Last week was a big week in the markets on a number of fronts, and the coming week promises to be no less exciting on two counts…
- Fed-Speak of Desperate Interest Rate Moves
- And, Continuing Declines in GDP Growth
U.S. Treasury yields have been tumbling across the board lately, especially with the U.S. 10-Year Treasury Note.
Worried investors have flocked to Treasuries in a flight-to-safety which forces raising bond prices and thus punishing yields and interest rates down.
Even more, futures markets have already priced in a 50-basis point rate cut in the Federal Funds interest rate this year.
And as U.S. Fed Chair Jerome Powell becomes increasingly cornered, it all but confirms he was leaning in that direction.
These points are bad enough, but three more key pieces point to an ever more dire situation coming…
This Drunk and Rigged Stock Market Is Just Getting Silly
After all, that’s the sad new-normal of our Fed-driven markets: Rather than let markets rise and fall on natural terms, the Fed keeps them perpetually drunk on low rates, or even talk of low rates, to buy more time and keep the debt-spiked bloody-Mary’s flowing.
Such moves postpone market hangovers, but ultimately “destroy the liver” of our otherwise broken economy.
Folks, that’s not capitalism nor free markets but a rigged market, and in our free report this week, I will show you in detail how these markets are ultimately rigged to fail.
By my calculations, a proposed rate cut like this would actually bring the markets even closer to recession (as I already shared in Part 3 of the Storm Tracker Series), namely that when Fed Fund rates stop rising, recession beckons.
When they start declining, a recession is even closer, as this familiar chart describes…
Meanwhile, U.S. GDP just keeps tumbling, alongside interest rates.
The Atlanta Fed GDPNow forecast (described generally in Part 4 of the Storm Tracker Series) is at 1.17% for Q2 2019, down from a high of almost 5% just one year ago!
This looks like a race-to-the-bottom on both fronts, a freefall of both interest rates and GDP.
Don’t let last week’s bullish Fed-speak (on rates) and White House-speak (on rates AND tariffs) calm your risk outlook.
But that’s what makes a rigged market so entirely bizarre.
As more bad news comes out – including the sickening recent job reports – markets go up rather than down, because markets know the Fed will come in, slash rates, and add more debt stimulus to “solve” a debt-driven disease.
Meanwhile, as the recent bad news on jobs (even for our fiction writers in D.C.) confirms the tragic demise of our middle class and the absolute myth of US unemployment reporting, our real economy rots form within, while the top-10% of the US retains 70% of the country’s total wealth.
Such disparity is a dangerous leading indicator of a dying economy and trouble down the road.
Again, just think of the French…
As we head further into June, Storm Tracker remains at 45 knots of recessionary windspeed.
What to Watch Out for This Week
This backdrop of weakening growth, tepid inflation, and general pessimism may or may not move markets this week.
They should go to the downside, but if the rigged financial media tosses out enough interest-rate hope and drivel, then markets could rise on hype rather than data.
Something investors are sadly getting more and more accustomed to.
The G-20 is also in the news this week but on the dark side, as conclusions come that trade tensions pose a threat to the world economy.
But again, the worse the actual news, the more hope investors will have on the bullish side from Uncle Fed.
But for us, “hope” is not a long-term investment plan.
There will also be a rash of economic data releases this week, like purchasing manager surveys (Tuesday), CPI fiction (Wednesday), import prices (Thursday), and an all-important industrial production print on Friday.
Buckle-up and hold onto those fixed income allocations this week … that’s the trade in vogue.
Stay tuned for more critical reports coming soon from Critical Signals Report.
In the interim, and as always, stay informed and invest as such.
7 responses to “Every Investor Needs This Chart About the Coming Recession”
June 10 2019