THIS TIME IS DIFFERENT: MARCH 2025 IS NOT OCTOBER 1987

THIS TIME IS DIFFERENT: MARCH 2025 IS NOT OCTOBER 1987

On 2 Oct 1987, the US composite SPX reached a maximum fractal length of peak secondary valuation growth and following a 30 Sept 1987 y/2-2.5y/2y :: 3/7/6 day 3 phase fractal decay series – crashed, on 19 October 1987, day 6 of the 6 day third fractal with over a 22% loss on the day and with global equities collapsing 1.7 trillion dollars on that single day of trading. Preceding peace-time historically high % Reagan GDP to deficit annual spending had built a 600 ship navy and fueled robust economic and equity growth. The 1987 debt to GDP ratio was about 39%

In 1987 the US hegemony and American manufacturing were near a zenith. Falling US interest rates from 1982 would propel an interpolated (see previous posting) first 13 year fractal from 1982 to 1994, and American innovations, US financial engineering,the US-NATO hegemony protecting the US dollar, low cost foreign labor and globalization, historically low fed fund rates, and an expanding US debt balance sheet to purchase foreign goods, provide services and defense spending would reinflate US equity growth after bubble collapses in 2000 and 2007-2008, and the after the 2020 Covid pandemic unemployment crisis resulting in the current US housing-equity-debt bubble.

In 2025 the US equity and commodity markets are near the end of a maximum length of growth of an interpolated 1982 13/32-33 year :: x/2.5x first and second fractal series. Second fractals are characterized by terminal nonlinear collapses.

In Oct 1987, five years into the 13 year equity growth first fractal, there was no 10 year note minus 3 month treasury bill debt inversion. There was no data to suggest an oncoming recession. The US hegemony and NATO alliance was strong, bankrupting the Soviet Union within the following decade. China was weak economically with only great potential by the nationalistic policies of determined sequential Chinese leaders.

In March 2025, in the 32nd year of the 32-33 year equity growth second fractal -after the longest ever, more than 750 days of 10 year note minus 3 month treasury inversion and uninversion of about 50 days – historical inversion has reoccurred in the last few trading days. Manufacturing and employment data suggest a pending recession. Federal employees who contribute to the economy maintaining mortgage and car payments are being fired en masse without cause. Smoot-Hawley-like tariffs are being enacted and the US-NATO alliance supporting the US dollar is undergoing dissolution. China has grown into the top manufacturing country, but is destabilized by a residential bubble that is on at least an order of magnitude greater than the global 2008 housing bubble.

This time is different.

In 1987 a 30 Sept 1987 3/7/6 day :: y/2.5y/2y fractal collapse ended in the 22.7% DJIA drop on 19 Oct 1987 the 6th day of the third 6 day fractal.

A x/2.5x/1.6x :: 8+/24/14 month SPX growth fractal series from the March 2020 Covid low ended on 27 October 2023. This growth was propelled by the excessive deficit-GDP spending by the two preceding administrations, accompanied by central bank money creation and low interest rate mortgaged back securities, and bolstered by tax cuts for the wealthiest individuals and corporations with corporate buy-backs of equities and corporate buying of residential units .

In March 2025 after a 27 November 2023 to 19 February 2025 55/139/136 day maximum SPX growth fractal series, an eerily similar 19 February 2025 3/6 of 7-8/ 6-8 day :: y/2.5y/2y-2.5y decay series similar to the Oct 1987 crash series is apparent.

Unlike Oct 1987 which bounced off a slightly lower low 34 trading days later, March 2025 will be the first in a series of significantly lower lows.

Since the Eisenhower administration when top US individual tax rates were 90% and corporations 50%, steady tax reductions for the wealthy and corporations with unconstrained governmental spending have created greater and greater budget deficits and higher debt to GDP ratios. Unlike Chinese politicians who have promoted domestic employee wage growth and manufacturing growth nationalistic policies, both American political parties have sided with wealthy individuals and corporations to reduces taxes, expatriate US manufacturing jobs in favor of cheap labor imports and higher corporate profits, creating wider and wider wealth disparity in the United States.

