Above: x/2.5x/2x Nikkei Growth followed by y/2-2.5y/2-2.5y Decay
Observable within the US hegemony 1807 great fractal pattern of x/2.5x/2.5x/1.5x :: 36/90/90/54 years with equity valuation lows in 1842-43 and 1932, and third fractal 90 year peak valuation in November 2021.
Also observable is an interpolated 1981-82 fractal pattern of 13/30 years :: x/2-2.5x. This 1981-82 first and second fractal series began with US central bank QT resulting in a May-July 1981 peak prime rate of 20.5% to control inflation.
Historical %-GDP Deficit US defence spending initially maintained composite equity prices. Thereafter. over the next 40-42 years – falling interest rates, globalization of manufacturing with grossly cheaper labor cost, transoceanic shipment of goods, trade of hegemony petro-dollars and Euros for those manufactured goods, repeal of 1930’s investment laws, looser bank lending regulations, lower corporate taxes, increased corporate buy-backs, financial engineering with tranching of CDO’s and CLO’s, gross assessment and lending fraud, and US, Euro, and Chinese central bank QE and lending programs with low, near zero and negative sovereign bond rates – have pushed composite equity valuations and property valuation to the November 8 2021 zenith and recent secondary peak valuations.
During this 40 year time plus period, there have been over-investment bubbles propelled by the above cited stimulus modalities in 1987, 2000, 2008, 2020, and 2021.
For the interpolated 1981-82 first and second fractal series, a sudden nonlinear ending is expected between 2x and 2.5x of the x base fractal. With x equal to 13 year, the nonlinear ending is expected between 26 and 32 years.
The US, Japanese, and Chinese equity markets; cryptocurrencies, gold, and global CRB indices all have synchronized monthly and weekly fractal patterns, for crash devaluations over the next 4 trading weeks.
The current weekly and monthly fractal patterns began at the March 2020 global covid pandemic low valuations in March 2020. In an unprecedented fashion, the US money supply over 12-18 months was increased by 25 % resulting in inflation and thereafter decreased by 5 percent in the QT phase to control the resulting inflation. The 2020-2021 unprecedented increase in money supply, low interest rates and MBS programs have resulted in a supple bubble of equity and property valuations.
The y/2-2.5y/2-2.5 decay fractal series for the composites from the March 2020 low are 14/72/72 weeks. Currently the decay series is 33/72/68 of 72 weeks.
The Nikkei and its proxy DXJ fund have done among the best of global equities with a 33/72/66-67 week :: x/2-2.5x/2x valuation growth pattern. See above green graph.
DXJ and Nikkei have matching first and second fractal patterns: 33 weeks: 6/15/14 weeks and 72 weeks 14/30/30 weeks. DXJ’s current 67-68 third fractal blow-off.
DXJ diverges slightly from the Nikkei and is composed of a 10/21/25 week fractal series followed by a blow.-off series of 4/8-9/4 of 8 weeks for a total of 72 weeks. The final four weeks are expected to complete a composite decay series of 33/72/72 weeks or 8/18/17 months. See above red graph.
For the Hang Seng index the March 2020 first and second fractals are likewise composed of 33/72 weeks. The third 72 week decay fractal is composed of 10/25/25/11 of 15 weeks. The second 25 week fractal of this x/2.5x/2.5x/1.5x series took the HSI below its 2011 low – a telltale valuation sign of what s to come in the next four weeks.
Fractal patterns predict a Chinese property valuation crash and banking/equity crash (Shanghai Property Index and Bank of Shanghai/Shanghai Composite) over the next four weeks. These patterns will be self-evident and detailed in follow-on postings as will the closing fractal patterns for crypto, gold, oil, and the CRB composite.
That the macroeconomy operates in a self-organizing fashion allows the label of a science to its intrinsic nature.