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Fed Sweeps Yield Curve Under the Rug – What Are They Trying to Hide?

July 22, 2018

Federal reserve and the yield curve

Fed Sweeps Yield Curve Under the Rug – What Are They Trying to Hide?

A few weeks ago we reported the Fed was getting hawkish despite what they were calling “low inflation.”

In that article, we showed rates possibly being raised more than 4 times in 2019. But more importantly, we warned that anyone investing in the market should start preparing to expect the unexpected.

And right now, it looks like the Fed’s bizarre moves are continuing.

This time it involves the yield curve. The yield curve represents the difference in interest rate paid on short-term Treasury notes and long-term Treasury notes in the bond market.

A common signal of economic health from the bond market involves looking at the difference between the 2-year and 10-year rates (also called the “spread”).

Over the last three decades, when 2-year yields are lower than the 10-year bond yields, it signaled a healthy economic outlook.

But when that “spread” shrinks, the yield curve is said to be flattening. If it “reverses” entirely, the yield curve is inverted (or negative).

Since 1980, an inverted yield curve preceded an economic recession with reliable accuracy (see graph below, red arrows point to 3 recent events):

us treasury yield

So the yield curve is a fairly reliable signal for imminent recession. And notice the downward trend of the yield curve on the right side of the graph. That indicates a flattening yield curve heading towards inversion.

And when we zoom in, the picture looks even more dire.

As of July 11th, 2018 the Treasury reported the difference between the 2-year and 10-year bonds to be 27 basis points (or .27% – see chart below).

This is the lowest spread since the 2008 Great Recession, and already much lower than the historical graph above.

us treasy yield

There is no doubt the yield curve is flattening, and at an alarming pace.

…click on the above link to read the rest of the article…

Globalists Are Telling Us Exactly What Disasters They’re Planning for The Economy

July 11, 2018

Globalists Are Telling Us Exactly What Disasters They’re Planning for The Economy

Globalist plan of destruction for the economy

Years ago when analysts first started to use the term “globalist”, there was an immediate recognition among liberty advocates as to who they were referring to. This was back when the movement for small government, the non-aggression principle, and true free markets was small but growing. These days, it’s difficult to gauge how many liberty groups there are or even if they know what small government and the non-aggression principle represent, let alone what makes a “globalist” a globalist.

There are a lot of new and very green members to the push for freedom, and a lot of them seem to think “MAGA” is the pinnacle of the movement’s philosophy. But MAGA doesn’t represent much of anything tangible. Making America great again is not a plan, it’s just a goal. Or even less, just a catch phrase. Without concrete plans, the notion of achieving a goal is laughable.

Make no mistake, the globalists have concrete plans, some of them simple, some of them rather elaborate. But who are the “globalists”? There’s really no secret to it: ANY person or institution that promotes the philosophy of global centralization of economic or political power into the hands of a select few is probably globalist.

There is no specific nationality, ethnic group or religious group that makes up the globalist hierarchy. They come from every part of the world and from every conceivable background. They have their private clubs like the Bilderberg Group and the Bohemian Club. They also have their own institutional frameworks, like the Council on Foreign Relations, the Trilateral Commission, the Tavistock Institute, the International Monetary Fund, the Bank for International Settlements, etc. But, these are all distractions and misdirections.

The core of their organization is the desire for total power, built upon full blown narcissism and sociopathy leading to naive notions that godhood, for them, is attainable.

…click on the above link to read the rest of the article…

The Real Inflation Rate May Signal That the U.S. Economy is in a Death Spiral

May 3, 2018

The Real Inflation Rate May Signal That the U.S. Economy is in a Death Spiral

real inflation us economy collapse

Just like a car with a bad cooling system, the U.S. economy may be overheating, and could break down soon. Why?

Aside from trade wars, geopolitical tension, and debt, inflation might stand center-stage as the final nail in the U.S. economic “coffin”.

According to Torsten Slok, the Chief International Economist at Deutsche Bank, inflation “is the mother of all risks here”.

You see, the floundering U.S. dollar, tight labor market, Quantitative Easing and trade wars have all paved the way for rising inflation. And, in a recent survey of global fund managers conducted by Bank of America, 82% expect the CPI index to keep climbing over the next year.

But the “inflation nation” might be overheating, as reported by CNBC:

Earlier this month, inflation numbers came in hotter than anticipated, signaling inflation pressures could be mounting. The Labor Department reported its CPI rose 2.4 percent year on year, its fastest annual pace in 12 months.

