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FedEx Is Talking As If A Global Recession Has Already Begun – And The Numbers Back That Up

FedEx Is Talking As If A Global Recession Has Already Begun – And The Numbers Back That Up

“Slowing international macroeconomic conditions” is just a fancy way to say that the global economy is in big trouble.  For months, I have been warning that economic conditions are deteriorating, and we just keep getting more confirmation that we are facing the worst global downturn since the last financial crisis.  For the second time in three months, FedEx has slashed its revenue forecast for this year.  In an attempt to explain why revenue is declining, FedEx’s chief financial officer placed the blame squarely on the faltering global economy.  The following comes from CNBC

The multinational package delivery service reported declining international revenue as a result of unfavorable exchange rates and the negative effects of trade battles.

“Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue,” Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer, said in statement.

The use of the word “trends” implies something that has been going on for an extended period of time, and obviously FedEx doesn’t expect things to get better any time soon if they have cut profit projections twice in just the last three months.

And FedEx certainly has a lot of company when it comes to having a gloomy outlook for the global economy.  In one recent article, Bloomberg boldly declared that the global economy is in the worst shape it has been “since the financial crisis a decade ago”

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

Debt Trifecta at All-Time Highs – Billionaires Panic

Debt Trifecta at All-Time Highs – Billionaires Panic

The “trifecta” of national, corporate, and consumer debt has reached all-time highs, and could prove to be catastrophic if a recession hits.

Let’s start by quickly bringing each part of this debt trifecta up to date as much as possible…

U.S. National Debt

The national debt, ever on the rise, currently sits at around $22 trillion:

In just the short decade since 2008, the debt has jumped from $10.6 trillion to $22 trillion. It also comes with a deficit that’s currently over $1 trillion currently. The interest payments alone may be forming a “black hole” from which the U.S. may never escape.

These facts alone should raise concern in any interested observer.

Corporate Debt

The total amount of corporate debt has never stopped rising since 1950. Corporations have taken on a record level of debt since 2007.

You can see the steady rise in corporate debt liabilities here:

One of the main problems with this type of debt, aside from getting repaid, is that some corporations are using it to buy back shares of stock. Instead of this “sleight of hand,” you’d think that they should be using it to fund growth and create jobs.

But one thing is certain, the piper will need to be paid at some point. When that happens, who knows what can happen to the economy.

Consumer Debt

Total consumer debt is near $4 trillion, and has been rising steadily since 1975. But it has risen a staggering 47%since 2008, and shows no signs of stopping.

The chart below reveals this economic “ATM” at work:

When interest rates rise, as they have been thanks to the Fed’s recent spat of rate hikes, they will eventually get high enough that consumers won’t be able to get loans, or repay them.

Economic growth requires that consumers buy things and obtain credit. If they can’t do either, the consequences could be dire.

Now, this debt-fueled trifecta has caused panic among some billionaires.

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

The State of the American Debt Slaves, Q3 2018

The State of the American Debt Slaves, Q3 2018

Consumers are being lackadaisical again with their plastic.

Consumer debt – or euphemistically, consumer “credit” – jumped 4.9% in the third quarter compared to the third quarter last year, or by $182 billion, to almost, but no cigar, $4 trillion, or more precisely $3.93 trillion (not seasonally adjusted), according to the Federal Reserve this afternoon. As befits the stalwart American consumers, it was the highest ever.

Consumer debt includes credit-card debt, auto loans, and student loans, but does not include mortgage-related debt:

The nearly $4 trillion in consumer debt is up 49% from the prior peak at the cusp of the Financial Crisis in Q2 2008 (not adjusted for inflation). Over the same period, nominal GDP (not adjusted for inflation) is up 39% — thus continuing the time-honored trend of debt rising faster than nominal GDP.

But a hot economy is helping out: While over the past 12 months, consumer debt jumped by 4.9%, nominal GDP jumped by 5.5%. A similar phenomenon also occurred in Q2. This is rather rare. The last time nominal GDP outgrew consumer credit, and the only time since the Great Recession, was in the three quarters from Q1 through Q3 2015.

Auto loans and leases

Auto loans and leases for new and used vehicles in Q3 jumped by $41 billion from a year ago, or by 3.7%, to a record of $1.11 trillion. These loan balances are impacted mainly by these factors: prices of vehicles, mix of new and used, number of vehicles financed, the average loan-to-value ratio, and duration of loans originated in prior years.

