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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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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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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Dow Jones Bear’s Eye View

By Mark J Lundeen – Re-Blogged From Gold Eagle

The Dow Jones saw some selling pressure this past week, closing down 4.94% from its last all-time high of October 3rd of last year.

Time to press the panic button?  Not as far as I’m concerned, but then I also have no exposure to the broad stock market.  But speaking as a spectator sitting in the peanut gallery, my key indicator of when the people who do have market exposure to the NYSE and NASDAQ should exit the market was, and still is when the Dow Jones Industrial Average once again begins experiencing days of extreme volatility, (+/-) 2% daily moves from a previous day’s closing price.  Until the Dow Jones once again begins seeing those dreaded 2% days, I’ll be sitting in the cheap seats eating peanuts and cheering on the bulls.

This week I thought I’d use my Bear’s Eye View (BEV) chart of the Dow Jones going back to February 1885, with an in-depth analysis.  It’s an amazing view of the daily ups and downs for the past 134 years in the Dow Jones.  So what are we actually looking at?  We’re looking at each daily close of the Dow Jones since 16 February 1885, Any Dow Jones closing price that IS NOT a new all-time high registers as a negative percentage from the Dow Jones’ last all-time high.  For example, today’s Dow Jones BEV value indicates it has closed -4.94% from its last all-time high of October 3rd 2018.

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Fed Tightening Is Over: Markets Now Expect Cuts In 2019

By John Rubino – Re-Blogged From Dollar Collapse

People who assumed the Fed, along with the rest of the government, would cave the minute the financial markets got a little choppy turned out to be right. A couple of bad months and the “normalization” of both interest rates and the Fed’s balance sheet have stopped cold. Now the markets expect falling rates and (apparently) rising asset purchases. From today’s Wall Street Journal.

Debt Investors Embrace ‘Upside Down’ World After Fed Shift

Signs that the Federal Reserve may be done with its yearslong campaign to raise interest rates are sending ripples through fixed-income markets.

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Federal Reserve’s Balance-Sheet Unwind is Unwinding Recovery

By David Haggith – Re-Blogged From Great Recession Blog

We are in the end time of an unprecedented era of financial expansion — the greatest expansion of the world’s money supply ever attempted, expansion of the Federal Reserve’s vast and unchecked powers far beyond what the Fed could do before the financial crisis, and super-sizing expansion of banks that were already way too big to fail.

I am calling this time in which we are now unwinding this monetary expansion the Great Recovery Rewind because I believe this attempt by the Federal Reserve and other central banks of the world to move us away from crisis banking is taking us right back into economic crisis. That is why this was the top peril listed in my Premier Post, “2019 Economic Headwinds Look Like Storm of the Century.” It is more potent in possible perils than all the trade tariffs in the world.

How “Free Money” Helped Create Sizzling Housing And REIT Gains In Recent Years

By Dan Amerman – Re-Blogged From Silver Phoenix

Housing prices and the associated REIT returns have worked very differently in the United States since the recession of 2001. The increasing financialization of the real estate markets by Wall Street, and the aggressive and unconventional interventions by the Federal Reserve over that time, have combined in multiplicative fashion to produce new and volatile sources of housing profits and losses.

One such change has been the creation of an extremely powerful profit engine for housing, that most real estate investors have not been taking into account. Indeed, there is a strong mathematical case to be made that “yield curve spread compression” has supported and enabled the substantial majority of housing price gains for homeowners and investors on a national average basis since the beginning of 2014.

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