Even if you factor out energy and food — factors which the U.S. Government likes to leave out to make the CPI inflation rate more appealing — it’s still 2.1%.

That’s the fastest rise since February 2017, higher than the benchmark of 2%, and still rising. Which begs a serious question…

“What is the real inflation rate?”

The Consumer Price Index (CPI) is a set of methods that track the inflation rate, monitored by the Bureau of Labor and Statistics (BLS).us inflation higher matrix

It was designed to help businesses, individuals and the government adjust for the impact of inflation. It worked well until politicians started messing with the methodology in the 1990’s.

In 2011, John Melloy reported on the “real” inflation rate, calculated with the methodology used before 1980 (bolding ours):

Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 percent in February, according to the Shadow Government Statistics newsletter.

…click on the above link to read the rest of the article…

China’s “Nuclear Option” in the Trade War

April 18, 2018

china trade war usa nuclear

China’s “Nuclear Option” in the Trade War

The United States has been interested in economic relations with China since 1784, shortly after the American War for Independence.

At first, this interest was purely economic, because the British refused to deal with the U.S. (for obvious reasons). So the Americans bought Chinese goods, and the Chinese bought from the Americans.

And for most of U.S. history, things were good. But in 1949, with the rise of Mao and communist China, tensions rose.

Fast-forward to today’s relationship, as described by The Heritage Foundation:

Today, the United States and the People’s Republic of China are like the European great powers of a century ago. They trade with each other, but do not trust each other. They have the largest economies in the world, and they have a financial and trading relationship that shapes the global economy. But at the same time, they have different, and often opposing, views on many national security and foreign policy issues.

This lack of trust in their trading relationship mainly stems from China’s views on communism, their endorsement of certain people, and security issues.

Now it looks like that trading relationship is heating up dramatically…

China recently announced tariffs on 106 U.S. products like soy, cars, and some chemicals. As Sam Meredith explains on CNBC.com, this came 24 hours after the U.S. slapped tariffs on a list of Chinese imports in a $50 billion crackdown on unfair trade practices:

The effective start date for the new charges is not announced, though China’s Ministry of Commerce says the tariffs are designed to target up to $50 billion of U.S. products annually. The 25 percent levy on U.S. imports includes products such as soybeans, cars and whiskey.

This announcement caused a 450-point drop in the Dow Jones.

In retaliation, the Trump Administration then doubled down on its initial tariffs, imposing another $100 billion in tariffs on Chinese goods.

…click on the above link to read the rest of the article…

The Risk of the Fed’s Continuous Rate Hikes

April 4, 2018

The Risk of the Fed’s Continuous Rate Hikes

jerome powell raises rates

This past week, the Fed raised interest rates by 0.25%. The effective Fed fund rate is now 1.63% – the highest since the big market crash of 2008.

However, it could get as high as 3.375% by 2020. The decade 2020 – 2029 could see a high-tech version of the early-1980’s when home loans fetched interest rates up to 18%.

It was only a couple years ago when raising rates seemed like a “boy who cried wolf” idea. Now we’re seeing one rate hike after the other, with two more expected for 2018.

Does the Fed have something up their sleeve, or are they hanging on to false hope?

The Fed is Either in Denial or Misleading Us About the Economy

While the Fed’s decision to raise rates was predictable, the rest of their announcement wasn’t.

In the recent FOMC report the Fed paints a rosy picture about the state of our economic situation. They stated the outlook has “strengthened in recent months.”

Then they claimed a better unemployment rate at 4.1%. And it is, if you’re only reporting the statistics that make things look good.

We know that rate is misleading for one simple fact…

Anyone who is not looking for work is not considered part of the calculation.

As more and more people leave the workforce altogether, and give up looking for work, they get culled from the calculation reported in the media which skews the statistic.

The truth is, the unemployment rate is much higher than the media reports. It’s actually closer to 8.2% as of February 2018.

So is the Fed in denial about the state of our economy? Is it telling white lies? Or a combination of both?

 

…click on the above link to read the rest of the article…

China is One Signature Away From Dealing the Dollar a Death Blow

March 23, 2018

China is One Signature Away From Dealing the Dollar a Death Blow

China to deal final blow to dollar

If you leave your sliding glass door open, you might let in a stray cat, raccoon, or bugs without knowing it.

Some intruders are worse than others. All can be annoying. But let in a thief, who robs your home… and it only takes that one time to change your life forever.

