During the U.S. presidential campaign, the Trump Mexican border wall received a lot of attention. When reviewing the chart below and visualizing the rise of border walls during the contraction phase of Cycle 3, one can easily see why something perceived as extreme would be occurring in the recent election. During the contraction in mood and mindset, destructive behavior rises to the top. This behavior is expected as these extremes.
Border walls data source: Elisabeth Vallet (2016)
Credit Suisse calculates a “fear index” that can be charted under the symbol CSFB. The index measures the relative cost of sell/buy options in the market. The chart below compares it to the Dow Gold Ratio, our barometer for mood, mindset, and behavior. The CSFB is rapidly trending up as expected in this contraction phase of the cycle.
The Orlando shooting adds to a long list of cowardly attacks from both American and non-American assailants. During the contraction phase of the cycle, humans collectively tend to be more fearful, angry, and pessimistic. This leads to many destructive outcomes on an individual and group basis.
The chart below illustrates the major “fear events” since the contraction phase of Cycle 3 started in 1999. It denotes a progression of major events that have caused an increase in fear and anger in the herd. The Y2K event kicked off this phase in late 1999.
Unfortunately if the Dow-Gold Ratio Cyclicity Theory is correct, the next few years will see much more of these type of events.
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“Cyclicity & The Collective Human Experience – 1900-2016”.