The 7-year sabbatical cycle

Talk by speaker from T3B Singapore, @ T3B Malaysia on 9 Jan, 2016 (Part 1 of 3).

The speaker has many years of experience in stock market trading and applies Cycle Analysis (CA) to predict and time his trades.

This article serves to provide further information to the speaker’s argument pertaining to his application of CA to stock trading. There will be 3 parts:-

Part (A) : Sovereign debt crisis.

Part (B) : The 7-year sabbatical cycle.

Part (C) : commodities, the next bullish markets.

Part (A) : Sovereign debt crisis

Stock trading analysis usually comprises FA (fundamental) and/or TA (technical).

The speaker applies possibility of 3, i.e

ANALYSIS = FA + TA + CA (where CA stands for Cycle Analysis).

The previous year 2015 should be a year of financial crisis starting with European countries. He called this the sovereign debt crisis. He said that the countries in crisis have debt-to-GDP ratio of over 100. This is the phase 1, crisis in Europe.

 

1.    Sovereign Debt Crisis (refer to debt-to-GDP ratio of the world)

Phase 1 of SDC à Europe

Source: http://www.tradingeconomics.com/country-list/government-debt-to-gdp

Country	Debt:GDP ratio	Data dated
Greece	177.1	Dec 2014
Italy	132.3	Dec 2014
Portugal	130.2	Dec 2014
Ireland	109.7	Dec 2014
Cyprus	107.5	Dec 2014
Belgium	106.5	Dec 2014

The table above shows high debts of the European countries in crisis now.

The PIIG have debts > GDP.

From above, it is shown that when in high debts, Euro money is flowing to USA.

Hence US exchange rate is higher and higher.

Question: Is debt-GDP ratio a proper measure of this financial crisis?

Take a look at the extended table:-

Country	Debt:GDP ratio	Data dated
Greece	177.1	Dec 2014
Italy	132.3	Dec 2014
Portugal	130.2	Dec 2014
Ireland	109.7	Dec 2014
Cyprus	107.5	Dec 2014
Belgium	106.5	Dec 2014
Japan	230.0	Dec 2014
Lebanon	134.4	Dec 2014
Jamaica	132.7	Dec 2014
USA	103.0	Dec 2014
Bhutan	101.3	Dec 2014

Note: Singapore score is 99.3 @ Dec 2014

So, should we include more data to prove our point?

Source: https://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves

https://en.wikipedia.org/wiki/Government_debt

https://en.wikipedia.org/wiki/List_of_countries_by_public_debt

Country	Foreign Exchange Reserve	Data dated	Government debt	Data dated	As % GDP in 2012	Debt to reserve
Greece	US$5.5 bil	Nov 2015	US$436 bil	2012	161	79x
Italy	US$130.5 bil	Nov 2015	US$2334 bil	2012	126	18x
Portugal	US$19.0 bil	Nov 2015	US$297 bil	2012	119	15x
Ireland	US$2.0 bil	Nov 2015
Cyprus	US$0.8 bil	Nov 2015
Belgium	US$23.7 bil	Nov 2015	US$396 bil	2012	99	16x
Japan	US$1,233 bil	Nov 2015	US$9872 bil	2012	214	8x
Lebanon	US$50.5 bil	2014
Jamaica	US$2.9 bil	Oct 2015
USA	US$118.2 bil	Dec 2015	US$17607 bil	2012	73	149x
Bhutan	US$1.2 bil	2014
Singapore	US$247.0 bil	Nov 2015	US$370 bil	2012	111	1.5x

The speaker also said that the next will be phase 2.

Phase 2 of SDC à Japan.

Japan’s debt to GDP ratio is 230.

Japan’s debt is 8x their reserve

There will be a possibility of it happening within the next few years.

Do you think so if data from internet sources is true? I am doubtful base on present data.

The final phase is phase 3.

Phase 3 of SDC à USA.

They have ratio of 103 over their GDP. USA has debt of 149x their reserve.

Base on present data, I think it is possible. USA already has issues of increasing their borrowing (recall: raising debt ceiling in 2014 & 2015).

            p/s: China’s reserve is US$3330 bil @ Dec 2015