The Yield Curve and Recession

   By Bob Shapiro

The Federal Reserve (FED) has raised interest rates 7 times during its latest tightening cycle, after almost 10 years of its previous rate suppression binge.

What tended to have happened in previous interest rate tightenings is that shorter term interest rates have risen somewhat faster than long rates, and at some point, short rates catch up to and pass long rates. This rare situation is referred to as an ‘Inverted Yield Curve.’

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Inflation Rearing Its Ugly Head

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

The world of finance and investment, as always, faces many uncertainties. The US economy is booming, say some, and others warn that money supply growth has slowed, raising fears of impending deflation. We fret about the banks, with a well-known systemically-important European name in difficulties. We worry about the disintegration of the Eurozone, with record imbalances and a significant member, Italy, digging in its heels. China’s stock market, we are told, is now officially in bear market territory. Will others follow? But there is one thing that’s so far been widely ignored and that’s inflation.

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Poverty and Energy

By Andy May – Re-Blogged From http://www.WattsUpWithThat.com

Poverty and access to energy are closely related. Although it probably isn’t possible to show that access to energy is the key reason so many have been lifted out of poverty in recent decades, the data and logic suggests that this so. In the United States, the average person uses about 300 million BTUs of energy per year according to the EIA. This is equivalent to the manual labor of 69 healthy people working hard for 6 hours per day. Worldwide, the average person uses 73 million BTUs, the equivalent of 16 hardworking people.

Prior to the industrial age, which began with the first practical coal- and wood-fired steam engines between 1712 and 1776, slavery, bonded servants and serfs were common, this group made up over 90% of the world’s population in 1800. For a few people to live well they needed lots of servants and domestic animals to do the manual labor for them. Now, in the age of electricity, petroleum and nuclear powerplants, most manual labor can be done by machines. No longer do a few wealthy people live from the labor of others, everyone who has access to energy can live well. Before the industrial age, nearly everyone was extremely poor as seen in Figure 1, today fewer than 10% are extremely poor.

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Irrational Beliefs Are Ruling Markets

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

To understand the consequences of the credit cycle, we must dismiss pure opinion, and examine the evidence rationally. This article assesses the fate of the dollar on the next credit crisis, a subject of increasing topicality. It concludes that the late stage of the credit cycle has important similarities with 1927, when the Fed eased monetary policy, following evidence of a mild recession.

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Is this the Most Hawkish Fed Ever?

By Michael Pento – Re-Blogged From Pento Portfolio Strategy

My research shows that this is one of the most hawkish Fed rate-hiking regimes ever. It has raised rates seven times during this current cycle and is on pace to raise the Fed Funds Rate(FFR) four times this year and three times in 2019.

But what makes its monetary policy extraordinarily restrictive is that for the first time in history the Fed is also selling $40 billion per month of Mortgage Backed Securities (MBS) and Treasuries starting in Q3 and $600 billion per year come October. Because the Fed is destroying money at a record pace while the rest of the world’s major central banks are still engaged in money printing (QE) and zero interest rate policies (ZIRP), Jerome Powell’s trenchant and unilateral tightening policy is now causing chaos in emerging markets.

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Why The Global Collapse Will Be Devastating

By Egon von Greyerz – Re-Blogged From King World News

As the world edges closer to the next crisis, today the man who has become legendary for his predictions on QE and historic moves in currencies, told King World News there is no way out and this is why the global collapse will be devastating.

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Oil, The Petrodollar, And The Next Emerging Market Crisis

By John Rubino – Re-Blogged From Dollar Collapse

Oil prices are up over the past year, which is bad if you’re, say, a developing country that imports a lot of the stuff. But the US dollar (aka the petrodollar) is also up, which compounds the problem because oil is priced in dollars. So Brazil, for instance, finds itself buying an appreciating necessity that’s priced in an appreciating currency:

Steep Oil and Strong Dollar Make Toxic Brew for Global Economies

‘Brutal’ rally in dollar-priced crude hammers governments, strains consumers from U.K. to Brazil.

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