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Transcript of DAVID CHAPMAN. “Those who cannot remember the past are condemned to repeating it” -- George...
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DAVID CHAPMANDAVID CHAPMAN
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“Those who cannot remember the past are condemned to repeating it”
-- George Santayana (1863-1952)
“The people are turbulent and changing, they seldom judge or determine right.”
-- Alexander Hamilton (1755-1804)
“The issue today is the same as it has been throughout all history, whether man shall be allowed
to govern himself or be ruled by a small elite”-- Thomas Jefferson (1743-1826)
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CYCLES and TRENDSCYCLES and TRENDS
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Long Term CyclesLong Term Cycles
Dewey & Dakin (54 Year Commodity Cycle)
Kondratieff Kwave (54-60 Year Supercycle)
CYCLES and TRENDSCYCLES and TRENDS
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Edward Dewey And Edward DakinEdward Dewey And Edward Dakin
● 54 Year Cycle
● Their book charted prices from 1790 for wholesale prices that coincided with peaks and valleys for commodity prices
● Cycle measured peak to trough with roughly 27 years to peak and 27 years to trough
CYCLES and TRENDSCYCLES and TRENDS
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DEWEY & DAKIN PREDICTIONSDEWEY & DAKIN PREDICTIONS
Year of Peak Prediction – Year of Peak Prediction – Dewey & DakinDewey & Dakin
Actual Peak Actual Peak Peak WarPeak War
1755 * Seven Years War aka French Indian Wars (Britain/France)
1817 1817 (1810) War of 1812
1871 1868 (1864) Civil War
1925 1920 WW1
1979 1980/81 (1974/75) Vietnam
2033 War on Terror? WW3?
CYCLES and TRENDSCYCLES and TRENDS
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Year of Trough Prediction – Year of Trough Prediction – Dewy & DakinDewy & Dakin
Actual TroughActual Trough Trough WarTrough War
1729/1730 * French Colonies and Great Britain
1790 1790 (1783) American Revolution
1844 1842 (1837) Mexican American War
1952 1949 (1932 and 1947) WW2
2006 2001 Cold War/Gulf Wars/Balkan Wars
CYCLES and TRENDSCYCLES and TRENDS
DEWEY & DAKIN PREDICTIONSDEWEY & DAKIN PREDICTIONS
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Kondratieff Cycle or KwaveKondratieff Cycle or Kwave
● Russian Economist under Stalin
● 50-60/65 year cycle
● Can be controversial
● Not widely accepted
● Ian Gordon – Long Wave Analyst
www.longwavegroup.com
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The K-Wave Cycles 1789-Present U.S.A.The K-Wave Cycles 1789-Present U.S.A.SPRING (EXPANSION) SUMMER (RECESSION) AUTUMN (PLATEAU) WINTER (DEPRESSION)
1784-1802 (American Revolution)
1803-1816 (War of 1812)
1817-1834 (Era of Good Feelings)
1835-1844 (Mexican American War)
1845-1858 (Mexican American War)
1859-1864 (Civil War)
1864-1874 (Reconstruction)
1875-1896 (Indian Wars)
1896-1907 (Spanish American War)
1908-1920 (WW1) 1921-1929 (Roaring 20’s)
1930-1948 (WW2)
1949-1966 (Korean War, Suez Crisis, Cuban Missile Crisis, Cold War)
1966-1981 (Vietnam War)
1982-2000 (The Information Age)
2000-? (War on Terror? WW3?)
