The Federal Reserve has potentially had the most memorable year in its more than a century–long history. What started out as a year of “Will they or won’t they cut interest rates?” blossomed into a time of slashing rates to near zero, unleashing unlimited quantitative easing, purchasing corporate and municipal bonds, and growing its balance sheet to a record high. Now, as the economic consequences from the covid-19 pandemic linger, the Fed has taken advantage of the crisis to modify its policies to be more expansionary—which will inevitably blow bubbles and wreak havoc on households everywhere. Read More.
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Category: Bear Market News
There can be little doubt that macroeconomic policies are failing around the world. The fallacies being exposed are so entrenched that there are bound to be twists and turns yet to come. Read More.
I am experiencing déjà vu. In 1988, as a young and inexperienced investor, I met a transportation analyst from Nomura. He explained how a midsized and heavily indebted railroad company owned land in Tokyo Bay. It had the potential to build a giant condominium complex on this land, thereby diversifying into the highly profitable real estate market. Read Moer.
Central banks, China, Financial crisis, Global depression, Global economy, Recession
We have been watching, with disbelief and bemusement, how the “recovery-narrative” has been touted in the financial media and among some economists and analysts. Categorically, an economic recovery is a period of expansion, where we eventually exceed the previous peak in employment and output. There’s no such thing coming (anytime soon). Read More.
Blackstone’s market maven Byron Wien sees a significant correction risk. He warns of rising speculation in the stock market, the vulnerable state of the U.S. economy and possible turmoil in the course of the presidential election. He also shares his views on where he spots opportunities for patient investors. Read More.
08/07/20 – Joe Carson: “Averaging” Inflation Does Not Eliminate The Flaws In The Fed’s Policy Approach; It Compounds Them
Federal Reserve has spent over a year conducting a review of its monetary policy strategy, tools, and communication process. The review was an academic re-assessment of an academic experiment called inflation targeting. The new framework of inflation averaging is an extension of the inflation-targeting regime, with a longer timeline. Read More.
Misguided lockdowns have destroyed the global economy and the impact is likely to last for years. The fallacy of the “lives or the economy” argument is evident now that we see that countries like Taiwan, South Korea, Austria, Sweden, and Holland have been able to preserve the business fabric and the economy while doing a much better job managing the pandemic than countries with severe lockdowns. Read More.
Asset prices could be on the cusp of a sharp collapse known as a “Minsky moment,” and may retest lows last seen in March, according to Ron William, market strategist and founder of RW Advisory. Read More.
Last week we showed that following the July 31 “fiscal cliff”, which saw the end of the $600 weekly emergency unemployment benefit and as a result, weekly unemployment insurance benefit payments were cut in half, from $25BN pre-July 31 to just over $10 BN after… Read More.
For the second quarter of 2020, US GDP experienced its worst-ever contraction of 32%. The key question now is how fast will the economy recover? Read More.
We have been watching the “shock-and-awe” bailout of the financial system by the Federal Reserve with astonishment. Never before has a central bank tried single-handedly to rescue both the financial system and a large proportion of U.S. corporations. We were taken aback then by Fed actions and are now just as worried about what it has given birth to. Read More.
Soaring financial markets are blithely indifferent to lingering vulnerabilities in the US economy. But the impact of consumers’ fear of COVID-19 on pandemic-sensitive services are unlikely to subside, undermining the case for the uninterrupted recovery that investors seem to expect. Read More.
Skeptics are a dying breed in American equities. It’s another illustration of how risky it has become to doubt the resilience of the market’s $13 trillion surge since late March. Read More.
08/19/20 – Kitco: Jim Rogers gives the best investing advice you’ll hear, talks next big market crash
Jim Rogers, chairman of Rogers Holdings and co-founder of the legendary Quantum Fund, said that the next financial crash could be even worse than what we saw this year. Read More.
A lot of the policy response to the COVID-19 pandemic was based on the belief that it would be over quickly. We saw big, multi-trillion dollar spending bills from March into May. The Fed took their balance sheet from about $3.8 trillion to around $7 trillion. (By the way, I can easily envision some scenarios where it goes to $10 trillion). Read More.
A collapse of major chunks of the economy is widely viewed as “impossible” because the federal government can borrow and spend unlimited amounts of money because the Federal Reserve can create unlimited amounts of money: the government borrows $1 trillion by selling $1 trillion in Treasury bonds, the Fed prints $1 trillion dollars to buy the bonds. Rinse and repeat to near-infinity. Read More.
Do you sense an approaching endgame? Like there’s another heavy shoe to drop? Perhaps an entire closet’s worth? Certainly there’s entirely too much confusion surrounding SARS-CoV-2 and how to deal with it. Read More.
08/03/20 – Michael Snyder: We Are Experiencing Economic Devastation On A Scale That America Has Never Seen Before
For a very long time we have been warned that a U.S. economic collapse was inevitably coming, and now it is here. Fear of COVID-19 and unprecedented civil unrest in our major cities have combined to plunge us into a historic economic downturn, and nobody is exactly sure what is going to happen next. Read More.
One of the world’s major credit-rating companies fired a warning shot regarding the U.S.’s worsening public finances on Friday, just as lawmakers in Washington contemplate spending more to combat the economic fallout from the coronavirus pandemic. Read More.
Well, the Virus Patrol sure has done it. In a fit of reckless overkill they have managed to vaporize six years of economic growth during the last 90 days. And that’s just by the mechanical reckoning of the GDP accounts, where total output in Q2 weighed in at essentially the same level as Q4 2014. Read More.
“Up, Up and Away” returned on Wall Street, as the SkyNet BuyBots gained control in the overnight futures session, sending US stocks sharply higher at the open of trading on Wall Street. The rally continued with a vengeance all the way into the close, on renewed hopes of progress in the battle against Covid. The DJIA jumped another 227 points (0.8%) and the NASDAQ tacked on 62 points (0.6%).
Stay tuned as the battle 0of the SkyNet StockBots continues.
According to the International Monetary Fund (IMF), global fiscal support in response to the crisis will be more than $9 trillion, approximately 12 percent of world GDP. This premature, clearly rushed, probably excessive, and often misguided chain of so-called stimulus plans will distort public finances in a way which we have not seen since World War II. The enormous increase in public spending and the fall in output will lead to a global government debt figure close to 105 percent of GDP. Read More.
We’ve only had one depression in modern times: the Great Depression, the worst economic downturn in the history of the U.S. and the industrialized world.
With unemployment at levels unseen since the Great Depression — the worst economic downturn in the history of the industrialized world — one has to be wondering if the country will eventually dip into a major depression.
It was pretty much another “Up, Up and Away” day on Wall Street, as the SkyNet BuyBots took control in the overnight futures leading to a sharply higher open of trading on Wall Street. From there, stocks went a net nowhere as they zigged and zagged into the close. The DJIA gained 177 points (0.7%) and the NASDAQ zoomed higher by 148 points (1.4%).
Stay tuned as the battle 0of the SkyNet StockBots continues.