Financial Crisis Forum Recap

By Ron William, CFTe, MSTA

Financial Crisis Forum Recap

The Foundation for the Study of Cycles (FSC) hosted a Financial Crisis Forum to share insights on whether the recent volatile macro landscape was a “near miss or eye of the storm.” Edward R. Dewey, co-founder of the FSC, had distinguished from his experience of the Great Depression, a “mysterious [cyclic] force” in life and markets, with the ability to “trigger events,” like a universal invisible force of nature.

Lightning has already struck multiple times in the last month or so, hit by bank failures, market turmoil, and ongoing economic uncertainty – elevating risk of the much talked about Minsky Moment – a behavioural crash pattern, fueled by a Ponzi mirage of artificially cheap money. Given this compelling backdrop, the FSC forum proved thematic and timely, offering a diversity of expertise that attracted record-breaking interest from more than 1,000 attendees!

Interestingly, although there was a consensus view on the extent of storm conditions, a variation of bull/bear scenarios transpired across 6 speakers, as part of the FSC leadership team.

Bill Sarubbi, presented on The Panic Cycle and its unique, albeit mysterious, patterns throughout history. To begin, Sarubbi bases his definition of panic in behavioural terms, derived from the work of Theodore Burton, whereby “business communities are for a considerable period overcome by sudden fright or exaggerated alarm.” According to Sarubbi’s own cycle research of panics since the 1600s, including a quantitative market overlay; it signals a further turbulence from Q4 onwards (Figure 1).

Lars von Thienen followed with a review of Financial Stress Index Cycles, using the FSC Cycle software, offering an earlier timing signal for risk in the coming summer months, with potential for temporary stabilization thereafter (Figure 2).

Andy Pancholi shared analysis on How History Repeats with Mathematical Precision, believing in a mix of pattern repetition and rhyme variations. Pancholi featured work on the 90-year anniversary of the 1933 crisis, with both timing and macro-overlays to the latest banking crisis.

He also references other important cycles, notably the 100-year cycle which aligns the 2007/08 GFC with 1907 Rich Man’s Panic. Further analysis on the 50-year half-cycle uncovers interesting timing signals from 2007/08, to 1957, 1907 and 1857. His short-term analysis predicts late June and September, as risk windows (Figure 3).

Jake Bernstein presented on Cycles, Seasonality, and Protective Strategies. He featured top cycle setups on rates, equities, and G3 FX currencies. Bernstein’s cycle analysis predicts a lower interest rate environment, which could potentially be supportive for equities. Indeed, his view is grounded by the market cyclical bottom of October 2022, marked by record sentiment extremes, in terms of commercial buying and small trader selling pressure (Figure 4). He also highlighted further downside for the DXY, with potential lows expected for JPY in the near-term and GBP in 2024.

FSC chairman, Dr. Richard Smith addressed How to Prepare for Market Volatility with a better understanding of the macro dislocations, cycle timing and protective strategies. He cites Ray Dalio’s theme of 3 key disruptive forces, 1. Government debt, 2. Growing wealth gap, risking further tensions in society (Figure 5) and 3. Big international conflicts, resulting from a changing world order.

To end, Ron William discussed latest insights on Roadmap Cycle and Gold’s Crisis Hedge, warning of sovereign debt risk (Figure 6). The recommendation is a barbell strategy, risk-asset selectivity, while building up a defensive play such as gold, cash, quality bonds and non-correlated portfolio risk. More analysis is in recent FSC blogs and related media interviews Are the market dominoes falling? and Gold consolidation, then $2800 next.

Thank you to all FSC Members for all your kind feedback and insightful questions on our FSC blog series. I welcome more interaction on ron.william@cycles.org.

Ron William, CFTe Bio

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Ron William, CFTe, is a market strategist and educator/mentor with more than 20 years of experience working for leading macro research and institutional firms, producing tactical research and trading strategies. He specializes in global, multi-asset, top-down framework, grounded in behavioural technical analysis, driven by cycles based on the "Roadmap" signature model of veteran market technician Robin Griffiths, published in his book “Mapping the Markets.”

Ron also applies a "market & mind" approach at IntensiChi, using the latest techniques in behavioral-risk models and neuroscience sourced from expert groups. He further supplements with mentoring/coaching, trained by the International Coaching Federation (ICF), and teaches a regulatory approved masterclass in Applied Behavioral Science, with investment, private banks and CFA Societies.

Ron's primary work, as part of his current institutional market advisory firm (RWA), acquired global industry recognition as winner of “Best FX Research” in 2020. Financial media programs and industry publications regularly feature his market insights, including “Is the big cycle about to turn?”, predicting the 2020 crash and alerting the “Minsky paradigm” of 2020 H2-2022.

Driven by high-integrity education, Ron serves as part of the education committee of the International Federation of Technical Analysts (IFTA), Development Director at the Foundation of the Study of Cycles (FSC), Head of SAMT’s Geneva Chapter, and an honorary member of ESTA. He is also a visiting lecturer at universities, active guest speaker for the CFA, CAIA and CISI, and senior teacher at colleges offering an accredited diploma in trading and investing.