EU Recession Imminent – Euro Disunion As Brexit, Italy And End Of QE Loom

By John Mauldin – Re-Blogged From Gold Eagle

Someone asked recently how many times I had “crossed the pond” to Europe. I really don’t know. Certainly dozens of times. It’s been several times a year for as long as I remember.

That makes me an extremely unusual American. Most of us never visit Europe, except maybe for a rare dream vacation. And that’s okay because our own country is wonderful and has a lifetime of sights to see. But it does affect our perspective on the world.


Graphic: European Central Bank

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Rome vs Brussels

By Arkadiusz Sieron – Re-Blogged From Gold Eagle

Only one digit has changed. But it may have profound consequences, sending the country closer to junk status. Meanwhile, Rome and Brussels clash over budget plan. Will that duel benefit or harm the yellow metal?

Only One Notch Above Being Junk

Italian drama continues. On Friday, Moody’s, one of the most significant rating agencies in the world, downgraded the Italian credit rating from Baa2 to Baa3. It means that Italy’s local and foreign-currency bonds are now only one notch above junk territory. The move was not surprising, as well as the reasons behind this decision:

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Bond Bubble Conundrum

By Michael Pento – Re-Blogged From Silver Phoenix

Wall Street shills are in near perfect agreement that the bond market is not in a bubble. And, even if there are a few on the fringes who will admit that one does exist, they claim it will burst harmlessly because the Fed is merely gradually letting the air out from inside. However, the fact that we are in a bond bubble is beyond a doubt—and given the magnitude of the yield distortions that exist today, the effects of its unwinding will be epoch.

Due to the risks associated with inflation and solvency concerns, it should be a prima facie case that sovereign bond yields should never venture anywhere near zero percent—and in some cases, shockingly, below zero percent. Even if a nation were to have an annual budget surplus with no inflation, it should still provide investors with a real, after-tax return on government debt. But in the context of today’s inflation-seeking and debt-disabled governments, negative nominal interest rates are equivalent to investment heresy.

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Inflation Target Regrets

By Michael Pento – Re-Blogged From Silver Phoenix

Beginning this fall, and continuing throughout 2019, the stock market’s performance should be vastly different from what has occurred during the prior few years. Indeed, the huge reconciliation of stock prices is arriving now.

The primary reason behind this is the watershed change in global central banks’ monetary policies. For years central banks had been keeping rates near 0%, or below, and at the same time printing over a hundred billion dollars’ worth of fiat currencies each and every month to purchase bonds and stocks. That is all changing now. According to Capital Economics, fourteen major global central banks are either in the process right now, or have indicated that they be will next year, in the process of raising interest rates. At the same time, QE on a global net basis will plunge from $180 billion per month at its peak during 2017, to $0 by December…and will then go negative in 2019.

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Does Gold Speak Italian?

By Arkadiusz Sieron – Re-Blogged From Gold Eagle

Is Italy the new Greece? Read today’s article and find out what does the newest Italian turmoil imply for the gold market.

The recent days have been quite tumultuous in Italy. The turmoil started last week when the new government submitted its spending plans to the EU. The ruling coalition set Italy’s budget deficit at 2.4 percent of its GDP. The number is much higher than the current deficit which is set to be 1.5 percent of the GDP. The proposed difference between spending and revenue is also higher than 1.6 percent proposed by the country’s finance minister Giovanni Tria. So the number was above the expectations. Actually, it came as a shock, especially that the International Monetary Fund has projected it to fall to 0.9 per cent in 2019. Well, nobody expected the Italian inquisition.

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Global Central Banks Enter the Danger Zone

By Michael Pento – Re-Blogged From Pento Portfolios

Investors are experiencing huge moves in commodities, currencies, equities and in sovereign debt across the globe. And now the fall has arrived. Expect the volatility currently witnessed in markets to only surge.

This is because global central banks have overwhelmingly turned hawkish in a vain attempt to gradually let the air out of the massive bubbles they have spent the last decade recreating. Unfortunately, that is not the nature of asset bubbles—they don’t end with a whimper–and they are about to burst in violent fashion.

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Italy Calls Europe’s Bluff, And The Euro Loses Either Way

By John Rubino – Re-Blogged From Gold Eagle

When Italy elected a bunch of rowdy populists back in March, the rest of the eurozone assumed (or at least hoped) that the weight of responsibility would bring Rome back into line. But so far the Italians appear to be serious about ending austerity and forcing the ECB to finance their spending ambitions. The just-passed Italian budget calls for a rising deficit, in direct disobedience of Continental (read German) authorities.

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