Happy Monday!

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.

Rate cuts could occur as soon as July, especially if these rigged stock markets sink further in the near term.

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.

It’s crazy.

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.

Matt Piepenburg


Comments

7 responses to “Every Investor Needs This Chart About the Coming Recession”

  1. I don’t feel comfortable with this market our country politics and crap that’s taking down this country in Washington. We have more communist in Washington with their socialist views that would bring this country down. God bless America.

  2. You guys are way to gloomy and most of you are not giving TRUMP any credit or you simply do not understand that he is usually 6 steps ahead of everyone else. By 2020 he will have most things in great shape and if only the Demos would get out of the way, things would even be much better.
    We in the real heartland of this country will vote for HIM again big time, because he is neither a Repub or a Demo !!!!

  3. As an erstwhile Graduate student in international economics & finance & having resided in 10 nations since 1975, I can capably report herein that NO nation retains its identity, hence sovereignty, when it yields its manufacturing base to cheaper overseas labour & production inputs. Yes, the “have / have nots division” is a by-product of a post-modern economic catapult into a global economy poorly managed & governed. Indeed we are seeing tribalistic economics currently that is assaulting the dignity of simply having a job, of ensuring individual self-worth & hope for humans. The Chinese formula, predicated in Nation-State central planning /corporatism has enabled China to create enough trade imbalance & accrue wealth to move into its pre-planned “Domestic Development” phase. Domestic development should continue to include and provide that Chinese citizens continue towards full-employment. It appears that the USA finally has seen the long-known Chinese plan. China has been allowed to grow-up, get rich & now dominate world economics. Alongside all this development has been a world that has continued to imbibe cheap Chinese products, only to finally realise that they cannot compete manufacturing products & in the modern AI & internet age… well this has only accelerated the growth of China, a China that has well worked within the Western Economic models to now push their own “Chinese Economic Model”. Central bank Governors have dived into the debt game to spare their respective economies. Statutes have changed that enable them, commercial banks, equity & bond traders to trade with loose /well manipulated low interest rates. This could have All been foreseen. Now the weirdo Trump is finally taking China to task —- when it (trade enforcement) should have begun with the Nixon/ Kissinger rapproachment

  4. …and as a Corollary, Nixon & Kissinger AND the leading Occidental free-market capitalists likely had no experience to foresee how the invitation of a tightly-organised Central Chinese economy would play itself out. The reader herein should stand back & see this big picture: the new global economic model admixture.

    Solution: yes, reversion / retreat to ensuring that all Nation-States produce at least half of their daily life needs, pursuant to GDP. “Externalities” are not being considered enough when forging ahead with “free-trade agreements. Nor are the principles of “Natural Capitalism”. When they indeed are, the crap coming down the road (impending depression) will be better planned for, or better: prevented! Yes, we Investors can enjoy “Call” & “Puts” profits, but the middle classes shouldn’t have to pay. When they awaken … well yes … heads will roll! Nobody profits from this uncertainty, malaise & human decay. Those behind Trump are correct to force China to finally enter the western economy — not as a centrally-ruled economy, but rather one that is transparent with its economic & trade statistics AND doesn’t operate effectively as a bullying monopoly. The spirit of “Anti-trust laws” was created to prevent such. Commodity pricing should NOT be allowed to be manipulated. Anybody know why Brexits are erupting everywhere in the Occidental???

  5. If, When Powell cuts the interest rates, this should spur gold and silver higher. As, interest rates are pushed lower, markets will react higher at first, but, then I believe the bottom will drop out. Consumer staples, Utilities, and Big Blue chips will initially fall, but, will rise faster as recession comes into play. Gold and Silver will be safety as well as profit centers, as they mover higher. I believe the US Dollar has began its downward trajectory, also look towards food commodities, US has had huge disasters in the heartland, DBA, looks to be a long term play, for higher agriculture prices. Good luck, and remember 2008-2009.

  6. So, what do I need to be getting into or buying ? Please , give me your opinion ? Name a few instruments & so on .

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