The U.S. has essentially left their “sliding glass door” open, and on March 26 China is set to become the intruder that may very well deal a death blow to the dollar.

China Prepares Death Blow to the Dollar

On March 26 China will finally launch a yuan-dominated oil futures contract. Over the last decade there have been a number of “false-starts,” but this time the contract has gotten approval from China’s State Council.

With that approval, the “petroyuan” will become real and China will set out to challenge the “petrodollar” for dominance. Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), already warned last year that China launching a yuan-denominated oil futures contract will shock those investors who have not been paying attention.

This could be a death blow for an already weakening U.S. dollar, and the rise of the yuan as the dominant world currency.

But this isn’t just some slow, news day “fad” that will fizzle in a few days.

A Warning for Investors Since 2015

Back in 2015, the first of a number of strikes against the petrodollar was dealt by China. Gazprom Neft, the third-largest oil producer in Russia, decided to move away from the dollar and towards the yuan and other Asian currencies.

…click on the above link to read the rest of the article…

 

How Will Gold Prices Behave During Economic Crisis?

March 13, 2018

How Will Gold Prices Behave During Economic Crisis?

gold prices during economic crisis

It is generally well known in economic circles and in the general public that precious metals, including gold, tend to be the go-to investment during times of fiscal uncertainty. There is a good reason for this. Precious metals have foundation qualities that provide trade stability; these include inherent rarity (rather than artificially engineered rarity such as that associated with cryptocurrencies), tangibility (you can hold gold in your hand, and it is relatively difficult to destroy), and precious metals are easy to trade. Unless you are attempting to make transactions overseas, or in denominations of billions of dollars, precious metals are the most versatile, tangible trading platform in existence.

There are some limitations to metals, but the most commonly parroted criticisms of gold are generally incorrect. For example, consider the argument that the limited quantities of gold and silver stifle liquidity and create a trade environment where almost no one has currency to trade because so few people can get their hands on precious metals. This is a naive notion built upon a logical fallacy.

Gold backed paper currencies existed for centuries in tandem with the metals trade. Liquidity was rarely an issue, and when such events did occur, they were short lived. In fact, the last great liquidity crisis occurred in 1914, the same year the Federal Reserve began operations and the same year that WWI started. This crisis was, as always, practically fabricated by central banks around the world. Benjamin Strong, the head of the New York Fed in 1914 and an agent of the JP Morgan syndicate, had interfered with the normal operations of gold flows into the U.S. and thus sabotaged the natural functions of the gold standard.

Central banks in Germany, France and England also applied influence to disrupt currency and gold flows, causing a global panic. This engineered disruption seemed to take place through conscious co-operation between central banks. Does any of this sound familiar?

…click on the above link to read the rest of the article…

New Fed Chairman Will Trigger A Historic Stock Market Crash In 2018

February 21, 2018

New Fed Chairman Will Trigger A Historic Stock Market Crash In 2018

Ever since the credit and equities crash of 2008, Americans have been bombarded relentlessly with the narrative that our economy is “in recovery”. For some people, simply hearing this ad nauseam is enough to stave off any concerns they may have for the economy. For some of us, however, it’s just not satisfactory. We need concrete data that actually supports the notion, and for years, we have seen none.

In fact, we have heard from officials at the Federal Reserve that the exact opposite is true. They have admitted that the so-called recovery has been fiat driven, and that there is a danger that when the Fed finally stops artificially propping up the economy with constant stimulus and near zero interest rates, the whole farce might come tumbling down.

For example, Richard Fisher, former head of the Dallas Federal Reserve, admitted a few years ago that the U.S. central bank has made its business the manipulation of the stock market to the upside:

What the Fed did — and I was part of that group — is we front-loaded a tremendous market rally, starting in 2009.It’s sort of what I call the “reverse Whimpy factor” — give me two hamburgers today for one tomorrow.

I’m not surprised that almost every index you can look at … was down significantly.

Fisher went on to hint at the impending danger (though his predicted drop is overly conservative in my view), saying: “I was warning my colleagues, don’t go wobbly if we have a 10-20% correction at some point…. Everybody you talk to … has been warning that these markets are heavily priced.”

One might claim that this is simply one Fed member’s point of view. But it was recently revealed that in 2012, Jerome Powell made the same point in a Fed meeting, the minutes of which have only just now been released:

…click on the above link to read the rest of the article…

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