Both the Wilshire composite and Bitcoin in USD had an average daily peak valuation on 8 November 2021. By the time of this peak it was apparent that the western central banks’ credit/money creation had caused significant consumer commodity and living expense inflation. This required central bank counter regulatory tightening. For the Wilshire, 2021 was the 90 th peak valuation year of a 1807 36/90/90 year :: x/2.5x/2.5x maximum growth cycle of progenitor US trading stocks with lows in about 1842/43 after the Panic of 1837 and in 1932 after crash of 1929.
Since 1982 credit expansions have been fueled by cascadingly falling Volcker interest rates, Reagan military expansion and deficit spending, a late 1990’s tech bubble, NAFTA et. al. outsourcing of US manufacturing, derivative financial engineering, CDO and CLO tranche financial engineering creating the 2007-8 housing bubble, abandonment of Glass-Steagal laws, and, after the early 2000’s, Ponzi scheme financing of the Chinese property bubble
Credit expansion since 2009 has been facilitated in a historically unique fashion by central bank trillion dollar bail-outs of the financial industry, support for the automotive industry, huge corporate tax cuts, use of those tax gains for buy-backs of stocks which have promoted paper gains for the board members, life support of nonviable industries via low interest rates and extension of loans, and finally a massive social spending program to offset the impact of covid.
Since 2009 the monthly fractal groupings have been: 5/13/10/7; 3/7/7; 8/17/16-17; and 10-11/26-17/16 ending in March 2020.
The Wilshire had a valuation low on 23 March 2020. At the time of the valuation low, the details were known of the CARES Act which was passed on 25 March 2020 and signed into law by President Trump on 27 March 2020. The CARES ACT more than reliquified the economy; many people received more money than they had received from wages earned during the preCovid period. The decay fractal series from 31 January 2020 was 6/15/14-15/10 days with the last 8 days of the 10 day fourth fractal starting a post CARES Act Wilshire valuation growth period. This was associated with a annual 400% increase in the M1 money supply.
The current monthly fractal groupings from the 23 March 2020 low appear to be 3/6/5 and 4/9/9 of 10 months, matching the time period of central bank money/credit creation because of covid and the later central bank tightening because of consumer inflation. From the March 2020 low these two monthly fractal groupings correspond to a 9/25/19 week :: x/2.5x/2x growth cycle followed by a 16/33/currently 33 of 39 week cycle :: y/2y/2.5y.
US housing valuation prices are at extreme levels with Wallstreet corporations, advantaged with with lower corporate tax rates and cash, competing directly with blue collar Americans. Observable from 15 August 2022 is another possible 6/15/15/10 day decay fractal series. This decay series starts at the end of a 24 January 2022 31/71/41-42 day :: y/2-2.5y/1.5y declining growth aeries. Unlike 2020 the last 10 days of this 6/15/15/10 fractal decay series will not be supported with a repeat of the 2020 CARES Act. Nonlinear devaluation of equity and commodities of historical proportions is highly likely given the excesses of money/credit creation..
One thought on “The 15 August – October 2022 Y/2.5Y/2.5Y/1.5-1.6Y Great Global Equity Crash: A Fractal Replica of the 31 January 2020 Decay Series … but without the CARES ACT”
The likely decay fractal series starts from the Wilshire’s 16 August 2022 saturation lower high valuation which is day 42 of a 24 January 2022 31/71/42 day :: xy/2-2.5 xy/1.5xy defining and truncated growth fractal.
The likely decay fractal is series from the 16 August high is 5/13/12/7 days ending on 1 October 2022.