Has The U.S. Economy Plunged Into A Depression?

Has The U.S. Economy Plunged Into A Depression?

“Face reality, and that means admitting that “the U.S. economy has plunged into a depression.”

This is already the worst economic downturn that America has experienced since the Great Depression of the 1930s, and we are right in the middle of the largest spike in unemployment in all of U.S. history by a very wide margin.

Of course, it was fear of COVID-19 that burst our economic bubble, and fear of this virus is going to be with us for a very long time to come.  So we need to brace ourselves for an extended economic crisis, and at this point, even Time Magazine is openly referring to this new downturn as an “economic depression”.

Needless to say, there will be a tremendous amount of debate about how deep it will eventually become, but everyone should be able to agree that our nation hasn’t seen anything like this since before World War II.

In order to prove my point, let me share the following 10 numbers with you…

#1 According to a study that was just released by the National Bureau of Economic Research, more than 100,000 U.S. businesses have already permanently shut down during this pandemic, and that represents millions of jobs that are never coming back.

#2 The Federal Reserve Bank of Atlanta is now projecting that U.S. GDP will shrink by 42.8 percent during the second quarter…

“A new GDP forecast from the Federal Reserve Bank of Atlanta for the three months through June estimates an unprecedented drop of 42.8 percent. The bank describes the data as a “nowcast” or real-time, compared with the official government report of GDP, which is dated. The first-quarter preliminary data, which showed a 4.8 percent dip, included a limited period of impact from COVID-19.”

#3 On Friday we learned that U.S. retail sales were down 16.4 percent during the month of April, and that is a new all-time record.

#4 U.S. factory output was down 13.7 percent last month, and that was the worst number ever recorded for that category.

#5 U.S. industrial production fell 11.2 percent last month, and that represented the worst number in 101 years.

#6 On Thursday, we learned that the number of Americans that have filed initial claims for unemployment benefits during this pandemic has risen by another 2.9 million, and that brings the grand total for this entire crisis to 36.5 million.  To put that number in perspective, at the lowest point of the Great Depression of the 1930s only about 15 million Americans were unemployed.

#7 According to the Federal Reserve Bank of Chicago, the real rate of unemployment in the U.S. is now 30.7 percent.

#8 According to a survey Fed officials just conducted, almost 40 percent of Americans with a household income of less than $40,000 a year say that they have lost a job during this crisis.

#9 One study has concluded that 42 percent of the job losses during this pandemic will end up being permanent.

#10 According to a professor of economics at Columbia University, the U.S. homeless population could rise by up to 45 percent by the end of this calendar year.

We have never seen economic numbers this horrifying, and more awful economic numbers are coming in the months ahead.

At this point, things are so bad that even Fed Chair Jerome Powell is openly admitting that he doesn’t really know how long this new economic downturn will last…

“This economy will recover…We’ll get through this. It may take a while. It may take a period of time. It could stretch through the end of next year,” Powell said during a rare televised interview that aired on “60 Minutes” Sunday night. “We really don’t know. We hope that it will be shorter than that, but no one really knows.”

In the months ahead, there are a few sectors that you will want to keep a particularly close eye on, and one of them is the commercial real estate market.  The following comes from Zero Hedge

“Fast forward to today, coronavirus outbreak, and the ensuing lockdown, has essentially frozen the commercial real estate market. Buildings that were once used for restaurants, offices, hotels, spas, and or anything else that is classified non-essential have seen soaring vacancies.

This is single handily sending the commercial property market into chaos. As vacancies soar, tremendous downward pressure is being put on almost every asset class tied to commercial real estate.

The latest TREPP remittance data compiled by Morgan Stanley showed a quarter of all commercial mortgage-backed securities (CMBS) could be on the verge of default.”

I am personally convinced that we are on the precipice of the greatest commercial real estate implosion in American history.

As the dominoes tumble, it is going to send wave after wave of devastation through the financial industry, and it is going to make the subprime mortgage meltdown of 2008 look like child’s play.