The green line in the chart represents the old data before the adjustment in September 2017. These adjustments to consumer credit occur every five years, based on new Census survey data. Most of the adjustments affected auto-loan balances, reducing them by $38 billion retroactively to 2015.

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

The Fourth Turning & War of the Worlds

THE FOURTH TURNING & WAR OF THE WORLDS

Image result for fake news cnn Image result for illegal immigrant invasion

Image result for bomb hoax Image result for fourth turning war

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

The paragraph above captures everything that has happened, is happening, and will happen during this Fourth Turning. It was written over two decades ago, but no one can deny its accuracy regarding our present situation. The spark was a financial crash. The response to the financial crash by the financial and governmental entities, along with their Deep State co-conspirators who created the financial collapse due to their greed and malfeasance, led to the incomprehensible election of Donald Trump, as the deplorables in flyover country evoked revenge upon the corrupt establishment.

The chain reaction of unyielding responses by the left and the right accelerates at a breakneck pace, with absolutely no possibility of compromise. A new emergency or winner take all battle seems to be occurring on a weekly basis, with the mid-term elections as the likely trigger for the next phase of this Fourth Turning.

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

Where the Debt Slaves Are the Most Vulnerable

Where the Debt Slaves Are the Most Vulnerable

This type of chart is trotted out constantly these days to show that American households are in fabulous shape when it comes to their ability to service their blistering record debts. The red line in the chart shows household debt-service payments (combined monthly payments on mortgages, credit cards, auto loans, and student loans) as a percent of disposable (after-tax) income. Since 1980, the ratio has ranged from 9.9% to 13.2%. It hit that top in Q4 2007 just before it all came apart. Ten years later, it was at 10.3%. Hence the conclusion that households won’t have any trouble servicing their record debts. In a moment, we’ll get to the trap in this conclusion.

The chart above also shows separately the mortgage-debt-to-disposable-income ratio (brown line) and the non-housing consumer-debt-to-disposable-income ratio (blue line). Both combined make up the red line.

These debt-service ratios are a function mostly of three factors: The dollar amount of the debt; the interest rate on that debt; and the amount of disposable income. The logic is that rising disposable income supports rising indebtedness.

The large decline of the debt-service ratio from the peak of 13.2% in Q4 2007 to the all-time low in the data of 9.9% in Q4 2012 was caused by several factors:

  1. Consumers “deleveraged” mostly by shedding their debts via defaults and bankruptcies.
  2. Homeownership dropped to lows not seen since the 1960s. As households became renters, their mortgage debts were eliminated.
  3. Mortgage debt plunged by $1.2 trillion, or by 11.3%, from $10.6 trillion in 2007 to $9.4 trillion at the end of 2014. It has since risen to $10.1 trillion.

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

Global Debt Crisis II Cometh

Global Debt Crisis II Cometh

– Global debt ‘area of weakness’ and could ‘induce financial panic’ – King warns
– Global debt to GDP now 40 per cent higher than it was a decade ago – BIS warn
– Global non-financial corporate debt grew by 15% to 96% of GDP in the past six years

– US mortgage rates hit highest level since May 2014

– US student loans near $1.4 trillion, 40% expected to default in next 5 years
– UK consumer debt hit £200b, highest level in 30 years, 25% of households behind on repayments

The ducks are beginning to line up for yet another global debt crisis. US mortgage rates are hinting at another crash, student debt crises loom in both the US and UK, consumer and corporate debt is at record levels and global debt to GDP ratio is higher than it was during the financial crisis.

When you look at the figures you realise there is an air of inevitability of what is around the corner. If the last week has taught us anything, it is that markets are unprepared for the fallout that is destined to come after a decade of easy monetary policies.

Global debt is more than three times the size of the global economy, the highest it has ever been. This is primarily made up of three groups: non financial corporates, governments and households. Each similarly indebted as one another. Debt is something that has sadly run the world for a very long time, often without problems. But when that debt becomes excessive it is unmanageable. The terms change and repayments can no longer be met.

This sends financial markets into a spiral. The house of cards is collapsing and suddenly it is revealed that life isn’t so hunky-day after all. Rates are set to rise and as they do they will spark more financial shocks, as we have seen this week.

