The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Monday, October 3, 2016.

Adolf would be proud. The Boys (and girls) From Brazil (been on this page for some time now) are hard at work these days bringing their idea of a perfect global corporate state to the world, with the latest volley being Obama transferring control of the internet over to an agency run by the United Nations (UN), giving countries like China and Iran command of censorship in the future. If this is allowed to occur, gradually, the face of the internet will change in coming years to reflect the corporatist elites and authoritarian governments that dominate the world, crushing the last bastion of declining free speech remaining - America.

Understandably then, those concerned with rising tyranny in America are attempting to fight back - they are trying to block this move. (i.e. but apparently they failed.) With most politicians' card carrying members of 'the party' these days however, this effort will likely fail. There is a ray of hope if Trump is elected as President however, this lunacy could likely be reversed. (i.e. like Obamacare?) So let's keep our fingers crossed, because if left unchecked, this move would accelerate the spread of power in the cancerous corporatist state considerably. Just look at what they did to Michael Savage right before the debate for discussing Hillary's health.

Michael Savage was no lightweight, with the #2 syndicated radio talk show across America - gone.

So make no mistake ladies and gentlemen, tyranny in America is on the rise, and it will get very ugly before it's all over. You think the only thing one need worry about is Trump beating Hillary in the debates? Well think again. Oh, and by the way, do you know who's moderating the next debate? The CIA. And don't forget who's attempting to take over the election process this time around - Homeland Security. At a minimum, expect the 'deep state' to attempt every trick in the book at election time to steal the show, however with Trump so far ahead now, because increasing numbers are on to these clowns, pulling an Al Gore on The Donald will be considerably harder.

On to the economy now - a disaster is brewing. Iron clad signals a major economic downturn is on the way are front and center (here's a global view), which will make life interesting for whomever is in the White House - no matter. And again, my view is it will get so bad, that even Trump would be forced to employ helicopter money. Because things look completely different once you take the oath. Political survival enters the picture, and people under pressure do funny things when that happens. This is of course why things could get very interesting in the stock market sooner rather than later as well.

Because stocks are significantly overvalued, so just a whiff of genuine inflation will crash them. As per my recent comments on this subject matter, if Trump were elected, his proposed policies would wreak havoc over the zealous ambition of Wall Streeters, which could scare the bejesus out of twitchy stockholders before he's even in office. As fate would have it, this happens to be the exact possible message in the risk adjusted S&P 500 (SPX) chart seen below, where it appears spike highs could in fact be in place- bound by the sinusoidal again. If this proves correct, while new nominal highs may be witnessed this month, a meaningful reversal should be triggered soon. (See Figure 1)

Figure 1

It's a fact - the stock market likes incumbents. Unfortunately for Hillary however, it was down this last quarter, which is a historically reliable indication The Donald will be triumphant on November 8th. So again, while stocks could conceivably grind higher to a marginally nominal new high here in October as status quo'ers continue to push their agenda(s), things should look quite different by November at the latest, something to keep in mind depending on your exposures. The Dow / XAU Ratio (see below) continues to work on it's 'inverse head and shoulders pattern' (seen here on the daily), which can continue for a little longer, however it would not be surprising to see it break higher sooner rather than later in connection with the major top in stocks that appears immanent. (See Figure 2)

Figure 2

So while this might not occur in connection with the next debate, which may not be the best for Trump anyway (see above), this doesn't matter as long as he's strong in the last one on October 19th, which is close enough to November 8 to mark the top. This is when the 'hot money' will be looking closely at the situation, and voting with their money. Correspondingly then, since precious metal shares are positively correlated to the broad markets at the moment, one should be watching exposures starting right now, waiting for further weakness prior to buying any new positions. Again, my target for a low on the Gold Bugs Index (HUI) is in the 165 to 170 range, however it could hold closer to the 200-day moving average (MA) in the 200 vicinity - who knows. (See Figure 3)

Figure 3

The suite of possibilities short of complete failure back down to the lows in a stock market crash are denoted above in annotations on the HUI's monthly plot from the Chart Room. Notice the 21-month exponential moving average (EMA), also know as the 'swing line', also resides in the proximity of 200, meaning it's not important support just because it's the large round number. So again, if 200 did not hold, then the message in the 'time line' occurrence will prove true, and 170ish would be vexed, at a minimum. If this occurs, we would be waiting for a 'helicopter money' related announcement to save the day - the Keynesian nightmare we live in today. The Fed won't get the blame however, Deutsche Bank will have that honor as the 'scapegoat' de jour - our new omnipresent 'Lehman moment'.

This saga is being played like a fiddle, with the German government saying they won't bailout their 'crazy and corrupt bankers'. Just watch though - once stocks start down in earnest - magically - their parasite politician's will have a change of heart, and bank stocks around the world will soar. Next year is a year ending in '7', which historically has been a concern for the bulls / status quo in times like these, if not at the beginning of the year (like in '07), as fall approaches (like in '87). So if nothing, 2017 should prove to be interesting if stocks dodge the election bullet (as seasonals suggest), for whatever reason. Frankly however, I don't know how they do it with Trump likely to take it, and World War III (WWIII) on deck. If interest rates start rising with a Trump win, the multiples will contract no matter how speculators are betting.

That's the thing to watch then - interest rates. If they remain controlled, so will the bubbles. Even if some volatility sets in as long as rates remain under control, this is the signal the bubbles will be re-inflated. So I wouldn't bet against Wall Street just yet, because they are crafty buggers, to say the least. One needs to look no further than the most recent batch of scandals to surmise this. No new accounts - no problem - just make them up. What about the authorities? No problem again - Wall Street owns them. And the fines they pay are just a tax. Did you figure that one out on your own? The fines they pay are just a tax - paid to the politician's - for their 'lunch fund'. It's all a part of the Wall Street / Washington 'circle jerk' - and the public is in the middle. (i.e. and it won't stop until corporations are taken out of politics.)

All that said, with stocks in a terminal impulse higher going right into what looks to be a high right in front of the Presidential election here in October, it would be surprising to see stocks trading higher than they are today given this would imply Hillary would win. (i.e. see attached above.) How do I know stocks are in a terminal impulse? Answer: I can count to five, and I know Elliott Wave Theory. Therein, when looking at the larger impulse from the bottom in February in the SPX (click over into the weekly), you can clearly count five waves from the bottom. So again, while further gains are possible here, and not knowing the extent of any potential weakness (2000 is the initial target), an intra-month reversal appears likely, possibly at the third debate on the 19th. Options expiry is only 2-days past that Wednesday, so this factor falls into place a well.

See you next week.