Safety nets are being dismantled to afford yet greater tax cuts for wealthy individuals and corporations. 80 year old alliances with a countries having over a collective GDP of 55 trillion which support the US dollar are being undermined in favor of association with well established adversarial nations with less than a 2.5 trillion GDP.

This time is different.

On Friday 21 February 2025, The SPX and ACWI completed a maximum growth x/2.5x/2.5x :: 55/139/138 day 3 of 4 phase fractal series initiated on 27 Oct 2023. The SPX peak valuation occurred on day 136 of the 138 day 3rd Fractal.

Characteristic terminal 2nd Fractal lower low nonlinear gaps occurred between the prior two trading days before the 5 August 2024 139 day 2nd Fractal nadir. (See 2005 opening web page about 2nd Fractals).

Debt and credit in macroeconomic systems expand to acquire and create assets which reach eventually peak valuations or overproduction relative to the accumulated debt burden.

Debt is a countervailing asset in this system. Overreach naturally occurs when assets become over-produced and/or over-valued, and debt supporting that overproduction/over-valuation cannot be repaid. Restructuring of debt or default on debt occurs and asset prices undergo devaluation adjustment in well known cyclical patterns..

Empirical observation strongly suggests the timing of peak asset growth and nadir decline of easily tradable assets (both non-debt and debt assets) occurs and self-organizes in two very regular time-based fractal series patterns:

a four phase phase fractal series pattern of x/2-2.5x/2-2.5x/1.4-1.6x

and a three phase fractal series pattern of
x/2-2.5x/1.5x-2.5x.

The individual elements in the four phase series are arbitrarily and sequentially termed the 1st, 2nd, 3rd, and 4th Fractals andin the three phase seriesthe 1st. 2nd, and 3rd Fractals .

With the exception of the 3rd Fractal in the four phase series, Individual fractals (groupings)are defined by beginning and ending nadir to nadir valuations with all individual valuations within the fractal (grouping) above these nadir valuations. The 3rd fractal in a four phase series, represents a peak valuation.

Since the creation of the 2005 web page, the primary fractal pattern of the current US hegemonic macro economy has been traced further back than the original webpage’s 1858 origin to available trading data dating from about 1790, a couple of years before the 1792 Wallstreet Buttonwood agreement.

An incipient 18 year fractal series occurred from 1790 to 1807 ending in nadir commodity prices in the depression of 1807. This 18 year incipient fractal served as the basis for an 1807 four phase x/2.5x/2.5x/1.5x fractal series of 36/90/90/54 years ending in about 2074. The nadir valuations of commodity and stock progenitors for the 36 year 1st Fractal and the 90 year 2nd Fractal occurred in 1842/43 and 1932 respectively. 8 November 2021 represented the 90 year 3rd Fractal Peak.

The 90 year 3rd Fractal beginning in 1932 and 54 year 4th Fractal starting in 2021 are composed of two interpolated fractal series: a 1932 10/21-22/21-22 year three phase series ending in 1982 and a 4 phase 1982 13/32-33/32-33/20 year series ending in 2074.

Credit is created via private fractional reserve banking and via central bank money creation. The former is collateralized by assets and the latter by securitized assets and by future taxation.

US politicians adopted anti-US industry based-policies and treaties starting in the 1990’s favoring corporation profits via the use the very cheap foreign available labor. Private US credit expansion to corporations allowed investment abroad and foreign countries bought US national debt to fund the US military, transoceanic transportation protection, and deficit spending for US social programs to bolster appearances in a setting of a declining standard of living requiring two breadwinners in aa typical US household.

The predominant interpolated four phase fractal series for US composite equities since 1982 is a 13/32-33/32-33/20 year series completing the 1807 36/90/90/54 year four phase fractal series.

With the leveraged housing bubble bust In 2009 and even more so with the Covid unemployment crash in 2020, the US and world central banks have unprecedentedly placed trillions of credit in circulation. This excessive credit and money expansion have distorted composite asset fractal nadir valuations.