But at least bankruptcy lawyers will have plenty of work.  Last week we learned that J.C. Penney filed for Chapter 11 bankruptcy protection, and of course the bankruptcies that we have seen so far will just be the tip of the iceberg.

I think that politicians all over America are going to deeply regret overreacting to COVID-19, because nobody is going to be able to put the pieces back together now that our economic bubble has burst.

Sadly, very few people understood how shaky our debt-fueled economic “boom” was, and ultimately it didn’t take that much to push us into a new economic depression.

And now every additional crisis that comes along is just going to escalate our economic troubles.  This is going to be one very long nightmare, and there will be no waking up from it any time soon.

Even before COVID-19 came along, homelessness had become a massive problem in many of our major cities, and now tent cities are rapidly multiplying in size.

There is going to be so much economic pain in the months ahead, and it could have all been avoided if we had made much different choices as a nation.

But we didn’t, and so now we all get to pay the price.

Mr. Snyder wrote this article and I respect his opinion. I am not taking issue with his story, but he is a respected conservative voice in a world of noise.

So, I ask you, what if he is correct in his judgment and collapse is coming sooner than later?

Are you prepared for what is going to happen to your retirement and investment account values?

Are you sheltered from those accounts declining 40%? 50%, 60%, or more.

The Wealth Preserver Membership can protect your account from any stock market collapse. Please know that until it does collapse, your investments continue to grow as usual. 

Why Mark Mobius says the stock market hasn’t seen an ‘absolute bottom’ yet

Why Mark Mobius says the stock market hasn’t seen an ‘absolute bottom’ yet

Emerging-markets investing pioneer Mark Mobius made those remarks Tuesday in an interview with CNBC, putting him in the investing camp that expects an inevitable cascade of brutal economic data and corporate earnings hasn’t been fully discounted by investors.

Mobius, who founded Mobius Capital Partners in 2018 after a three-decade run at Franklin Templeton Investments, said corporate earnings would be “pretty bad” and that while some bargains have emerged, investors should keep some cash ready to deploy in the event of a further market downturn.

U.S. stocks hit all-time highs in February, then plunged into a bear market as the global spread of COVID-19 forced the U.S. and countries around the world to largely lock down their economies in an effort to contain the outbreak. Stocks have taken back a large chunk of lost ground since March 23, however, with recent gains tied to expectations the pandemic is near its peak, turning attention to efforts to reopen economies.

Market bulls have argued that the unprecedented nature of the shock and the massive response from the Federal Reserve, other central banks, and governments have rendered most comparisons to past bear markets debatable.

Others have cautioned that stocks are largely sticking to the bear market script.

“Although there are some opportunities to buy, I would say it’s probably a good idea to keep some powder dry for another downturn,” he said. “We might see a double bottom.”

The Virus Peak & Stock Market Bottom

The Virus Peak & Stock Market Bottom

I cannot make any claims about the virus itself and this post is the reaction of major stock markets. A good explanation I’ve found on epidemics and exponential growth is this one on YouTube which I recommend watching if you are not already up to speed.

Looking at the current situation it appears that the market has room to fall further as the economic fallout continues and the virus spreads.

If the virus starts to slow down, it won’t be long before stocks find a bottom given the huge amount of stimulus that central banks are providing.

The most important thing is that we need to see the number of new daily cases start to flatten out.

Currently the virus is spreading at an exponential rate and that is causing businesses and services around the world to enter lock-down.

That has dire consequences for company profits.

Exponential Growth

To summarize some of the information in the mentioned video above, exponential growth means that as you go from one day to the next you have to multiply by some constant.

In the case of coronavirus, daily cases have been increasing by about 1.15 to 1.25 times the previous day’s cases. This results in an exponential curve with the number of new cases increasing on a daily basis. In fact, a virus provides a textbook example of exponential growth since what causes new cases are existing cases. However, there comes a time when exponential growth has to slow down.

For example, as millions of people become sick there are fewer people that can be infected so the rate of new cases must decrease. Likewise, measures such as hand washing and limiting gatherings also have the effect of reducing the spread.

