and forget jobs or the eurozone crisis is the dow really the best indicator of who will be you as president we'll hear from robert proctor he's founder of elliott wave international and states and federal officials have finally reached out foreclosure deal a twenty five billion dollars settlement with the five biggest banks guilty of abuses of abusive practices like robo signing signed on now it's billed as helping homeowners but no mean prince says this is yet another example of only good for the banks you'll hear why let's get to today's capital account. so as we watch the eurozone debt crisis and look to what politicians or technocrats

are doing to keep europe together or as we watch the two thousand and twelve us presidential election campaign and look at what candidates are saying or as we try to analyze what the economy and economic news means about where the stock market is had market is headed what is the outcome of the events like this has to do with something else entirely the same thing that dictates how minds you're right seeing rising here in the early sixty's. so you can see a little shen but skirts got higher as a decade went on as you can see there what is the deeper thing moving all of these trends skirts market events is social mood measured best by the stock market that is just the theory behind the work of robert proctor he's founder of

elliott wave international and author of this book conquered the crash you can survive and prosper in a deflationary depression i spoke to him earlier and for viewers who may not be familiar with elliott wave theory i asked him first to break down why he believes social mood is the driver of all of these things. well that's not an intuitive way to look at things most people sort of default to a mechanical way of believing that causality works in society it's a it's the primitive way that we learn how to cope with things if the ball is rolling down a hill or stone is rolling down a hill it could crush you you know that it isn't going to change direction on its own volition so you can jump out of the way most people feel society changes in the same way it's going to go in one direction unless something impacts what i was troubled by with this explanation is the idea that these impacts seem to come from nowhere under the. other words what causes the actions in the first place and when

i started studying the stock market and and different social action such as the growth of contraction in the economy or the kind of music that people listen to those sorts of cultural things i found out they tended to implode together so i began to realise that there's something else going on and i think what's happening is that there are in dodge's asli regulate in waves of social mood that arise naturally you know among human beings when they're in a social setting and that rather than the events of society determining the general mood of the population i think it's the general mood that actually dictates the character of the actions that people take in a social setting so it's a completely different way of looking at things and as you said at the outset it extends the stock market the way the macro economy is going a lot of political trends and the more frivolous things such as popular music trends in movies and so on and it's completely fascinating how do you measure it though using elliot way. well unfortunately we cannot put electrodes in everyone's

brains that would be very nice and container trickly what i've noticed is the most sensitive measure of social moon at least that i can find and also the one where we have excellent back data in fact going back two hundred years in this country in another hundred years in britain is the stock market. and i think there's another reason the stock market is so good at reflecting social mood and that is that people can react very very quickly to changes in their mood they can buy and sell stocks now these days with a push of a button certainly with no more than a few hours contemplation or maybe calling a broker whereas some of the other things that may result from a change in social mood such as the changing business conditions take time to effect so if someone decides it's time to expand my business you may go i have to go borrow money or rent more space hire new people and it takes a few months and guess what that's why recessions follow downturns in the stock market recovers follow up turns in the stock market they do not need them i think

it's because of this delay in expressing social mood and it's so interesting that with social mood putting pressure on all of these different things that you named that the barometer for that is the markets i want to go into some of these examples though of putting markets aside let's look at some of the cultural examples that i have everyone may remember goldie hawn and lathan in the sixty's i want to play a clip of that for the audience here and i. really think that me larry that. made this was. so this was the late sixty's she's wearing a little short skirt i say this is driven between a combination of nice legs and maybe women's liberation movements that were gaining steam you say this is the bull market explain why. well i was the first one to come up with that idea that's been around since the twenty's but i think social amik theory explains why there's truth to the idea when the mood has been swinging

positively for a number of decades people reach a. ceiling of euphoria in essence and they express it many different ways over valuing stocks is one way that people do it and people dress with more color more colorful things such as in the mid sixty's they also dress a lot. of women dress with less less clothing once they see you in the mid sixty's you had. bikini's where the big thing i mean they were making headlines it was so daring you know and as you say short skirts in the late sixty's they certainly returned in the late ninety's and watching any of the m.t.v. videos by women you know they were barely dressed for most of those and when times are different more difficult and i don't just mean the economy with but when mood is depressed you find maxi skirts for example in the seventy's coming along also we've we've looked into colors we find that grays browns and blacks are more popular during a bear market periods or depressed periods so there are so many different things

