Oil Markets Fulfill Mid-to-late-May Cycle High; Project Final Peak in late-3Q ‘18.
Oil Markets Fulfill Mid-to-late-May Cycle High; Project Final Peak in late-3Q ‘18.
05/31/18 INSIIDE Track: “Crude Oil – Multi-year trend slowly turning up after fulfilling cycle low in early-2016 – the convergence of monthly & yearly cycles. Cycles turned bullish in 3Q ‘17 and could spur additional upside into 3Q 2018…
Outlook 2018 – 2019
Currency Competition –
Vying for Position
05-30-18 – The rhetoric continues to escalate with the U.S. & China appearing to be on a collision course. The Korean Peninsula is one of the (many) areas where this is unfolding with the U.S & China fighting for the lead in North/South Korean negotiations (with Russia now interjecting herself).
When the U.S. was achieving too much forward progress too fast, China suddenly had covert meetings with Kim Jong Un and everything changed.
Then it didn’t. (Back to Plan A.)
Then it did. (Oops… Back to Plan B.)
North Korea/US negotiations on. North Korea/US negotiations off. And on. And off. And back on.
Meanwhile, US tariffs on specific imports are invoked. Then they’re not. Then they are, except everyone is exempt… except China. Wow, that was well disguised.
US warships continue to make their presence known in the South China Sea, assuring safe maritime passage for all nations. China responds. More US naval vessels appear. China reacts.
China & the Currency War
While all of this is going on, and the US appears to be maintaining the upper hand in most of these conflicts, China is making major inroads where it could ultimately matter most.
BRIC by BRIC, China is erecting a venerable edifice as it continues to develop into a major, global economic player. Recent events corroborate this.
The structure to which I am referring is the BRICS’ New Development Bank – which has become the primary player in Pakistan’s financial rescue, striving to avert a foreign currency crisis. In the past year, the NDB – based in Shanghai – has played a crucial role in loaning Pakistan 1 Billion USD and preventing them from going to the IMF.
A lot of this goes back to the global meltdown of the late-2000’s, after which the BRICS nations hatched these plans. About the same time, rumors began to circulate about a proposed basket of currencies to replace the US Dollar as the centerpiece of global foreign exchange. In addition to some of the BRICS nations, other countries like Saudi Arabia were alleged to be part of those talks.
At the same time, a new assault began on the US – this one in cyberspace. Keeping with the 8-Year Cycle of Attacks Against America, an onslaught of hacking attacks were leveled against dozens of major US companies and government agencies – later traced back to the People’s Liberation Army of China and the so-called Elderwood Gang.
America’s response, at least that to which the masses are privy, was anemic with ‘stern warnings’ and or inquiries launched. Soon after, China really began to align their ‘ducks in a row’ – with the debut of the BRICS New Development Bank & Asian Infrastructure Investment Bank (future rivals to the IMF & World Bank). China, often in league with Russia, wanted to ramp up the pressure on the West while also providing an alternative when the next (inevitable) financial meltdown occurred.
As Vladimir Putin stated back in 2014: “The international monetary system itself depends a lot on the US Dollar… on the monetary and financial policy of the US authorities. The BRICS countries want to change that…” Hmmmm. Luckily, he hasn’t done anything (???) to influence the direction of American politics and our leadership.
While China was launching the Asian Infrastructure Investment Bank, the US obviously saw the writing on the walls (as did many of our allies) and tried desperately to prevent Australia, S. Korea and other nations from joining. Again, a very tepid reaction resulted in nothing except the AIIB’s membership quickly expanding to 57 members, including UK & many European nations.
With China playing a commanding role in both of these entities, it is easy to see who has the largest influence. And, oh yeah, they also hold a large chunk of US debt (that can always be used in an extortionary manner, if necessary), currency and corresponding debt and currency of other nations. In other words, if economic (or even military or political) pressure escalates to uncomfortable levels, China has multiple alternatives for ‘influencing’ other nations to see things their way.
China didn’t stop there as they launched YASRef in 2014 – a joint refining venture in Yanbu, between Saudi Aramco & Chinese Sinopec – and struck a 30-year gas deal with Russia, for two major pipelines between the two countries.
In 2016, China launched the Yuan-based Gold fix on the Shanghai Gold Exchange (on April 19; a date of dramatic gold actions in the past) and then had the Yuan included into the basket of currencies that form the IMF’s SDR/XDR or Strategic Drawing Rights (at the cost of reduced Euro & Pound inclusion) – one of the original global digital ‘currencies’.
Once all these ducks were in a row, it was time to nurture them – which has been unfolding at a rapid pace. Pakistan has been one of the original recipiencts of funding & currency swaps, sparing them (at least for the time being) of a financial meltdown. The BRICS have opened ‘branches’ of the New Development Bank in South Africa & Brazil
So, when the US announces another round of tariffs against China, the closer the globe approaches a day or reckoning. One problem is that this President has become emboldened by the initial responses to his rhetoric and actions. Whether or not they are justified (I will leave that debate to more skilled economists and financial thinkers) matters little.
What does matter is which action becomes the proverbial ‘straw that breaks the camel’s back’. By swinging a big enough stick, one can back a formidable dog or other animal (or adversary; no link between an animal metaphor and the people of China is intended) away for some time.
BUT, once it gets cornered – and there is no chance for escape – then the adversary is forced to vehemently react with everything it has at its disposal. All it takes is one missed swing of that stick and suddenly the tables are turned dramatically.
As China & the US near the 40-Year Cycle anniversary (Dec. 2018 – Feb. 2019) of a seismic shift in China’s global economic & political standing – and the start of their economic rise to power – the precursor rumblings (foreshocks) of a new quake are repeatedly occurring.
Late-2018 – 2021 also includes 40, 80, 120 & 160 year moves from Major China-involved wars… as well as 200, 240 & 360 years from underlying triggers and the original Sino-Russia conflicts starting in 1650’s. As is often the case, a nation’s currency and financial markets reflect these shifts before them. That is why I am closely watching the Yuan (see page 4). More to follow…
Crude Oil, Unleaded Gas & Heating Oil remain likely to move progressively higher into 3Q 2018 – when a myriad of monthly cycles converge (see April ‘18 issue).
On a near-term basis, they were projected to surge into mid-to-late-May, the latest phase of a ~16-week low-low-high-(high) Cycle Progression and the mid-point of the ~7-month low-low-high Cycle Progression that projected the surge from mid-2017 into late-Jan. 2018.
They did that and ushered in a multi-week correction that should ultimately yield to a new advance.”
Energy markets fulfilled projections for overall advance into mid-to-late-May as part of a year-long advance from late-Sept. ’17 into late-Sept. ’18 (coinciding with related Middle East Cycles). Close relationship of oil/energy markets to overall equity markets remains in force and projects a precarious period for 4Q 2018.
The ~16-week/~4-month Cycle Progression – that has timed peaks in late-May ’17, late-Sept. ’17, late-Jan. ’18 and now late-May ‘18 – projects a subsequent peak in late-Sept. 2018 – the culmination of other multi-month, multi-quarter and multi-year cycles.
How will China’s economy – and its correlation to oil prices, its falling stock market – forecast to experience a year-long decline and plunge into late-2018, and its War Cycles – linked with the ebb and flow of N. Korean tensions, impact Crude cycles that project a 6 – 12 month and possible multi-year peak in 3Q 2018?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.