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

 

Consumer Debt Roulette: Debt Is Up $605 Billion BEFORE $682 Billion Is Spent on Christmas

Consumer Debt Roulette: Debt Is Up $605 Billion BEFORE $682 Billion Is Spent on Christmas

The last time American consumer debt was this high was.. well…NEVER. But now, it seems we are engaged in a high stakes game of consumer debt roulette. And the House is the only one who will win this game.

Last summer, it was reported that people owed more on loans, credit cards, and payment plans than ever in history. The country surpassed the spike that led to the crash of 2008 back in March when debt reached a mind-boggling $12.73 trillion in the first quarter of the year.

Here’s the breakdown, via ZeroHedge:

  • Total household indebtedness stood at $12.73 trillion as of March 31, 2017. This increase put overall household debt $50 billion above its previous peak set in the third quarter of 2008 and 14.1 percent above the trough set in the second quarter of 2013.
  • Mortgage balances, the largest component of household debt, reached $8.63 trillion as of March 31, a $147 billion uptick from the fourth quarter of 2016.
  • Balances on home equity lines of credit fell slightly in the first quarter, down $17 billion to $456 billion.
  • Non-housing debt saw mixed changes—an increase of $10 billion in auto loans and $34 billion in student loan balances, and a $15 billion drop in credit card balances.

And we have exceeded the terrible record even more. This year, the debt for American households has grown by 605 billion dollars. THIS YEAR.  That is on top of the insane numbers mentioned earlier.

And it’s causing serious issues.

From extended lines of cash-strapped consumers at New York food pantries to a rise in mental health problems, the latest New York quarterly Fed data paints a dire picture: US household debt has grown by $605 billion in the past 12 months, with $116 billion, or nearly 1 percent, hitting in the latest quarter. Debt is mushrooming everywhere — on mortgages, student loans, auto loans. Credit card debt, meanwhile, has jumped by 3.1 percent in the latest quarter. (source)

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

The Inconvenient Truth of Consumer Debt

The Inconvenient Truth of Consumer Debt

It’s acceptable to build infinitely high levels of household debt — as long as rates never rise.
Ready for a rainy day?Photographer: Anoek De Groot/AFP/Getty Images

Oh, but for the days the hawks had a hero in Sydney. Against the backdrop of a de facto currency war, the Reserve Bank of Australia stood as a steady pillar of strength. The RBA held the line on interest rates, maintaining a floor of 2.5 percent, even as its global central bank peers drove rates to the zero bound and beyond into negative territory.

The abrupt end to the commodities supercycle drove the RBA to join the global currency war. The mining-dependent nation’s economy was so debilitated that policy makers felt they had no choice but to ease financial conditions. In February 2015, after an 18-month honeymoon, the RBA reduced its official rate to 2.25 percent, marking the start of a cycle that ended last August with the fourth cut to a record low of 1.5 percent.

The Bank of Canada has taken a similar journey in recent years. It embarked upon a mild tightening campaign in 2010 that raised the overnight loan rate from a record low of 0.25 percent to 1 percent in September 2010. The bank maintained that level until early 2015. Two weeks before the RBA’s first cut, the Bank of Canada lowered rates to 0.75 percent. The January move, which shocked the markets, was followed in July 2015 with an additional ease to 0.5 percent, where it remains today.

Bank of Canada Governor Stephen Poloz, who replaced Mark Carney after he departed to head the Bank of England, explained the moves as necessary to counter the downside risks to inflation emanating from the oil price shock to the country’s economy.

Two resource-rich economies reacting similarly to body blows is intuitive enough. They eased the pressure on their given economies.

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

This is How Consumers Turn into Debt Slaves

This is How Consumers Turn into Debt Slaves

The Fed likes the word “credit.” Sounds less onerous than “debt.”

Consumer debt rose by $19.3 billion in September to $3.71 trillion, another record in a five-year series of records, the Federal Reserve’s Board of Governors reported on Monday. Consumer debt is up 6% from a year ago, at a time when wages are barely creeping up and when consumer spending rose only 2.4% over the same period.

This follows the elegant principle of borrowing ever more to produce smaller and smaller gains in spending and economic growth. Which is a highly sustainable economic model with enormous future potential, according to the Fed.

