Sunday, June 16, 2019

US Yield-Curve Looks Hell-Bent on Inverting, “Flattest” Since Aug 2007

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by Wolf Richter, Wolf Street:

How does it compare to German, Japanese, and Chinese yield curves?

On Friday, the US Treasury 2-year yield rose to 2.63% and the 10-year yield remained at 2.82%. This squeezed the spread between them to just 19 basis points, the lowest since August 2007.

This is a further step in the “flattening yield curve,” where short-term yields and long-term yields move closer together. Unless the 10-year yield gets on the rate-hike bandwagon and jumps, it might soon be lower than the 2-year yield – a condition called yield-curve “inversion.” This happens as shorter-term yields rise following the Fed’s rate hikes but long-term yields refuse to budge. The way it looks, it is hell-bent on doing just that:

STOCK INVESTORS, LIKE ALFRED, TO LOSE 98% OF THEIR INVESTMENT

by Egon Von Greyerz, Gold Switzerland:

Imagine a casino full of slot machines that all guarantee a constant high return. All you need to do is to put in a bit of money and you will get an incredible income stream for life.

Well, this is exactly what the stock market is, namely a remarkable slot machine with a continuous flow of guaranteed payouts. No skill is required, and relatively little money. And the wonderful thing is that you don’t even need to be lucky since the machine just continues to spew out money without the need for either a strategy or dexterity.

High Inflation, High Taxes, High Cost of Living, High Migration – Nathan McDonald (25/04/2019)

by Nathan McDonald, Sprott Money:

A trend has been developing for years, one that sees people fleeing the large, vast cities of the world for “greener” pastures, both literally and figuratively.

This trend has been building on itself and will continue to do so until we reach a point of stabilization, a point in which the system once again balances itself.

The trend I speak of is the vast migration of people both young and old leaving their high-rise towers and moving to smaller, rural towns and cities.

The reasons for this are many. However, first and foremost, as with anything else in life, it comes down to money.

Shale Oil Keeps Growing on Trees

by Steve St. Angelo, SRSRocco Report:

The United States Geological Society (USGS) today released a report stating there is an estimated 46.3 billion barrels of theoretical, technically recoverable, as yet undiscovered light tight oil reserves in the Wolfcamp, Bone Springs and Avalon shaley carbonate formations in the Delaware Basin of West Texas. Shale oil, it seems, keeps growing on trees.

NOTE:  Article written by Mike Shellman on Dec 6th at the OilyStuffblog.com

Crypto Crash/Exchange Fraud…Only ONE Solution! (Bix Weir)

from RoadtoRoota:

https://www.youtube.com/watch?v=JHg68mo4DK4

MOVE IN COMMODITIES, DOLLAR, INTEREST RATES – ROAD TO HYPERINFLATION

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by Egon von Greyerz, Gold Switzerland:

2018 is starting right on cue. Inflationary pressures have been latent for quite some time but have recently shown the world what is to come in the next few years.

How could anyone believe the propaganda that there is no inflation. It has of course suited the market manipulators. But the fake wizardry of the central bankers is now about to be revealed. Since the early 1980s the interest rate cycle were in a strong down trend. When the financial crisis started in 2007, central banks panicked and rates were rapidly lowered around the globe.

US short term rates went from 5% in 2007 to zero in 2008 and stayed at that level until late 2015. In many countries rates were lowered to negative like in Japan, the Euro area, Switzerland, Sweden etc. Low or negative interest rates defy all economic principles and distort the equilibrium of a normal market economy. They discourage savings and without savings there can be no sound investments. Instead, investments have been made with printed or borrowed money. Due to the low cost of money many high risk projects have been undertaken.

Low or negative interest rates also lead to irresponsible deficit spending by governments. This is why global debt has gone from $120 trillion in 2006 to $240 trillion today.

Explosion in money supply will lead to inflation explosion

Normally this explosion of money would have created very high inflation or hyperinflation. But since virtually none of the fabricated money went to the normal economy, published inflation has been non-existent. Anyone buying food, or paying bills of course knows that official inflation is a fiction of governments’ imagination. And although the official figures show no inflation, there has been an explosion in asset prices. Stocks, bonds and property have all soared. US stock markets for example are up 4 times since 2009.