we've looked at with the car colors we looked at the popularity of james bond movies all all these things seems to have been flow with the very same thing which is the stock market but i'll add one more thing yeah new studies by others are beginning to confirm this this nation you probably heard about the twitter studies the bowl and mounted i think that. you know they're terrific because they found that the change in mood today detected in the twitter messages actually preceded changes in the stock market by a couple of days and that's exactly what search nomic theory says they see it's totally fascinating and just what you said about maxie's cards it's interesting because those have actually come back in style in the last few years and we know what the economy and stock market has been doing and behind me i just have a life magazine that shows the headlines rising for nineteen seventy's so interesting. stuff there but let's get back to the markets because there is this concept that we really see in the mainstream news that news drives markets and i

want to just give a couple examples our audience as for mail your but just let's bring up some headlines of that they can say so this one says u.s. stocks advance as greek leaders agree and then you know one from a couple weeks ago says stocks drop with euro on greece concern dimitri wants to jump in here for a question there robert yes so this is something that we often poke fun at a lot on the show which is that in the morning the u.s. will be saying that the markets are rising due to x.y.z. and then the same thing will be attributed to a fall in the market a few hours later in your experience looking at this over decades what is the connection that you see between stock market movements and the news cycle what you just pointed out we've seen many times you can actually times the news is precisely the same and they just attribute this is reaction to the different direction well part of social mix theory is that people are not reasoning so much when they're making their investment decisions which is the you know opposite of the efficient market hypothesis what they're actually doing is rational as it is very easy at the

end of the stock market day when you already know which direction the market is going to attributed to this news event or the news of it but if someone only had the news in the paper nothing about that particular market they were after but they knew exactly where commodity prices were going exactly exactly what would happen in greece and so on they would not be able to predict what the stock market over so they're shooting a news to the market and anyone can do that it's rationalizing and i'd like to know one more thing your show is unique because instead of generating those very those very headlines you're you're analyzing it i think it's terrific on think yeah i really appreciate that let's talk about who gets to talking about the markets let's talk about the dow and what it's done recently because we've seen it hit its highest point since two thousand and eight i guess on the surface things are better since two thousand and eight but there are still a lot of problems. i mean we have long term structural unemployment we have more officials coming out today saying europe's and recession there are a lot of reasons to be pessimistic so what explains the dow right now well first of

all under the new model that i use to try to predict the stock market at least in a probabilistic way the only way to model we completed a four five waves down in march of two thousand and nine and i turned very bullish at the time when on television i said this is the kind of bottom that should lead to a substantial rally where there were only two percent bulls among futures traders in the s. and p. as reported by train futures dot com and those are the kind of things once you won't want to be on one side he says going to be a big rally and by the time it's over the economy will be in recovery because again as we said earlier the economy legs this stuff or that people will be optimistic again because that's what's driving the movement change toward more optimism we'll also see the fed taking credit for saving the financial world and they've done that so all the things we expected so you were seeing but at this moment we're also seeing extremes in mood and positive mood and this is the third time in the last

dozen years we've seen the first time was two thousand and two thousand and seven and two thousand and seven and again basically now things can stretch further but we're definitely seeing readings among individual investors economists. money managers and all subgroups including futures traders and auctions traders all of them are on the extreme side of optimism and that doesn't mean the market has the peak you know next week but it means it's much closer to a high than a low so we're expecting the things that reflect social mood have since follow the rally that's normal if the market turns down again they'll follow the market on the way down as well interesting and just more broadly i want to play a commercial because you're talking about some more optimism i want let's look at a broader in society let's play that super bowl commercial that people have been obsessing over. country has been knocked out when we get right back up again and when we do it we're going to hear the roar of our engines. and

our second pass about to begin. so emotional clint eastwood in that car commercial what does that signify about where society is and the man well i'm not sure it signifies per se you know you can overdo this and i don't want to sort of come on like associate on just where they can find meaning in every little event. which we want to look at things that we can quantify so so while that's a lot of fun and i love clint eastwood and so on you know you can tell but it's not one thousand nine hundred because a nine hundred ninety nine everything was great you know the central bankers were on the cover of time magazine everything was under control they told us it was a new economy that the fed said we've control interest rates and the money supply so perfectly that we have a goldilocks situation not too too hot not too cold everybody thinks thought things were great some of the no need for that kind of

a better times but now that things have been shifting for the last twelve years and people can feel it especially on main street i think you're now getting people you know saying hey let's let's pay attention let's try to recover from this but again those things are in terms of yes we can pull ourselves up you really can't change the way in social mood you can only observe them and as an individual you can either get on board if it's on the up side or get out of the way if it's on the down side. and as they say in psychology sometimes as a gar is just a cigar which could explain that commercial in the view of robert proctor author and founder of wave international. and still ahead find out if the stock market will predict the two thousand and twelve presidential election we'll tell you what history says but first your closing market numbers.

