A 1987 like nonlinear devaluation?

Current Fractal Analysis: End of US trading day 15 September 2022

Global assets including housing are grossly and historically overvalued relative to prevailing total debt loads and prevailing interest rates, the latter which have been increased at a historical pace by central banks  to combat consumer inflation which  was caused by grossly both too low and too long low of interest rates and by the central bank’s underwriting of mortgage backed securities.

From its March 2020 lows, the valuation hegemonic composite Wilshire (and Bitcoin) qualitatively appreciated to 8 November 2021, at which time both the resulting consumer inflation was evident and the central bank’s required response to that inflation was evident. 

Gold’s valuation in US dollars on 15 September 2022 collapsed to a 2 year low. Gold  bears no interest, unlike the one year US treasury currently  earning 3.8275 % at the end of today’s trading day.

Quantitatively for the Wllshire, a 33/66 week :: x/2x first and second fractal is observable from the March 2020 low ending 24 January 2022. From this low, a 31/72/63 day :: y/2-2.5y/2-2.5y decay fractal is observable. The current 63 day fractal started on 16 June 2022 and consists of a 19//(9/20/18 of ?20) or 19/45 of ? 47 day self-ordering first and second sub fractal series composing the third fractal of the 24 January 2022   31/72/63 to maximum 77 day series.

Is it possible that a 1987 type of nonlinear asset devaluation event will occur over the next 2 equivalent trading days for equities, crypto’s, and commodities including gold?

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..

THE PERFECTLY VALUED ONGOING EQUITY, COMMODITY, AND DEBT ASSET VALUATIONS OF THE QUANTITATIVE 1807 36/90/90/54 YEAR DETERMINISTIC SELF-ASSEMBLY FRACTAL MACROECONOMIC ASSET-DEBT SYSTEM

Market valuations for all of macroeconomic system’s assets at all times are perfectly valued on a yearly monthly, weekly, daily, and hourly  basis. Debt-as-an-asset class and non-debt asset class valuations are counter balancing and dependent on the system’s prevailing central banks’ interest rate and debt/money creation conditions. The operative central banking conditions are in turn reactive to  the expected outcomes of that expansive debt/money creation activity. Since 1982 in the US interest rates have been dialed down in a cascading fashion by the federal reserve. In the 1990’s American corporations increasingly outsourced American manufacturing in favor of lower-cost labor and netter paper profits with corporate buy-backs of stocks, increasing corporate leaders’ private wealth. The American economy has been shifted to focus on the service sector which includes oceanic and transcontinental transportation of manufactured goods. The federal reserve’s operative activity in concert with private financial engineering/fraud have created boom- bust cycles associated with the Dotcom bubble in 2000 and the housing bubble in 2007-8. Deterministic peak and nadir valuations and self-assembled fractal groupings are, as a subset of the perfectly ordered d(valuation)/d(time) fractal system , likewise perfectly timed and grouped. Central bank operative conditions, especially since 2009 have alternatively caused consumer inflation directly related to both finite world energy, metal, and food commodity reserves and  by the commodity/equity speculation engendered by the central bank’s  relatively low interest rates/money printing programs .

Since 1807 the yearly fractal groupings of 36/90/90 years::x/2.5x/2.5x for the US hegemony are observable with a peak of the composite Wilshire’s valuation in November 2021 and nadirs for the asset-debt macroeconomic system in commodity and equity prices in 1842-43 and 1932.

The monthly fractal groupings since March 2009 are empirically observable: 5/12/10/7, 3/7/6,  8/17/17, 11/26/16, and currently 8/16/8 of 10.

The final 52 years of the 1807 36/90/90/54 year US hegemonic fractal cycle will be primarily dependent on the finite global commodities available to provide energy and feed the world’s population. Cyclical sharp inflation will be controlled by periodic interest rate increases/money tightening which will temporally lower commodity prices resulting in lower interest rates. From a 16.5 percent rime interest rate in 1982, the federal reserve, over the next 50 years, will operate in a negative to 1 – 2.5-3 percent range. Commodity inflation in this central bank interest rate range will be destabilizing. The commodity inflation will be exacerbated by competing geopolitical strife, continued global warming, and food production losses caused by the first two elements. A nonlinear event such as nuclear war or a precipitous annual global crop failure is an unwelcome possibility.

The operative monthly fractal series for US equities from the 2020 March low is 8/16/10 months with an expected blow-off in commodity prices (oil, metals, grains) (starting 14 August 2022) over the next 6-7 trading days and a commodity/equity low on 7-8 October 2022. The 10 month third fractal of the 8/16/10 month fractal series started on 24 January 2022 and is composed of a 2/5/5 month series.

https://www.youtube.com/watch?v=xvIgb8cx6JE