A FAILING SOCIAL CONTRACT

There is an Unwritten Contract between the Governing and the Governed

Gordon T Long
5/18/2016

MARCH 2016 Edition

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A FAILING SOCIAL CONTRACT

There is an Unwritten Contract between the Governing and the
Governed
MAY MONTHLY MARKET COMMENTARY
EXECUTIVE BRIEF .................................................................................................................................. 4
MARKET MESSAGE ....................................................................................................................................................................... 4
I DEFINING CHARTS ..................................................................................................................................................................10
Defining Chart #3 - The Big M and Super Cycle b .................................................................................................................... 11
Defining Chart #4 Intermediate Term Topping Process ............................................................................................................. 13
Boundary Conditions .......................................................................................................................................................................... 14
Channels & Regressions ................................................................................................................................................................... 15
II TARGETS .................................................................................................................................................................................24
III QUARTERLY SENTIMENT RISK AND FUNDAMENTALS ..................................................................................................28
SENTIMENT ........................................................................................................................................................................................ 28
NEW-RISK ANALYSIS - Complacency .......................................................................................................................................... 35
NEW-FUNDAMENTAL ANALYSIS Valuation Summary ............................................................................................................ 35
IV STUDIES..................................................................................................................................................................................37
SHANGHAI ACCORD An Update..............................................................................................................................................37
CHARTS OF NOTE ............................................................................................................................................................................ 37
Q1 EARNINGS An impending macroeconomic and profits implosion ...........................................................................42
STUDY: Q1 EARNINGS ..............................................................................................................................................................42
CHARTS OF NOTE ............................................................................................................................................................................ 42
MARKET BOUNCE Tell Tales of a Bear Market Counter Rally ............................................................................................47
CHARTS OF NOTE ............................................................................................................................................................................ 48
BUYBACKS Cash Flow Now A Looming Problem.................................................................................................................49
STUDY: BUYBACKS .....................................................................................................................................................................49
CHARTS OF NOTE ............................................................................................................................................................................ 50
V - TRIGGER$ ZONES ...................................................................................................................................................................51
VI - DRIVER$ & BIA$ .....................................................................................................................................................................52

A FAILING SOCIAL CONTRACT THERE IS AN UNWRITTEN CONTRACT BETWEEN THE GOVERNING AND THE
GOVERNED ......................................................................................................................................... 53
CAPITALISM NOW CREDITISM .............................................................................................................. 53
Increasing Standard of Living .....................................................................................................................................................53
Crippling Capitalism .....................................................................................................................................................................53
FINANCIALIZATION DOMINANT CONTROL............................................................................................... 53
Financialization & Risk Avoidance .............................................................................................................................................53
Cheap Money .................................................................................................................................................................................54
MONETARY MALPRACTICE INCREASED DESPERATION ............................................................................ 54
TOO MUCH DEBT NOT ENOUGH GROWTH ...........................................................................................................................54
The Greenspan Put....................................................................................................................................................................55
Untested & Uncharted Monetary Policy .....................................................................................................................................55
Monetary Malpractice ...................................................................................................................................................................55
NIRP for Safety ..............................................................................................................................................................................56
Financial Repression Authority ..................................................................................................................................................56

MARCH 2016 Edition

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CYCLES EVER CHANGING BUT ALWAYS REPEATING ............................................................................... 57

Lack of US Business Investment ................................................................................................................................................58
KONDRATIEFF CYCLE Generational Cycles .........................................................................................................................58
KONDRATIEFF CYCLE Generational Cycles .........................................................................................................................61
THE ECONOMIC CONFIDENCE MODEL Martin Armstrong .................................................................................................62
THE SPENDING CYCLE Dents Demographics ......................................................................................................................63
Hierarchy of Macroeconomic Cycles .........................................................................................................................................64
Shanghai Accord ...........................................................................................................................................................................64
A FAILING SOCIAL CONTRACT THE TELLTALE: RISING POLITICAL MOVEMENTS .......................................... 65
The Social Contract ......................................................................................................................................................................65
A Megaphone Top .........................................................................................................................................................................66
Ominous Rounded Top ................................................................................................................................................................66
M Top...........................................................................................................................................................................................67

MARCH 2016 Edition

Copyright 2016 GordonTLong.com

Restricted
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