As I look at what is happening in the economy I can only come up with one word that describes it all- surreal. I see Fed Presidents and “experts” doing their best to keep people uninformed- or misinformed about the true state of our economy.
Fed Presidents coming out and saying central banks are not buying bonds when the ECB, Bank of Japan and the Bank of England have all announced that they are buying “whatever it takes”, or bonds in unlimited amounts. I am sure that the Fed is in on it also but they have so far failed to admit it.
There is obviously a LARGE problem in the bond “markets” because the yields in supposedly “safe” treasury notes are trading more like tech stocks than the bedrock of the financial system. Just this week, after a large rise in rates- and a plunge in stocks- the 10-year Treasury yield went down 40 basis points in about 24 hours. That may not sound like much but that is a 10% move in a day! Also keep in mind that a massive move like that likely took HUNDERDS OF BILLIONS of dollars (or other currencies) to execute. There are only a few entities (likely all central banks) that could do that.
Keep in mind that the banks have LARGE derivative exposure to interest rates. Any major rate moves in a disorderly manner could cause massive damage to most large banks. This is likely a MAJOR reason for the interventions taking place today. Of course, the pension funds imploding because of leverage in England is also another reason. The sad part of this is that they are putting a band aid on a fatal wound.
Repos (Loans made to mainly banks overnight by the Fed) reached an all-time record on October 5thof $2.4 TRILLION. This is done to trick the system into believing that there is plenty of liquidity where none- or very little- likely exists. Another illusion brought to you by those “in charge”.
“Expert” after “expert” is being paraded out to extol the strength of our economy while, at the same time, those same “experts” are always surprised at the terrible economic numbers that are being reported day after day.
Just a few of the WONDERFUL economic reports:
- Global Maritime trade growth is SLOWING
- Manufacturing growth in the USA is SLOWING. Back to its lowest rate since the pandemic.
- Fedex withdrew its fiscal 2023 earnings because of uncertainty and macroeconomic weakness.
- Office vacancies in NYC are over 15%. Meta (Facebook) is looking to lay of up to 12,000 people and dispose of 200,000 square feet of office space. Even amazon is looking to reduce their rentals by 2 MILLION square feet.
- Mortgage rates have hit 7%. That little rise- according to the NAR (National Association of Realtors) increases the average mortgage payment by 50%. They also said a 1% increase in rates is like the price of a home jumping 13%. With the cost of virtually everything else going through the roof home affordability is getting crushed.
- Mass layoffs are being announced by major companies in virtually all industries.
You get the picture. There should be no surprise by anyone with a functioning brain that the economic numbers are always coming in weaker than expected. The only way to actually be surprised is to listen to the propaganda that masquerades as news and to believe it. Like we have FULL EMPLOYMENT while almost 100 MILLION working age Americans are EXCLUDED from the calculation. Another is that a recession may happen in 2023 when we have likely been in a depression since 2008 but hundreds of trillions of fiat currency conjuring has kept most of us in the dark.
One of the best is “Everybody is rich!” This, while homelessness is exploding, over 15% of households are behind in paying their utility bills, a majority of Americans live paycheck to paycheck- including many making over $100,000.00 per year. Another fact is that 26% of our population has NO ASSETS- as in nothing to fall back on. How do I know? There are 85,973,420 people on Medicaid- which means you have NO ASSETS. In addition, we are so prosperous that almost 39 MILLION Americans are on Food Stamps- of course there are likely multiple people in a family unit making this number far higher in its actual impact.
Looking beyond the propaganda we see a country (and actually the world economy) falling into the abyss. This will likely bring about large changes which will alter all we have come to know during our lifetimes.
It is extremely likely that those who measure their “worth” in dollars are likely to get quite a surprise at how little VALUE exists in a green piece of paper or computer blip.
Those who have the foresight to see what is taking place will, I believe, have the greatest chance of not only surviving but thriving in this new paradigm where people will likely be demanding payment in hard assets or currencies backed with hard assets.
Gold- central banks and major banks are hoarding as they suppress the price with paper contracts- giving the ILLUSION of FAR more gold than actually exists.
SILVER- getting harder to source every day. Silver is a MAJOR component in the green movement. Also getting the same treatment as gold only exponentially higher in the amount of paper contracts being used. (USDebtclock.org)
OIL- What actually allows the world to function as we are finding out the hard way.
Natural Gas- Cleaner burning and efficient. Europe is getting a lesson in Economics 101- SUPPLY and DEMAND.
Uranium- Most likely bridge to a green future since it is the energy source that produces FAR more energy than any comparative energy source and does it with NO CO2 emissions.
Food and Fertilizers- Over 100 food processing and fertilizer manufacturers have been destroyed (just in the US) since January 2022. Soaring natural gas prices have halted production of fertilizer in Europe. Supply and demand suggests FAR higher prices moving forward.
Water- Lifeblood of the planet.
In the past few decades, we have replaced hard work with get rich quick schemes. In the past buying back shares by companies was illegal because it was obvious that those in charge could enrich themselves at others expense. Since that rule changed over $10 TRILLION has been spent buying stock back. This leads to tremendous profits for those in C-suites and some shareholders but also takes money that could have been used for R&D or other opportunities and buries it.
We have also replaced being honest and raising taxes when necessary to conjuring up trillions to pretend that we could afford all of the handouts, foreign wars, bailouts, etc. while OUR infrastructure decays into 3rd world status- along with our economy and society.
It is likely that the landscape for investing over the next few years will be FAR different than the landscape we saw in the past 50 years or so.
BE PREPARED!
Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
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