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CYCLES and TRENDSCYCLES and TRENDS
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Kondratieff Phase Best Investments Worst Investments Characteristics
Spring (Expansion)Inflationary Growth
Stocks, Real Estate and Commodities
slowly rising
Bonds Low inflation, healthy banking system, growing
savings
Summer (Recession)Stagflation
Commodities, Gold and Real Estate
Stocks and Bonds Inflation, debt growing (corporate),
stagnate growth
Autumn (Plateau)Deflationary Growth
Stocks, Bonds and Real Estate
Commodities and Gold
Debt levels soar (consumer), wealth
disparity, stock market euphoria,
low inflation
Winter (Depression)Deflation
Gold, Cash and Commodities in late
cycle
Stocks, Real Estate, Bonds (until end of credit crunch then
they fall again)
Deflation, debt collapse, trade conflicts, social
upheaval
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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Other CyclesOther Cycles
● Kuznets – 15-25 Year Real Estate/Infrastructure
● Juglar – 7-11 Year Business Cycle
● Kitchin – 3-5 Year Inventory Cycle
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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● Gold
● Silver
● Oil
● Natural Gas
Commodity CyclesCommodity Cycles
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
Bubbles And PanicsBubbles And Panics
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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Intermarket Technical AnalysisIntermarket Technical Analysis
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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SOME INTERESTING CHARTSSOME INTERESTING CHARTS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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CYCLES and TRENDSCYCLES and TRENDS
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SOME ECONOMICSSOME ECONOMICS
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Declining Consumer ConfidenceDeclining Consumer Confidence
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Rising Household Debt Declining SavingsRising Household Debt Declining Savings
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Rising Household Debt as % of Disposable Rising Household Debt as % of Disposable IncomeIncome
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Declining Household Net Worth as % of Declining Household Net Worth as % of GDPGDP
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Declining % of Homeowner EquityDeclining % of Homeowner Equity
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Record High Total US Debt as % of GDPRecord High Total US Debt as % of GDP
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Real Estate Decline Real Estate Decline
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More Mortgage Resets to Come IMore Mortgage Resets to Come I
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More Mortgage Resets to Come IIMore Mortgage Resets to Come II
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Lots of Housing Supply on the MarketLots of Housing Supply on the Market
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Housing Prices have taken a PoundingHousing Prices have taken a Pounding
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And there is More to ComeAnd there is More to Come
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Owner’s Equity Keeps DecliningOwner’s Equity Keeps Declining
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Owner’s are not Getting as Much Out of Owner’s are not Getting as Much Out of their Homestheir Homes
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Home Ownership is in DeclineHome Ownership is in Decline
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But the Houses just kept getting BiggerBut the Houses just kept getting Bigger
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Growing Commercial Vacancy RateGrowing Commercial Vacancy Rate
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Rising Real UnemploymentRising Real Unemployment
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Declining Real EarningsDeclining Real Earnings
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Declining Automobile CompetitivenessDeclining Automobile Competitiveness
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Declining GDPDeclining GDP
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Rising International Trade DeficitsRising International Trade Deficits
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Growing Control of US AssetsGrowing Control of US Assets
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Explosive CDS ExposureExplosive CDS Exposure
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Explosive Derivatives GrowthExplosive Derivatives Growth
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Record Federal Reserve LiabilitiesRecord Federal Reserve Liabilities
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Bubble in Financial AssetsBubble in Financial Assets
0
50
100
150
200
250
119%
1980
201%
1990
295%
2000
317%
2005
346%
2006
356%
2007
00%
World Financial Assets
Nominal World GDP
Financial Depth(% of GDP)
Tri
llions $
Note: Asset and GDP figures have been rounded for simplicity. Financial depth percentages were calculated using nonrounded figures.
Source: McKinsey Global Institute
$12 $10
$43
$22
$94
$32
$142
$45 $48$55
$167
$195
World Financial Assets vs. Nominal World GDP
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High Real InflationHigh Real Inflation
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Rising Long Term InflationRising Long Term Inflation
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Expanding Money SupplyExpanding Money Supply
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Growing Global Money SupplyGrowing Global Money Supply
-5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Brazil
India
China
UK
Russia
Mexico
Canada
United States
Japan
Annual Increase in Money Supply
Money Supply as Reported
As of March 30, 2009
Source: Bloomberg
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Growing Federal ObligationsGrowing Federal Obligations
0
10
20
30
40
50
60
70
2002 2003 2004 2005 2006 2007 2008
Gross Federal Debt
Total Federal Obligations*
Source: www.shadowstats.com * Including Social Security and Medicare
U.S. Government Debt vs. ObligationsT
rilli
on
s $
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Total Government DebtTotal Government Debt
Government Sector Debt Debt
Federal Government Sector 10 Trillion
State & Local Government Sector 2 Trillion
Un-funded Social Security contingent liabilities looking forward 7 Trillion
Un-funded Medicare contingent liabilities, estimated 37 Trillion
Total Above Government Debt $56 Trillion
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Exploding Federal Budget DeficitsExploding Federal Budget Deficits
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Escalating Federal SpendingEscalating Federal Spending
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Gold, Silver and PlatinumGold, Silver and Platinum
119%
196%
225%
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Thank YouThank You
David ChapmanDavid Chapmanwww.davidchapman.comwww.davidchapman.com
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