Tag Archives: Fourth Turning

A Report To Make You Go "Hmmm…"

“Well, instead of getting a crash as the market broke the neck and shoulders tops, we got a sharp bounce. Ho-hum…that is the way of summer markets. However, nothing that has happened in the last four weeks has changed the risk of some significant downside to come. Chart patterns across major markets still look like large distribution tops,” Raoul Pal writes in his latest edition of the Global Macro Investor, and presents us with evidence of an ongoing depression and of an upcoming second recession.

“While we are on the subject of how lousy things are, this is the worst economic recovery of a recession in recorded history.”

Raoul Pal


The latest edition of the Global Macro Investor by former hedge fund guru, Raoul Pal, is quite interesting reading. Not only do Raoul Pal make a hard hitting analysis of the present and upcoming developments in the financial markets, he also draw some nice historical parallels.

“If you’ve read the book The Fourth Turning by William Strauss and Neil Howe, you’ll notice that this is almost exactly as they predicted,” Pal writes.

At the end of “The Fourth Turning,” the authors describes a process where mankind start an entire new development once again, returning to where the super-cycle began.

“In this case we would be returning to a society much more like the 1950’s which was a time of economic and social conservatism, shunning of debt, economic isolatiosm and a whole heap of insecurity and paranoia.”

“However, we only start again at the first turning once the fourth turning has played out and in that case it means default (and often war….but I won’t go that far!) and a complete shift in social and political values,” Mr. Pal concludes.

“But remember, little did the average man in the 1950’s (the last first turning) know that he could look forward to the 50 best years to come. The authors have identified this social, political and economic cycle back over the last 500 years. I’ve only just come across the book and I pretty much agree with it. We are in the midst of the fourth turning and it’s likely to take at least another decade to work through – if not longer – and then we can start again,” he adds.

“It’s almost Austrian in its theory of creative destruction and for me, it makes a lot of sense.”

“I am often asked what I think is the solution to the current economic problems, but I actually don’t believe there is an easy solution. History tells us time and time again, over the millennial, that these super-cycles inevitably end badly, and it’s the bad outcome that proves to be the best outcome because we can begin again with a clean slate,” the famous hedge fund manager writes in his latest edition of his monthly market analysis, The Global Macro Investor.

A Technical Macro Strategist

Raoul Pal has been publishing The Global Macro Investor since January 2004, in where he draws on his considerable experience in running a hedge fund and advising many more.

Pal retired from managing client money at he age of 36 in 2004 and is now living on the Valencia coast of Spain.

Previously he co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world.

Raoul moved to GLG from Goldman Sachs where he co-managed the hedge fund sales business in equities and equity derivatives in Europe. In this role, Raoul established strong relationships with many of the world’s pre-eminent hedge funds, learning from their styles and experiences.

Other stop-off points on the way were NatWest Markets and HSBC, although he began his career by training traders in technical analysis.

The Future Recession in an Ongoing Depression

That’s the title of the August edition of The Global Macro Investor.

And Raoul Pal provides evidence of both.

“Well, instead of getting a crash as the market broke the neck and shoulders tops, we got a sharp bounce. Ho-hum…that is the way of summer markets. However, nothing that has happened in the last four weeks has changed the risk of some significant downside to come. Chart patterns across major markets still look like large distribution tops.”

“You can see the new downtrend rather clearly if we add regression lines to the chart of the SPX. It’s not as flashy as a crash, but a downtrend it is. Expect the upside to be capped near here…”

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The Worst Recovery In History

“While we are on the subject of how lousy things are, this is the worst economic recovery of a recession in recorded history,” the legendary hedge fund manager writes and points to the fact that most major markets are now roughly where they were during the summer or autumn of 2009.

China and Japan are the worst markets with zero returns since May 2009.

Europe has managed zero returns August 2008 and SPX since September 2008.

Looking farther out, the SPX and Eurostoxx have now produced zero returns since March 1998, the Nikkei since September 2001 and China since 2006.

“By any yardstick these are lousy markets indeed and we have to expect them to worsen again as economy weakens,” Raoul Pal argues.

You’ll find a copy of the full analysis here.

h/t: Zero Hedge

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