Consumer debt – the Fed uses “consumer credit,” which is the same thing but sounds a lot less onerous – includes student loans, auto loans, and revolving credit, such as credit cards and lines of credit. But it does not include mortgages. And that borrowing binge looks like this:

us-consumer-debt-total-ex-mortgages-2016-09

Diving into the components, so to speak: outstanding balances of new and used vehicle loans and leases jumped by $22.6 billion from Q2 to $1.098 trillion, another record in an uninterrupted four-year series of records.

Auto loans have soared 38% from Q3 2012, the time when they regained the glory levels of the Greenspan bubble before the Financial Crisis:

us-consumer-debt-auto-2016-09

Auto loan balances have soared because people bought more cars. New car sales hit an all-time record last year, though they’ve started to flatten out or decline in recent months. The balances have also been rising because loan terms are getting stretched, and because the balances on individual loans have been getting bigger as cars got more expensive and loan-to-value ratios rose:

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

Albertans have highest debt load in Canada, Equifax says

Albertans have highest debt load in Canada, Equifax says

Consumer debt delinquencies jump 25% in province, 17% in Calgary

Consumer debt in Alberta has jumped 17 per cent.

Consumer debt in Alberta has jumped 17 per cent. (Joe Raedle/Getty Images)

Albertans have the highest average debt load in the country at more than $27,000, says Equifax Canada.

A study released this morning says consumer debt delinquencies in the province jumped 25 per cent over the same quarter last year.

But the nationwide delinquency rate didn’t change, and Equifax Canada says rates remain at historic lows.

“Despite the ups and downs of today’s economy we’re seeing that Canadians are generally able to manage debt and rein in spending when they have to,” Regina Malina, the senior director of decision insights at Equifax Canada, said in a release.

“It may be a surprise to some, but the fact is delinquency rates in the oil-producing provinces are still relatively low. Most people are still finding a way to pay back what they owe.”

Average provincial debt (excluding mortgages)

  • Ontario: $21,072
  • Quebec: $18,070
  • Nova Scotia: $21,709
  • New Brunswick: $22,107
  • PEI: $21,483
  • Newfoundland: $22,766
  • Alberta: $27,576 25
  • Manitoba: $17,913
  • Saskatchewan: $23,941
  • British Columbia: $23,040
  • Canada: $21,458 

Average debt in Calgary is $28,421 excluding mortgages, while Edmonton’s average debt is $26,479 compared to average consumer debt nationwide of $21,458.

The only age category to experience an increase in delinquency rates in the last quarter of 2015 was the under-26 group. The rate for that category rose 2.9 per cent.

“Debt is often used as a tool for consumers to accomplish their objectives. However, as people get older, their income earning capabilities generally trend downward,” Equifax said in a release. “To increase their financial security, Canadians should develop a plan to pay off their debt within a set timeframe.”

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

Deranged Central Bankers Blowing Up the World

DERANGED CENTRAL BANKERS BLOWING UP THE WORLD

It is now self-evident to any sentient being (excludes CNBC shills, Wall Street shyster economists, and Keynesian loving politicians) the mountainous level of unpayable global debt is about to crash down like an avalanche upon hundreds of millions of willfully ignorant citizens who trusted their politician leaders and the central bankers who created the debt out of thin air. McKinsey produced a report last year showing the world had added $57 trillion of debt between 2008 and the 2nd quarter of 2014, with global debt to GDP reaching 286%.

The global economy has only deteriorated since mid-2014, with politicians and central bankers accelerating the issuance of debt. These deranged psychopaths have added in excess of $70 trillion of debt in the last eight years, a 50% increase. With $142 trillion of global debt enough to collapse the global economy in 2008, only a lunatic would implement a “solution” that increased global debt to $212 trillion over the next seven years thinking that would solve a problem created by too much debt.

The truth is, these central bankers and captured politicians knew this massive issuance of more unpayable debt wouldn’t solve anything. Their goal was to keep the global economy afloat so their banker owners and corporate masters would not have to accept the consequences of their criminal actions and could keep their pillaging of global wealth going unabated.