So an exponential curve will eventually level out at an inflection point and turn into what’s called a logistics curve. At this point the number of new cases each day levels out and then starts decreasing. We have already seen this happen in China and now it is happening in South Korea too.

 New cases in China leveling out. Source: John Hopkins University.

Growth Factor = No. New Cases Today / No. New Cases Yesterday

A value over 1 indicates that we are still on the exponential part of the curve and there may be higher magnitudes of new cases ahead of us. In other words the growth is not slowing down.

This is the case right now in the USA and Europe. Whereas a value of 1 means that growth is leveling out and a value under 1 means new cases are decreasing.

Taking China as an example, the coronavirus spread began at an exponential rate which has gradually leveled off thanks to drastic shutdown measures.

With new cases appearing to have peaked the country has been able to get back to work and reboot its economy. Meanwhile, the United States and Europe have only just started to see new cases increase, indicating that they are likely to be near the beginning of the exponential curve.

What does all this mean for the stock market now?

I think we need to see the growth rate of new cases in the US and Europe start to level off before we can put in a major stock market bottom. So we need to see the daily growth rate drop to one or below and then stay there, perhaps for a week or so.

Once that happens I think we will see a bottom in stocks and a significant relief rally thanks to the huge amount of stimulus that is being provided by central banks.

It is because of this stimulus that we will see the slingshot. Importantly, though, I don’t think we need to see growth rates level off for the whole world.

It would be enough to see growth rates in the US and Europe start to slow for a bottom to be put in.
That’s because these areas (plus China) account for the vast majority of global GDP.

To keep on track of this I am using the coronavirus dashboard developed by John Hopkins University which seems to provide the most up to date and reliable figures that I’ve found. The dashboard provides the latest statistics on new cases which can then be used to calculate growth rates. 

For example, new cases outside China was 100.5k on Monday March 15th, higher than the previous day’s 81.7k cases and higher than the 75.1k cases on Saturday, a growth factor of 2.8.

Analyzing these numbers it doesn’t seem all that surprising that 10% drop in US stocks that day coincided with a huge daily growth rate of 2.8 times (this is for locations outside Mainland China).

Final Thoughts

Ultimately, virus growth rates and the stock market are linked and so long as the curve is exponential the markets are going to struggle.

Stock markets are likely to rally every time the virus looks to have been defeated, even when it’s not.

The data isn’t entirely accurate so there is likely to be some false starts. It’s also possible that the market will be able to lead a flattening in the virus whether it is caused by luck, government intervention or some other reason.

But eventually the market will get it right, it always does.

That being said, when stocks are up and the exponential curve has leveled off, review your Daily, then your Weekly charts with signals for Green Light Trade Signals because that will mean we are close to a bottom, or the bottom may be in!

Credit: Mr. Marwood, thank you for your research.

Golds Next Move?

Golds Next Move?

Gold. It is magnificent. Gold is still advancing, but what is golds next move?

In terms of US Dollars, it is actually advancing slower than in other currencies. So here is when we see the big move in Gold prices starting, and it is not now!

As you can see in the Gold chart above, the channel crossover occurred last December. But as you see in our actual Monthly Gold Trade Signal chart we were ahead of the move up as our signal was delivered in October.

GoldBug

Unfortunately, the gold-bugs keep preaching something about gold that is NOT going to arrive as they expect.

 

Members Trade Signals

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The Fed Has Won, But What’s It Mean To Your $?

The Fed Has Won, But What’s It Mean To Your $?

The Fed Has Won, But What’s It Mean To Your $?

Our info coming directly from REPO traders remains unsure to what extent the FED had to pour in money to prevent short-term interest rates from rising. The analysis which is still mostly calling this Quantitative Easing is just laughable.

The economy is doing well in the USA and unemployment is back to the lowest levels since the ’60s. There is absolutely no basis to “stimulate” the economy.

We can see that the Inverted Yield Curve going into the summer was the warning sign that confirmed our forecast we faced a liquidity crisis beginning in September 2019. Like the weather, everything is moving to the extremes in both directions.