These assets bubbles do not benefit normal people. They take away valuable investment into the real economy to the benefit of the top 1-5%. This is a very dangerous trend that eventually will lead to social unrest or revolution.

But we have now reached a stage when the explosion in money supply will have a major influence on the real economy. The inevitable consequences of the totally irresponsible mismanagement of the economy that I have been forecasting for quite some time are now starting to take effect.

WATCH COMMODITY PRICES, INTEREST RATES AND THE DOLLAR

The most critical areas to watch are commodity inflation, interest rates and the dollar. These three markets are now giving clear signs of the coming inflation and subsequent hyperinflation.

If we start with inflation, official statistics are useless as I mentioned above since these figures are totally manipulated. A very good indicator of inflation are commodities. Below is a chart of the GS commodity index versus the S&P since 1971. That ratio is at an all time low and below the 1971 and 1999 lows. This cycle is now turning and the ratio is likely to go well above the 1974, 1990 and 2008 highs. Thus the minimum target is 10 which is a 10-fold increase from here. This means that stocks will fall at least 90% against commodities. Since the precious metals will be the main beneficiaries of the commodity boom, stocks are likely to fall at least 95% agains gold and silver.

COMMODITIES VS STOCKS

Looking at a short term chart of commodities, the CRB index bottomed in Feb 2016 and is up 30% since then. Since June 2017 the CRB is up 20% and since mid Dec 2017 it is up 8%. This is a clear indication that inflation is now going up fast.

Read More @ GoldSwitzerland.com

Brace for Impact: Global Financial Crisis May be Just Around the Corner

by Jean Perier, New Eastern Outlook:

The cyclical nature of the world economy, when every single decade ends in a major meltdown of the world financial results in a number of experts predicting a global crisis to take place in 2019.

Everyone remembers the crisis of 2008, from which the West hasn’t fully recovered as production levels across the Western states still remain below the level shown in 2007. For the point of view of an impartial bystander, it’s rather hard not to point out that most countries would be borrowing cheap money at breathtaking rates in a bid to stimulate consumer spending. The problem of a wealthy lifestyle some still enjoy these days on borrowed funds is that it doesn’t solve any issues, it just delays the inevitable. In the end, all the printed money will flow back down to the stock market and the bubble starts to deflate. And where do we go from here? The only thing the West is still producing these days are shale hydrocarbons and even those are hardly profitable.

THE PARTY IS OVER

by Egon Von Greyerz, Gold Switzerland:

“What a difference a day makes”! Well we didn’t get the sun and the flowers like in Dinah Washington’s song but more like storm and showers. For the ones who don’t remember Dinah, Amy Winehouse made a more recent version of the song. Last week I warned investors again, in the strongest tone possible, of the risks in markets. So what triggered it? Was it the Fed’s interest rise? Or was it the trade war with China? Or maybe it was Kavanaugh?

We mustn’t believe that we can predict the exact time something will happen. Nor do we know what will cause a turn in markets. But what we have known for quite some time is that markets have been extremely vulnerable to a turn.

BANKERS CALL FOR GLOBAL CURRENCY AS THEY STACK GOLD BARS

from SGT Report:

Greenspan says the US economy is about to fail under the weight of unfunded entitlements, meanwhile central bankers stack gold bars and their minions call for a global currency. Lynette Zang joins me to discuss.

The Fed Broadsides $1.3-Trillion “Leveraged Loan” Market

by Wolf Richter, Wolf Street:

PE firms are all over this, but investors are still chasing yield.

Since the Federal Reserve started warning about the risks of “leveraged loans” in 2014, the amount of US leveraged loans outstanding has surged with delicious irony from $700 billion to $1.3 trillion. These things are hot. And now the Fed is even more worried.

The latest warning came from Todd Vermilyea, who leads the Risk, Surveillance, and Data sections at the Fed Board of Governors’ Division of Banking Supervision and Regulation. His responsibilities include, as he says, the Shared National Credit program, “a key interagency program that reviews and assesses risk in the largest and most complex credits shared by multiple financial institutions.”