well. it's technology innovation all the developments around russia we've got this huge earth covered. wealthy british soil it's time to. go. to. market why not. find out what's really happening to the global economy cars a report on our. welcome back sticking on this really interesting subject in the u.s. in the seventy's we saw a horrific stagflation ery depression now we also saw a large scale horror in

a different way. texas chainsaw massacre recession not unrelated factors according to robert proctor founder of elliot wave international author of this book conquered the crash you can survive and prosper in a deflationary depression so we continued speaking we looked at what proctor believes wave theory means for movies and markets post two thousand and eight financial crisis today there is a movie that came out in two thousand and nine right after the bottom shortly after the bottom of the market i want to play a trailer. this . so this movie was the road it was apocalyptic the line you saw

across the screen said at the end of civilization are we going to see more of this kind of thing or worse than this kind of thing because in our view it really doesn't seem like we've seen the kind of texas chainsaw massacre so a lot of the horror movies that we saw in the seventy's and according to your theory that was during a fourth wave down in a larger bull market so instead of the far worse now. well i think you know in the first part of the bear market it was in fact i wrote my book the way principle human social behavior in one thousand nine hundred nine and i included as sure showing the horror movies of the thirty's and they all bunched in a very short period of time well well the stock market was collapsing nine hundred thirty one thousand thirty two slots thirty three while the big names came in and the same thing happened in the seventies you pointed out the zombie movies a slasher movies and so on all of them were in the seventy's or late sixty's down to the bottom in the seventy's all of it was bear market territory and soon as the market turned down in two thousand we started getting

a slew of horror movies again and a whole new genre was born torture movies which you know unbelievable new thing that grossed people out there are very intense you know the saw series was one of them the hostile films so i think they've already broken new ground just as the seventy's did in just the thirty's did it but to answer your second question absolutely if the market has another leg down and i think the odds of that are very high based on my interpretation of the only way the model in these sentiments figures we've been talking about then you're going to see you know i think horror movies break ground that people haven't even thought of. who knows they're maybe x. rated her movies it could be quite a scene so if that's not your thing stay away. from those kind of movies it's interesting i'm very intense i guess you heard about the one i think it's called centipede you know so it was so disgusting they couldn't even watch it and we've seen some horrid ok so that's your prediction for markets and for movies let's talk

about the economy is let's talk about the eurozone crisis because every day there's something new going on and a prediction about whether the eurozone is going to stay together or not everybody trying to read the tea leaves you predicted this kind of turmoil and disintegration all long before any of this back in one thousand nine hundred eighty four years before the euro with even in circulation what did you see that everybody else missed aren't most people as you say they're looking at least because they're seeing every one of these events is a cause that's the problem that's the traditional way of looking at it and say ok here's a new event what's it going to cause when we look at it way back in one thousand nine hundred eighty two to about two thousand and two in the reforming the european union was that it was a result the market had been doing up there was since one nine hundred seventy four really since nine hundred thirty two all these waves were piling on to each other to major top we saw the lowest valuation of stocks the greatest debt build up all these reflections of positive social mood and here were these countries that have

been fighting each other for a thousand years deciding they were going to form a union we said this is not a cause of something this is the result and because it's happening at a peak and social move when like say the american revolution which occurred in a major major low and social mood after sixty four years a bear market in britain this is occurring in a major top it's not going to last and when that when the trend turns down toward a more negative social mood we will begin to see dissension and fracturing in the ranks and that's exactly what we've been seeing and since there is more bear market to go i think you know odds are probably that ultimately the e.u. will not hold together is so fascinating and then some of the trends that we're seeing right now as a result of the pessimism are in work out in your theory to for example the fractures we see between germans and greeks with the emergence of all divide. right now well it's certainly part of the dissension that we were talking about and we really think it's a new york lee stages i think by the time and so are you going to see people say you know we're afraid this was a mistake but you know the main thing i want to say is not so much whether that

particular kind of forecast comes true or not it's that the trend will be in the direction of social start mortgages keeps going up year after year after year and i'm wrong on that particular forecast then you'll see things begin to heal i mean in the bottom in two thousand and two slash three suddenly united states went to war that happened one week after the low in two thousand and three and after a couple of years of recovery you know there was peace in iraq and that sort of thing so those are that's what's determining the outcomes however the stock market decides to go so based on what we know now and what you know about wave theory what if things going to happen with the two thousand and twelve presidential election it's really social movement it's guiding the voter who's on the fringe so people vote always the same way some vote philosophically but the swing voters are voting by social mood and we tested it we went back not just fifty years like a lot of these studies were only back to the seventeen hundreds the very first presidential election with two hundred years where the history we found of the

