSE member.
- Our annual stock market roadmap for US, UK and Australian markets. This is easily one of our most sought-after documents. You will have in your hands a method to forecast the most important moves in equity markets.
- For the first time ever! The PSE team will also produce a one-off special stock market roadmap for 2023 to 2026. An amazing resource to assist you with navigating the markets to the forecasted 2026 peak in US land markets.
- In addition to that, you also get Akhil’s commodity forecasts out to 2026, including for gold.
- Economic indicator reports we use to track the cycle, some of which are found nowhere else but PSE. I’m very confident after last night’s presentation, you can see the immediate benefit of correctly interpreting the most important economic signals whilst placing the land market front and centre of this research.
- Weekly updates and market commentary as the cycle continues to its peak post-2026.
- Stock sectors and selected stocks aligned to the real estate cycle to consider for your portfolio.
- Exclusive stock market commentary and trading updates from Phil Anderson, with a particular focus on the lifetime work of W.D Gann.
This is exclusive to you.
To take up this offer now, click here and use the coupon pci-pse-2023 during checkout to ensure you receive your exclusive discounted membership package.
In addition to that, if within 30 days you’re not happy with our research and insights, then we happily refund your subscription fee in full, no questions asked.
So, there’s no risk to you to look at what we offer in depth and provide a great opportunity to determine if our research can turbocharge your investment journey.
At uncertain times like these, where we are confronted with an escalating regional conflagration that might lead to a major war, and all the consequent impacts on markets, it’s important to have access to our research on market cycles so that you can maintain some emotional stability and get a sense of what might be coming next.
I look forward to welcoming you to the PSE family.
Best wishes,
Akhil Patel and Darren J Wilson
and your Property Sharemarket Economics Team
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