Hard Landing

Martin Armstrong writes on the issue of Global hard landing

The hard landing is economic and will have its greatest impact outside the USA. While central banks have sold US Treasuries in an attempt to keep the dollar down, the private sector has been pouring assets into the USA and particularly the Dow. Our capital flows have tracked a significant shift in global capital flows into the USA especially from Europe. That should come as no surprise given the chaos in BREXIT as well as the May elections.

We still do not see a major correction in the Dow. We have been undergoing a shift from public to private assets on a global scale. Therefore, the hard landing will be more economically based and central banks will try to do something, as in lowering rates, but they have run out of bullets. The Fed has tried to back off on rates after buying into the problem of a hard landing outside the USA. The ECB has been on its hands and knees, pleading with the Fed not to raise rates when they will have to continue their QE programs or face sovereign debt defaults.

My two cents

I am a big believer in capital flows and if you read Peter Zeihan book ” The Accidental Superpower” you will realise that whatever conflicts US is picking up around the world today is by design. US does not want to carry the burden of world with it especially after becoming independent in the most precious resource in the world ” OIL”. This as Martin explains ,will lead to capital flowing back to US in the coming recession which will also create a double whammy for Emerging Markets in the form of rising dollar.


  1. Sir , shud one wait Patiently for the recession , rather than get carried away !!

    • This is a difficult question to answer because the winner in coming recession will be dow jones ( because global money needs diversified funds to invest) or value stocks

  2. With Interest rates most probably not rising in the foreseeable future is it not possible that hot money moves around the world chasing returns and in turn pulling up the emerging markets to become developed markets.
    This cycle might take a few years to play out .
    Once a new equilibrium is established, who knows which geography and currency becomes the investment of choice ?

    This experiment with near zero interest rates can throw up unthought of consequences.

    • you are right till the time GOLDILOCKS economic condition exist. neither too hot nor too cold global economy, stable to falling dollar and low volatility is the best condition for Emerging markets. china printing is already doing wonders to the US and EM economy

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