stock market is a real reliable predictor of whether or not an incumbent president running for reelection gets elected very high no significance on g.d.p. had far lesser significance unemployment and inflation as far back as the day to go . no significance at all so we think we proved a bit of a point. so maybe republicans should hope that the dow plunges in crashes but anyway you can read his study that has come out with on social mood and elections at the social science research network also interesting i asked him what is the differentiation we see just the rising inequality the divide between maybe the mood on wall street on main street what does that have to do with social mood he says they saw the same cross currents during the seventy's and end up coming together and ending up in one big leg down in his words at the end of the day.

all right before we go a reality check so the u.s. foreclosure deal that we were talking about earlier this week two it's been going on for a long time now it's finally been reached between state and federal officials with the five biggest banks that were guilty of foreclosure abuses ok things like robo signing of documents that we've seen since the housing crash and two thousand and eight now this deal came after sixteen months they've been working on the thing and it's billed as help for homeowners now here's how u.s. president barack obama was touting it in a speech today we have reached a landmark settlement with the nation's largest banks that will speed relief to the hardest hit homeowners and some of the most abusive practices of the mortgage

industry and begin to turn the page on an era of recklessness that has left so much damage in its wake. ok yeah it sounds good let's see what's in the actual deal so there's about seventeen billion bucks in it to pay for mortgage debt forgiveness three billion bucks for refinancing now the banks are in the driver's seat in this money and there's seven hundred fifty billion dollars and negative home equity out there reportedly now this is another one of those things too where if you're watching dish oh for sure you're sitting there you're sitting back and you're going ok who is this deal really good for struggling homeowners or the banks who are settling on all of this fraud well i want to remind you what nomi prins author former goldman sachs managing director who's been following this closely said about who this deal benefits on our show earlier this week. usual it's it

would be a good deal for banks in the disguise of being good for homeowners the banks would be in the power seat of deciding how they use their portion of that seventeen billion dollars to do their job which is to work with customers to refinance or restructure their debt which is something that the government did with the banks when it provided them all these subsidies and bailouts a few years ago but which wasn't carried over into the homeowner community which is why foreclosures have continued to rise defaults continue to be bad in the housing market continues to be anemic now nomi prins says that nothing is going to matter until banks mark to market the lousy mortgages that are on their books as for this deal for banks of course this is a probe of abuse of foreclosure practices that's good news for them i wish i could tell you whether or not banks robo signed the agreement that i don't know but will they suffer that's of course the big question well one example i have j.p. morgan according to bloomberg won't even need to set aside additional cost to cover

its share in the agreement so if that's any indication it doesn't sound like they're going to be suffering too bad as a result of signing on to this settlement i recommend you check out our full interview with nomi prins it's on our web site from earlier this week more on that deal and lots of interesting stuff that you should definitely go back and check out but for now that's our reality check and that's all we have time for thanks so much for tuning in feel free to follow me on twitter at lauren lyster you can also go to our website and give us feedback on the show at youtube dot com slash capital account you know you read it you know we respond to it if you don't see our producers responding to you on the boards right there i may respond to you tomorrow is viewer feedback day also on the show tomorrow we have the rockwell chairman of the bond mrs institute so you won't want to miss that but for now from everyone here at capital account and mr have a great day. all

these top stories the u.n. and arab league plan to join forces to the bloodshed in syria as critics claim disinformation of the number of deaths is being used to play out of prop understanding of the situation. here is a minister's postpone a decision on a second financial bailout package for greece this by the coalition in athens closing a last minute deal on the sidelines and the stories he measured. going president hamid karzai lashes out after age children are killed in a nato air strike the u.n. confirms trying to eleven as the deadliest year for civilians since the start. that brings you up to date for now i'll be back with more headlines and around thirty minutes time but before that we have the iona show from washington d.c. don't go away.

welcome to the lower show we'll get the real headlines with none of the mersey are going live in washington d.c. now it's not going to take a look at the new foreclosure fraud settlement between forty nine states and the five biggest banks is this really a good deal for america or just an easy out for wall street then lieutenant colonel daniel davis who's on our show the other day well turns out of the pentagon now has launched an investigation into that report that he released about.