Will Fed Easing Turn Out Like ’95 Or ‘07?

By Michael Pento – Re-Blogged From PentoPort

You should completely understand that the market is dangerously overvalued and that global economic growth has slowed to a crawl along with S&P 500 earnings. However, you must also be wondering when the massive overhang of unprecedented debt levels, artificial market manipulations, and the anemic economy will finally shock Wall Street to a brutal reality.

Artificially-low bond yields are prolonging the life of this terminally-ill market. In fact, record-low borrowing costs have been the lynchpin for perpetuating the illusion. Therefore, what will finally pull the plug on this market’s life support system is spiking corporate bond yields, which will manifest from the bursting of the $5.4 trillion BBB, Junk bond and leveraged loan markets. And, for that to occur, you will first need an outright US recession and/or a bonafide inflation scare.

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Fed’s Recessionary Indicators

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

How likely is a recession in the United States? Predicting a recession is difficult, but one can make some nice money with a good forecast. So let’s focus on the most important recessionary models developed by the Fed.

The first model is the smoothed recession probabilities for the United States developed by Marcelle Chauvet and Jeremy Piger based on the research published in the International Economic Review and Journal of Business and Economic Statistics. The odds are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payment enrollment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales.

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Frothy Bubbles Make Me Whine

By David Haggith – Re-Blogged From Great Recession Blog 

These are not the tiny champagne bubbles Don Ho used to sing about, but those greenish-gray floats of foam that pile up against harbor docks where the churn of the waves meets the oil spittle of boat motors. They are the economic froth that has piled up around us and is now beginning to fizzle.

They are the bubbles of overbuilt retail space, heaps of junk bonds and layers of leveraged loans, rafts of student loans, bloated government spending. They’re the slop that formed from massive monetary expansion frothed up out of less than nothing — out of debt.

You’ve heard about all of them many times, but my concern in this article is that we are starting to hear tiny popping sounds, which leads me to the following scenario as a plausible path into recession this summer: (Not the only possible route, but one littered with likelihoods.)

What A US Rate Cut Could Mean For Gold Prices

By Frank Holmes – Re-Blogged From Gold Eagle

Stocks surged last Friday following a U.S. jobs report that, to put it mildly, fell far below expectations.  At first this might seem counterintuitive. Shouldn’t signs of a slowing economy act as a wet blanket on Wall Street?

Not necessarily. Investors, it’s believed, are responding to the expectation that the Federal Reserve will have no other choice than to lower interest rates this year in an attempt to keep the economic expansion going. Earlier this month, Fed Chair Jerome Powell himself commented that he was prepared to act “as appropriate” should the global trade war risk further harm. President Donald Trump has also renewed his attacks on Fed policy, calling last December’s rate hike a “big mistake.”

So a rate cut looks more and more likely in 2019, perhaps as soon as this summer. And investors rejoice.

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Red Pill Realities

We can face reality by swallowing the “red pill” (from the movie “The Matrix). This choice is uncomfortable because it opposes the propaganda from mainstream media, government statisticians, and Wall Street cheerleaders.

The “red pill” road is difficult and sometimes lonely. Gold is a “red pill” choice.

The “blue pill” path is easier and reassuring. Other “blue pill” advocates will applaud your choices. The herd approves this delusional path. Think debt-based fiat currencies.

The “blue pill” is best swallowed with a healthy slug of whisky, anti-depressant drugs, a few hits from now-legal “weed,” and platitudes from the evening news.

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Fed Running Out Of Time And Conventional Weapons

By Michael Pento -Re-Blogged From PentoPort

The buy and hold mantra from Wall Street Carnival Barkers should have died decades ago. After all, just buying stocks has gotten you absolutely crushed in China for more than a decade. And in Japan, you have been buried under an avalanche of losses for the last three decades. And even in the good old USA, you wouldn’t want to just own stocks if the economy was about to enter another deflationary recession/depression like 2008. Likewise, you wouldn’t want to own any bonds at all in a high-inflation environment as we had during the ’70s.

The truth is that the mainstream financial media is, for the most part, clueless and our Fed is blatantly feckless.

The Fed has gone from claiming in late 2018 that it would hike rates another four times, to now saying that it is open to actually start cutting rates very soon.

My friend John Rubino who runs the show at DollarCollapse.com recently noted: “bad debts are everywhere, from emerging market dollar-denominated bonds to Italian sovereign debt, Chinese shadow banks, US subprime auto loans, and US student loans. All are teetering on the edge.” I would add that the banking system of Europe is insolvent—look no further than Deutsche Bank with its massive derivatives book, which is the 15th largest bank in the world and 4th biggest in Europe. Its stock was trading at $150 pre-crisis, but it has now crashed to a record low $6.90 today. If this bank fails, look for it to take down multiple banks around the globe.

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3 More Years Of Expansion?

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

We are just a moment away from a significant achievement. If the current US economic expansion lasts until July 2019, it will reach 121 months, becoming the longest ever. The extended duration of the prosperity begs the question of when the next downturn will occur. Many analysts believe that its days are numbered, but we dare to disagree.

You see, we do not focus on the mere headlines, but always investigate the underlying factors behind the changes in specific data series. That’s true that the current expansion will likely be the longest on the record, but the reason for this is the softness of the recovery. The present expansion has been weaker than historical recoveries. Indeed, the real GDP has jumped just 24 percent since the end of the Great Recession. That’s a very disappointing result by historical standards: on average, the GDP rose by 33 percent during the previous three economic expansions, even though they were shorter.

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