Since March 2009 system self organizing Fractal series for the US SPX composite have been:

5/12/10/7 months :: x/2-2.5x/2x/1.5x
3/7/7 months :: x/2-2.5x/2-2.5x 8/17/17 months :: x/2-2.5x/2-2.5x 10/26/16 months :: x/2.5x/1.6x 8+/24/14 month :: x/2.5x/1.6x and 4-/8/7 months or 55/139/138 days with a peak on day 19 Feb 2025, the 137th day of the 3rd fractal

The March 2020 8+/24/14 month fractal series did not have a 27 October 2023 14 month nadir that contained all valuations from March 2020 to 27 October 2023. This was a blow-off sequence extending to Feb 2025 caused by a distortion of the central bank excessive money creation in 2020 and 2021.

A 32 year 2nd Fractal nonlinear ending for its interpolated 1982 13 year 1st Fractal base is expected with a targeted nadir in Aug-Sept 2025.

Debt and credit is created by private banks through fractional reserve banking and by money printing by

It is hypothesis of this website that easily tradable assets, both nondebt and debt entities, grow and decay in an optimal and deterministic time-based self-assembly fractal manner; either in a three phase fashion: x/2-2.5x/1.5 to 2.5x or in a four phase fashion: x/2-2.5x/2-2.5x/1.5-1.6x.

Unraveling of the US hegemony started in the 1990’s by career US politicians, lobbied and supported by US corporations who favored greater profits with foreign-based manufacturing and inexpensive labor. The US hegemony is following a 4 phase 1807 36/90/90/54 year :: x/2.5x/2.5x/1.5x fractal series for equities and commodities after having an incipient 18 year fractal base from 1790 to 1807.

Since 1982 US equities are following an interpolated 13/32 of 32-33/32-33/20 year four phase fractal series ending about 2054 . In this four phase series expected is a great 32-33 year second fractal crash occurring in 2025-2026.

Since 2000 2-3 % average GDP annual growth has been sustained by an average of 5 % GDP-deficit spending with the US central bank, US citizens and institutions, and the world subsidizing US debt. Until 2020, low-labor cost imported manufactured goods exchanged for US farm goods, US energy, and US debt maintained a low inflationary environment. With the increasing cost of foreign labor – and more recently the US adopting an isolationist posture, the abrupt ice-cold alienation of former allies, and the threatened and real imposition of new tariffs – both support of US debt growth from other than the US sources and the expectation of a low inflationary environment will qua;itatively wither.

A March 2020 3-phase 8+/24/14 month :: x/2.5x/1.6x fractal growth series ended on 27 October 2023.

On February 14 2025 a new high for ACWI, the 115 trillion dollar ETF proxy, was observed with a tiny blow-off gap opening at the beginning of the trading day with an end trading valuation near the low of the day (see the ten day 15-minute unit ACWI chart at the bottom of the page.) : 14 February completed nested fractal growth series: an 8 December 2024 7/14/18/11 day :: x/2x/2.5x/1.5x inverse growth fractal series: a 5/11/10 day a/2-2.5x/2x growth fractal series: a 5 Aug 2024 24/53/59 day :: x/2-2.5x/2-2.5x growth fractal series: and a 27 Oct 2023 55/139/134 day :: x/2.5x/2-2.5x growth fractal series. See below.

(In the previous post, the 5 Aug 2024 3-phase fractal series had been identified errantly as a 24/52/54 or 128 day series vice the correct 24/53/59 day or 134 day series and the 27 October 2023 fractal series as 55/139/128 day series vice the correct 55/139/134 day series. )

TNX, the US Ten Year Note interest rate came within 0.2 % of its 23 week third fractal lower interest rate growth trendline. It is possible for TNX to touch the third fractal lower interest rate growth trendline on Tuesday or Wed, 18 or 19 February 2025 with a final 2/5/4-5 day growth fractal of ACWI completing a 5/11/11-12 day fractal series rather than the current 5/11/10 day series.

Within the global asset debt macroeconomic system, it appear obvious that deterministic equity self assembly growth to a maximum valuation within the frame work of the simple laws of Lammert fractal progression is both observable and operative.