The issuance of debt and easy money policies of the Fed and their foreign central banker co-conspirators functioned to drive equity prices to all-time highs in 2015, but the debt issuance and money printing needs to increase exponentially in order keep stock markets rising. Once the QE spigot was shut off markets have flattened and are now falling hard. You can sense the desperation among the financial elite. The desperation is borne out by the frantic reckless measures taken by central bankers and politicians since 2008.

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

This Is Another “Subprime” Waiting to Blow

This Is Another “Subprime” Waiting to Blow

Dow down 239 points yesterday – or 1.5% – after Japan posted its biggest one-day gain in seven years. This is getting interesting again. If it is just “volatility,” as Wall Street’s shills in the press maintain, it will probably pass soon. Everything will be okay. Back to routine imbecility before the end of the month.

But if these whipsaw movements are heralding a bear market, U.S. stock prices could be cut in half… or more. And they may not recover for 10 to 20 years. (Catch up on the details of our bear market forecast here.)

Bull or Bear?

Which is it? Bull or Bear? No one knows, of course. But it looks to us as though the whole shebang is getting ready to collapse. So far, the correction has trimmed $12.5 trillion off the value of global stock markets. There are a few reasons for stocks to go back up… and many reasons why they might want to go down further.

The 2008 global financial crisis was centered on mortgage debt. There was too much of it that couldn’t be repaid. When the value of the collateral – homes – headed down, the bubble popped.

Today, consumers have about the same amount of debt. But now the excesses are in auto loans and student debt. As you can see below, total auto loans stood at about $781 billion in 2007. Today, they’ve topped $1 trillion. And student loans have more than doubled over that time to $1.3 trillion.

091015 DRE Student and Auto Loan Debt Chart

Again, the collateral is falling in value. Used-car prices fall, as leases expire and more used cars hit the market. As for student debt, the “collateral” is the earning power of the person who borrowed the money.

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

 

“There Are Big, Big Problems” – The Shocker Crushing The Economy Revealed

“There Are Big, Big Problems” – The Shocker Crushing The Economy Revealed

We are grateful to Alexander Giryavets at Dynamika Capital for pointing us to something which is far more troubling than even the Atlanta Fed’s collapse in Q1 GDP tracking: namely the latest Credit Managers Index for the month of March which “deteriorated significantly over the last two months and current readings stand at the recessionary levels not seen since 2008.”

To be sure, we have previously shown the collapse in consumer debt as reported by the Fed, which as we noted, just suffered its worst month for revolving credit since December 2010 and explains “why the consumer has literally gone into hibernation – it has nothing to do with the weather, and everything to do with the unwillingness to “charge” purchases, which in turn is a clear glimpse into how the US consumer sees their financial and economic future.”

 

It turns out it may not have been just a matter of demand: apparently something very dramatic has been happening in February and especially in March. Instead of spoiling the punchline, we will leave it to the National Association of Credit Managers to explain what happened:

From the latest NACM Credit Managers Index:

 

We now know that the readings of last month were not a fluke or some temporary aberration that could be marked off as something related to the weather. There is quite obviously some serious financial stress manifesting in the data and this does not bode well for the growth of the economy going forward. These readings are as low as they have been since the recession started and to see everything start to get back on track would take a substantial reversal at this stage. The data from the CMI is not the only place where this distress is showing up, but thus far, it may be the most profound.

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

 

 

‘Welcome Signs Of Cooling’ In Canada’s Overvalued Housing Markets: IMF

‘Welcome Signs Of Cooling’ In Canada’s Overvalued Housing Markets: IMF

Canada’s housing markets will cool this year, leading to a more “balanced” economy — one that is not as dependent on growing consumer debt, the International Monetary Fund says.

In a report released Friday, the IMF estimated house prices are overvalued by 7 to 20 per cent, with “significant regional differences” in the amount of overvaluation.

That’s a somewhat lower estimate than the Bank of Canada, which recently estimated house prices to be as much as 30 per cent overvalued in some markets.

“Canada’s housing market rebounded in 2014, fueled by low and declining interest rates, although there are some welcome signs of cooling especially in overheated markets,” the IMF report stated.

“Welcome” because the IMF sees risk to Canada in growing household debt. The organization is worried that the country’s economy continues to rely too heavily on consumer debt, and that the kind of debt Canadians are taking on is riskier than it used to be.

 

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

 

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