The collapse in the yield curve to invert has ABSOLUTELY nothing to do with a pending recession everyone was touting. The inverted yield curve was being driven by a panic to get out of the Euro. The Euro has been destroyed as a reserve currency because other central banks do not want to hold Euros with negative interest rates which they see as a tax on their reserves for the benefit of Europe.

We can see that the REPO Crisis is not about QE, but trying to prevent the short-term rates from rising. It had nothing to do with taxes and what everyone was attributing it to back in September.

The Repo crisis has been an ongoing crisis because the Fed is trying to prevent the inevitable – the rise in interest rates back to normal levels which reflect risk!

Some people have asked to please explain what this has as an impact upon the average person? 

What I am describing is that the trend is back to interest rates rising and this is what the Fed is trying so desperately to prevent. This is all about manipulating the interest rates and fighting against the free market.

The experiment with negative interest rates to stimulate the economies of Europe and Japan have completely failed. But the respective central banks are now trapped. They have utterly destroyed their bond markets, and in the process ensuring their own demise. As they try to maintain negative interest rates, the capital flows are working hard to undermine both european and eastern central banks and the Federal Reserve is caught in the crosshairs.

The REPO Crisis is NOT about Quantitative Easing, it is about trying to PREVENT interest rates from rising which will blow-up the world economy.

Here is my point:

We have to be very careful and attentive, all of what you read and hear by the media now it 100% about “self preservation”.  Stay close to your charts and signals.

The vast majority of analysts commenting on this have NEVER advised institutions. They are clueless with respect to what is really taking place. In many cases, even the institutional traders are people who have their coffee cups constantly refilled from beads of sweat pouring from their forehead from what is taking place. Even the COT managers are confused.

 

Here is my point:

We have to be very careful and attentive, all of what you read and hear by the media now it 100% about “self preservation”.

Stay close to your charts and signals as the vast majority will miss the slingshot move up after the coming false crash.

The vast majority of analysts are clueless with respect to what is really taking place. In many cases, even the institutional traders are people who have their coffee cups constantly refilled from beads of sweat pouring from their forehead from what is taking place. Even the COT managers are confused.

 

2020 Economy | Predictions By Gerald Celente

2020 Economy | Predictions By Gerald Celente

Gerald Celente breaks down what he sees as the trends arriving in the 2020 economy.

 

 

The InterAnalyst Wealth Preserver Trade Signals have outperformed the market by 1200% since the year 2000. No matter the predictions or prognostications by your favorite host, just remember to follow your Wealth Preserver trading arrows to grow and protect your retirement and investment growth.

 

 

Thats One Big Pile Of S**T

Thats One Big Pile Of S**T

quadruple-whammy of not-awesome trade-related comments today spoiled the party…

  1. 0602ET *TRUMP TO RESTORE TARIFF ON STEEL SHIPPED FROM BRAZIL, ARGENTINA
  2. 1035ET *TRUMP WILL INCREASE TARIFFS IF NO CHINA DEAL, ROSS TELLS FOX
  3. 1200ET *TRUMP AIDE SAYS IT’S UP TO CHINA IF DEAL WILL BE MADE THIS YR
  4. 1230ET *CHINA TO RELEASE ‘UNRELIABLE ENTITY LIST’: GLOBAL TIMES

And then US Macro data poured cold water on China and EU economic hope as construction spending plunged and manufacturing ISM disappointed significantly.But that ‘surprising’ surge in a government-provided survey of manufacturers in China was offered up as evidence that (despite US weakness) everything will be ok and the trough is in…

