Interest Rates Poised to Rise on Developing (Multi-Year) Inflation Cycle!
Outlook 2020/2021: 80-Year Cycle of Agriculture
09-29-20 – “America continues to evolve on a 40-Year Cycle basis. By that, I mean that many social and economic swings have adhered closely to that 40-Year Cycle – the topic of dozens of discussions over the past decade. The primary focus of that analysis has been the period of 2015 – 2021 – when seismic shifts were forecast to occur. When analyzing that, it is always important to remember that history rhymes… it does not repeat.
One current example involves expectations for price inflation in 2020 – possessing some similarities AND some very important distinctions from what took place in 1980… and 1940… and 1900. In the current case, the 2010’s have seen an exponential rise in paper assets – most notably stocks (and bonds) – akin to the rise in commodity prices & hard assets in the 1970’s…
Adding another ‘rhyming’ factor, metals and commodities were forecast to see an inflationary price surge from March 16 – 20, ‘20 into 2Q ‘21 (at the same time Dollar cycles were/are bearish). It is the subsequent period between mid-2021 and late-2022 when things could get a bit more ‘dicey’.
40-Year Cycle of Migration…
And then there are much larger, overriding cycles that might not always have a direct or immediate impact on specific markets… but ultimately do have a significant impact on the broader picture. Since this usually involves a slower process (like reversing the direction of an aircraft carrier instead of a speedboat), it is often overlooked until it is too late.
In 2015, INSIIDE Track began to elaborate on the outlook for the late-2010’s (and early-2020’s) and the potential for dramatic changes. One of the conclusions drawn then (2015) was that challenges in California were about to ratchet up to a new level.
A 40-Year Cycle of drought was transitioning and 2016/17 was threatening to usher in a vulnerable 3 – 5 year period during which a food crisis was expected to unfold (in diverse areas) as California was (expected to be) hit with escalating challenges.
One speculation, described at the time, was that El Nino flooding could hit CA in early-2016 and exacerbate the troubles already brought by years of escalating wildfires. California and its wildfires were ‘rhyming’ with the Dust Bowl events in the Midwest 80 years earlier – in the 1930’s. Along with that, the potential for topsoil erosion in CA was growing.
During the ‘30’s, the evolving dust storms (and massive topsoil erosion) decimated the prairies in the middle of the US and Canada – reaching a crescendo in 1939/1940 and ultimately driving farmers, ranchers and their crop-raising… to California. Something remotely similar could soon repeat… and might already be subtly evolving.
As described in the late-2015 analysis (reprinted on page 2), US agriculture has evolved on an ~80-Year Cycle with the period of 2016 – 2021 representing the culmination of the latest cycle (and related 40-Year Cycle) – during which a developing food crisis was expected to unfold… in or out of California.
2019 – 2021 was the crescendo of that period and the expected time for when the consequences were most likely to manifest themselves to the masses.
The speculation then, and repeated in the intervening years, was that the mass migration West (since the Dust Bowl decade of the 1930’s) – to California – would begin to reverse itself after that time and potentially trigger a decentralizing of agriculture that had become so pronounced in CA.
(Obviously, that is likely to be a slower process since it is in the context of an 80-Year Cycle.)
Sure enough, 2016 brought El Nino flooding that was a likely precursor to the future. In some areas, it demonstrated what happens when normal topsoil protectants are burned away and then flooded.
Also included in that 2015 analysis was conjecture that there would then be another warming spike after El Nino – lasting into 2019/2020 and exacerbating the drought conditions in CA (and in other areas).
Sure enough, global temperatures peaked in early-2016, spiking slightly above the 1998 peak, and then fell back for ~two years. They then entered the latest surge and are likely to set another multi-year peak in 2020/2021.
(Global temperature spike highs have occurred at a similar ~11-Year Cycle as other solar phenomenon – peaking in 1988, 1998/99, 2009/10 and potentially in 2020/21. This is NOT a political climate debate but rather an observation of shorter-term cycles.)
Is it possible that the events of 2014 – 2020 could spur a new migration away from California, similar to how the events of 1934 – 1940 spurred a migration to CA? If so, what does that mean for the 2020’s?
And just to be clear, I spend time in CA every year or two and love what the state has to offer. So this is not any sort of bias or political statement. It is simply an observation of some very intriguing cycles that should not be overlooked. Stay tuned…
Bonds & Notes are validating analysis for a final spike high to occur in June/July ‘20 and usher in a sizeable correction. That peak fulfilled a ~4-year low-low-low-low-high-high-(high) Cycle Progression dating back to the 1990’s and more recently timing peaks in mid-2012 and mid-2016.
Bonds & Notes set their highest weekly closes on July 31 and triggered signals for long-term traders and investors to liquidate long positions and look for a reversal lower then (see Aug. ’20 INSIIDE Track). That set the stage for a 3 – 6 month (or longer) top and reversal lower – part of which was/is expected to be influenced by developing commodity inflation…
Looking out over the next 3 – 6 months, a mid-2020 peak does not necessarily portend a major sell-off (yet). The overall mindset will not likely make an immediate shift from expecting perpetually low interest rates… to suddenly anticipating rising rates.
Instead, Bonds & Notes could remain in their upper regions for a few months until their euphoric bullishness begins to fade with some initial selling. That selling is rarely the immediate start of a new trend but rather a topping process that must unfold in order to shift from one expectation to the opposite.
Another resurgence of price inflation – later this year or in early-2021 – could also help change perspectives on interest rates…
Longer-term investors and hedgers can be liquidating long positions in Bonds & Notes and watching for [reserved for subscribers] in order to increase selling. The early-Sept. rally provided the first opportunity.” TRADING INVOLVES SUBSTANTIAL RISK!
Bonds & Notes have entered what is forecast to be a 2 – 3 year downtrend after fulfilling analysis for a multi-year peak (and corresponding bottom in interest rates) in/around July ’20 – while fulfilling analysis for a final, wave 5 of V advance into that peak. A myriad of factors are projecting an initial surge in inflation between now and mid-2021 (the first of multiple phases).
Stocks & Silver (representing paper & commodity inflation) triggered 6 – 12 month buy signals in sync with multi-year cycles that bottomed on March 20 – 27 and with stocks projecting a new 12 – 18 month advance into May ‘21. Lumber & Natural Gas did the same. Bonds could/should begin to fall when the masses recognize that we have entered a multi-year inflationary period.
2020/2021 represent final, culminating years of 40-Year & 80-Year Cycles – timing everything from War (watch late-2021 into late-2025), Climate (Drought Cycles peak in 2021/22 and transition to Deluge Cycles in 2022/23), Agriculture, Currency Wars… and ultimately Interest Rates. The final year(s) of a 40-Year Cycle of Drought (into 2021/2022; before transitioning to Deluge Cycles in 2022/23) could help magnify commodity inflation in the coming years. The events of 2020 are powerfully validating this ongoing analysis!
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.