One of the finest interview on global Markets, Capital Flow and surprising explanation why equities will be the last man standing.
Some Points from Martin Armstrong Interview
1.This is really a consolidation (Equities). And what you have to ask yourself is, really, if interest rates are definitely going higher. There’s no question about that. So, effectively, you’ve got the bond market going down. You’ve got people concerned about government on all levels.
2.The safe haven, actually, is equities. And the amount of money in the bond markets versus equities is – everybody knows it’s close to 10 to 1.
3.There are certain times in history when the stock market is the problem. And then on the other side of the coin is when government is the problem.And that’s what we have.
4.It’s amazing how people just don’t look at history. I mean, if you look at the DOW – all this stuff about, oh, higher interest rates, the stock market should go down. Just look at the data and you’ll see that is absolutely false. The Federal Reserve doubled interest rates between 1927 and 1929 and the stock market doubled.The thinking process before socialism was quite different. As long as interest rates were going up, it was viewed as bullish for the stock market because it showed there was still a demand to borrow, which is correct.
5.China is going to eventually be the financial capital of the world. But we haven’t gotten there yet. They still have currency controls and things of this nature, so it’s not a free currency to be able to invest in or trade yet. Yet it is the third largest bond market in the world.
6.Basically, the trade is long dollar, long US assets. You’re seeing a lot of major capital throwing the poor out of Europe and coming over here. You have the US fund managers that keep selling the stock market saying, oh, it’s overvalued, overvalued. Well, the foreigners are buying it.
7.The issue is people will run to gold when they question the validity of government. And that’s where the politics comes back in. It’s a question of your faith in government.
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