Chinese stocks clung to very modest gains overnight (trade headlines hit after the China close)…European stocks were hammered on trade turmoil (despite PMIs beating expectations)…And European bonds were also down (in price) along with stocks (10Y Bunds +8bps)…US equities suffered their biggest daily drop in 6 weeks…Dow futures were down over 400 points from the overnight highs…Momo was dumped at the open but the trend in value/momo reversed around the European close…VIX spiked above 15 intraday but once again vol-sellers returned after Europe’s close…Credit was smashed today (after last week’s insane surge)…Treasury yields surged on the day, led by the long-end (2Y was marginally lower in yield)…Most notably, the ultra-bond futures collapsed overnight (hitting a 3-point limit circuit breaker)…And today saw a major steepening of the yield curve… (the yield curve move has the smell of rate-locks given the underlying macro data, but we will have to wait and see what the calendar looks like – high-grade dealers expect this week to bring $15b-$20b in supply. This is likely to be December’s busiest week, with just about $25b for the full-month in store, according to estimates — that’s $8b more than last year and in line with the $23b that priced in December 2017)The dollar was dumped today (biggest daily drop in 6 weeks)……breaking down through its 50- and 100-day moving-averages…Yuan also lost ground as trade-deal hope faded…Bitcoin has been unable to get back above $7400…Gold, Copper, and Silver ended the day lower (despite a tumbling dollar) but oil popped on Saudi calls for more production cuts/extensions at OPEC (as its Aramco IPO looms)…But, with regard to oil, it is still a lot lower than before Friday’s plunge…

The 2019 FOMO rally’s resilience has taken it far enough in the face of a cloudy forecast. Any declines from here could get very steep indeed.And then there’s this…And the US is just as bad (if not worse)…And this…

Stay tuned…
and close to your Wealth Preserver and Wealth Maximizer signals.
The Golden Value Of The Federal Reserve

The Golden Value Of The Federal Reserve

Lost in the media’s obsession with the impeachment circus last week was Federal Reserve Chairman Jerome Powell’s testimony on the state of the economy before the Joint Economic Committee. In his testimony, Chairman Powell warned that when the next recession inevitably occurs, the US Government’s over $23 trillion debt would prevent Congress from increasing spending to revive the economy.

Powell also said that the Fed’s current low interest rate policies would prevent the Fed from using its traditional methods of increasing the money supply and further lowering interest rates to jump-start economic growth in a recession. Hopefully, Powell is correct that when the next recession hits the Federal Reserve and Congress will be unable to “stimulate” the economy with cheap money and new spending.

Interest rates are the price of money and, as with all prices, government manipulation of interest rates distorts the signals regarding market conditions. Artificially low interest rates lead to malinvestment and the creation of bubbles. Recessions are a painful but necessary correction that allows the economy to cleanse itself of these distortions. When the Federal Reserve and Congress try to stimulate the economy, they introduce new distortions, making it impossible for the economy to heal itself. Fiscal and monetary stimulus may temporally create the illusions of prosperity, but in reality they merely create another bubble that will eventually burst starting the boom-and-bust cycle all over again. So, the best thing Congress and the Federal Reserve can do to help the economy recover from a recession is nothing.

Powell is the latest Federal Reserve Chair to warn of the dangers of government debt, which is ironic since the Federal Reserve is the great enabler of deficit spending. Government manipulation of the value of money allows politicians to hide the true costs of their warfare and welfare. This is why throughout history governments have sought the power to dictate what is and is not money and determine the value of the monetary unit. Today’s central bankers are the heirs of the medieval kings who shaved off the edges of gold coins, then ordered the people to pretend that shaved coins were just as valuable as unsaved coins.

Instead of shaving gold coins, today’s central bankers facilitate the growth of government by purchasing government securities in order to keep interest rates – and thus the government’s borrowing costs – low. The Federal Reserve’s interventions enable the expansion of government well beyond what would be politically palatable if politicians had to finance the entire welfare-warfare state through direct taxation or borrowing at market interest rates, which would increase interest rates for private sector borrowers, lower growth, and increase unemployment.

Since the creation of the Federal Reserve, the US dollar has lost over 96 percent of its value.

So, when the federal reserve was established, had you bought once ounce of gold it would have cost $20.47.  Your $20.47 today would buy you 15 loaves of white lunch bread at the discount store. But your gold would buy you more than 1,300 loaves of bread at that same discount store.  The value of a Dollar is down 96%!

Ron Paul

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