Submitted by Taps Coogan on the 17th of July 2019 to The Sounding Line.
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Renowned trader and forecaster, Martin Armstrong, recently spoke with Peak Prosperity about his outlook for markets and the economy. He argues that markets run on confidence and anticipation not fundamentals, that central banks are trapped by low interest rates, and that stock markets are likely to move higher as inflation rises.
Some excerpts from Martin Armstrong:
“Markets run on anticipation. It’s a confidence issue. If you believe in the future you will buy. If you do not, you will not. This is why quantitative easing has completely failed. For ten years they’ve lowered interest rates, they tried to punish people going negative, etc… It has not worked. Why? Because (people) don’t believe in the future…”
“The biggest problem we have is a lot of the liquidity is shrinking.. A lot of the banks have been curtailing proprietary trading, so that’s been shrinking dramatically, like Deutsche Bank for example, and then you have… all of these people constantly saying ‘oh the stock market’s going to crash’ and all this, and they’ve been utterly and completely wrong. Why? Mainly, …the retail participation in the stock market is still about 50%-60% of what it was in 2007. So, the retail market is still not back in this thing yet. Nobody believes the rally. The vast majority has kept (saying) every new high ‘oh that’s it, it’s going to crash.’ They have not understood what this market is about. It’s much more on a global scale. Take what Powell said…, he emphasized not that the US economy is in trouble. The economy is still strong. Why? Because the rest of the world in imploding. So, if you look at the capital flows, everything has been moving into the United States. If you just look at France, take Germany. Those two stock markets, where are the peaks? (Year) 2000. They still have not exceeded the 2000 Dot-Com bubble high. The markets are telling you something. It’s the same thing over in Greece, Italy, etc… They have been bashing basically the free market all along…”
“The real serious money is starting to realize ‘Hey there is a problem here.’ The central banks are trapped. The Fed was yelling at Draghi saying ‘We have to raise interest rates…’ The US was the only one to raise interest rates and they’re getting bashed by the IMF, by everybody, ‘Oh you’re pushing everybody else under.’ Draghi took interest rates down for more than ten years and nothing has happened. You would think somebody at some point would wake up say ‘Hello, maybe this doesn’t work.’ What has happened? The ECB now owns 40% plus of the national debts of Europe…”
“The stock markets are moving up because it’s the only place to put money… The Dow, I don’t see it going anywhere but up. We are probably looking at at least 35,000 or so maybe by 2021, if not higher. It’s a difference, at this point, between public and private (assets). The central banks can’t raise interest rates…”
There is much more to the interview, so enjoy it above.
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