It appears to me that anyone caught by slow-moving hurricane Dorian will get what they deserve if the hurricane hits near them. While it is not exactly known where it will strike as I write this, many parts of the southeast have been adequately warned. The mainstream media has done a great job of raising awareness and causing people to prepare.
On the other side of the spectrum we have the mainstream media choosing to NOT discuss many warning signs that an economic hurricane may just be on the way. It appears that the mantra “all is well” is accepted as long as the equity markets are moving higher. So far that has appeared to be the case- at least on TV!
It is true that the main averages have been near all-time highs. That makes sense because many companies are buying their own shares back (while the c-suite sells out in record numbers by the way) and sovereign wealth funds, central banks and others I believe, “buy what they know”. This may be why 4 or 5 stocks can drive an entire average higher.
Looking a little deeper, however, may give us a far different view than the portrayal of “greatest economy of all time”.
Sure, the major averages (those that people watch), have hung in there despite the discouraging economic news that has been filling the charts for the past 12 months or so and are getting worse not better.
I have outlined many times the dire straits of global shipping, trucking, rail traffic, store closings, layoffs, etc. Just this weekend I read from Reuters’ Senior Market Analyst John Kemp that US refineries have slashed an average of 247,000 barrels of oil per day of refining oil because stockpiles remain high. This would not suggest a booming robust economy but one that is struggling.
I also hear many saying that “the rest of the world is slowing down but the USA has not been affected so far”. It is apparent to anyone who pays attention that the only reason we hear the unemployment rate is 4% is that 95 million + people are simply not counted. (USdebtclock.org) The reported inflation numbers are also massaged to make it look far lower than our actual costs are rising. The way inflation is calculated has been changed numerous times since the 1980s. Having $17 trillion in debt trading at negative yields globally is, in my opinion, telling a MAJOR story along with collapsing yields and yield-curve inversions right here in the USA.
Michael Snyder of The Economic Collapse Blog put out 28 signs of economic doom. It was on Zerohedge and has a lot of reasons why the US economy is in a tough spot. I won’t repeat all of them here but I will point out a few of the most important.
1- Tariffs and Trade Wars
2- Yield curve inversion (preceded every recession since the 1950s)
3- Mortgage defaults are rising at the fastest pace since the last financial crisis
4- US manufacturing has contracted for the first time since September 2009
5- Cass Freight Index has been falling for months. (CNBC- -5.9% in July, -5.5% June -6% May)
6- Copper down 13% in the last 6 months. When manufacturing slumps- so does copper.
7- Gold is up 20% since May (When trouble arises so does gold)
8- Domestic RV shipments have fallen 20% so far in 2019
9- S&P Earnings have been steadily falling all year.
10- Global trade fell 1.4% in June from a year earlier-biggest drop since the last recession.
11- Warren Buffett (Mr. Stock Market) has amassed $122 billion in CASH. VERY Telling!
12- Germany’s economy contracted in2Q 2019 and is expected to contract again in Q3 (Bundesbank)
13- Smart money (Insiders, hedge funds, etc. are SELLING not buying)
14- Shale revolution may be in peril as 28 bankruptcies have already happened in 2019 (28 in 2018 also) but $137 billion comes due in the next 2 years. (Zerohedge)
15- The Russell 2000 is a full 14% below its closing high in 2018. The Value Line Geometric Index of about 1700 stocks is down 15% from its closing high. The Transportation Index is 12.5 lower than at its high in 2018. The BKX banking index is down 20% from its highest close in 2018. Quite a stark difference from those “major” averages. (King World News)
16- The 1-month T Bill yields more than any other treasury out to 30 years! (9-3-2019) NOT NORMAL (CNBC treasury yield bond chart 09/03/2019)
Another fun fact is that the “near all-time high markets” have been at this level for a long time. I again went to Marketwatch and looked at the last 12-months returns. Here they are:
Market Index Value 9/5/2018 Value 9/4/2019 + or – % Change
DOW 25,974 26,319 +345 +1.32%
S&P 2888 2906 +18 +0.06%
Nasdaq 7922 7957 +35 +0.04%
This is hardly what I would describe as a “BOOMING” market. This is with central banks, sovereign wealth funds, plunge protection teams, etc. virtually all-in.
On the other hand, gold and silver- those “barbarous relics have performed this way.
GOLD 1182.00 1547.00 +365.00 +30.8%
SILVER 14.10 19.00 +4.90 +34.7%
Is this ever presented THIS way on the financial game shows? As a matter of fact I have illustrated many times that the average annual return on gold since the year 2000 is 25%. The last few years of unfettered intervention just may be coming to an end. Many mining stocks are also up far more than the metals themselves.
Again, look at what those “in the know” are doing- not what they are saying. Look beyond the noise and make decisions based upon what you are seeing right in front of you- not propaganda!