REVEALED: When Recession Starts

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Today we reveal the time frame of the next recession — to within three months.

The surprising details anon. But first to a far more immediate catastrophe…

We are informed the partial government “shutdown” has entered a record-extending 25th day.

It is information we must take on faith, and at second hand.

That is because we have suffered not the slightest disruption to our affairs… nor has anyone within our orbit.

We would prolong the calamity until the very last cow reports to the butcher… or the first honest politician reports to Washington.

That is, we would prolong the calamity permanently.

But those more publicly minded insist we are mistaken.

They claim the shutdown is already casting a shadow, broad and heavy, over the United States economy.

Over 800,000 federal employees have been thrown from the public payrolls, they argue.

Data technology company Enigma estimates the shutdown has “blown a nearly $5 billion hole in federal workers’ finances.”

And the economy is deprived of their labor’s fruit.

Private contractors who guzzle from the federal trough are likewise going thirsty.

In turn, so are merchants downstream of the central catastrophe.

Moody’s chief economist Mark Zandi says the shutdown will drain 0.5% from first-quarter GDP:

We estimate (the shutdown) will reduce first-quarter real GDP growth by approximately 0.5 percentage points. Of this, about half will be due to the lost hours of government workers, and the other half to the hit to the rest of the economy.

But we would remind the calamity-howlers:

All furloughed federal employees will be issued full back wages once the “shutdown” ends.

And all water drained from first-quarter GDP will go back in the tub.

Meantime, the paid vacationers can snooze deep into the day, laze before the television, munch popcorn… secure in the knowledge that all back pay is due them.

But to return to the question under consideration… the time frame of the next recession.

Global growth is coming to a crawl.

Chinese exports have plunged to two-year lows. December imports also dropped 7.6% — a portent of softening domestic demand.

Meantime, European factory output wallows at three-year lows.

If we use global industrial growth as a proxy for global economic health, Zero Hedge reminds us, the world has almost certainly sunk into recession.

The United States economic machine still runs forward. But at a reducing rate.

Morgan Stanley, for example, projects U.S. growth will slip to 1% by 2019’s third quarter.

All the while, growth of global central bank balance sheets went negative last August.

Bank of America reports global money growth (measured by M1 money supply) nears its lowest point since mid-2008.

And Morgan Stanley confirms that each time M1 money supply growth tips negative — as it presently is — trouble of some type is on tap:


So is recession dead ahead… like an iceberg in the North Atlantic night?

Here our tale gathers pace…

The Federal Reserve has essentially announced a halt to its rate hikes.

A March hike has already been removed from the card table. Later hikes are also in question.

But will it be enough to sustain the show?

Once a global slowdown becomes obvious even to the Federal Reserve, it may be forced to take one additional step… and actually cut rates again.

That will be the point we suspect recession is close.

But is it not common knowledge that Federal Reserve tightening precedes a recession — not loosening?

Yes, but monetary policy features a delayed fuse.

Previous tightening will have already worked its damage. By the time it is appreciated, it is time again to back off.

The Fed begins cutting rates. But it is too late.

Let the record show:

The past three recessions followed within 90 days of the first rate cut that ended a hike cycle.

Explains Zero Hedge.

While many analysts will caution that it is the Fed’s rate hikes that ultimately catalyze the next recession and every Fed tightening ends with a financial “event,” the truth is that there is one step missing from this analysis, and it may come as a surprise to many that the last three recessions all took place [within] three months of the first rate cut after a hiking cycle!

Does the rate cut itself frighten the horses… and turn a slowdown into a rout?

One can argue that it was the Fed’s official admission of economic weakness — by cutting rates — that triggered the economic contraction that was gathering pace as a result of [previous]higher rates and tighter financial conditions.

Once again — if the past three recessions are true indicators:

The next recession will commence within three months of the next rate cut.

The supreme irony:

Wall Street will consider the rate cut a beautiful omen for the stock market…


Brian Maher
Managing editor, The Daily Reckoning

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EXPOSED: the “Green” New Deal

This post EXPOSED: the “Green” New Deal appeared first on Daily Reckoning.

We took command of The Daily Reckoning fully aware of the bodily risk, reduced here to words by our co-founder Bill Bonner:

In our trade as newsletter publishers, hardly a day passes without a good laugh. Our only occupational hazard is a rupture of the midriff.

Each day tosses up a fresh roster of fools, scoundrels, frauds, knaves, rogues, ne’er-do-wells, world improvers, lunatics and pitchmen.

Sometimes — though rarely — they combine in the form of a single person.

The trouble with them all is that they are vastly amusing. Hence the constant threat of an abdominal tear.

Sunday night the odds caught up with us… our belly was ripped from its moorings…

For there she was on 60 Minutes, the latest political sensation, Alexandria Ocasio-Cortez — AOC from here forward.

A former waitress, AOC was serving food 1.5 years ago. As the newly installed representative of New York’s 14th Congressional District, today she is serving notice…

Notice that a New Deal is in prospect — a “Green” New Deal…

That every American is to be guaranteed productive employment…

That Medicare for all will cure the nation’s ailments…

That free college is as elemental a right as life itself…

And that the ultra-rich will pay all the freight.

AOC’s solution is a 70% tax on all income exceeding $10 million per year.

“There’s an element where, yeah, people are going to have to start paying their fair share in taxes,” said she in the Queen’s English.

We have no objection to a man paying his fair share.

But what is fair? And who decides?

“Render unto Caesar what is Caesar’s,” said Jesus our Lord.

But He never specified precisely what was Caesar’s.

Was it 5%… 20%… 60%… 99%?

For the United States government, the answer was 7% when the income tax went upon the law books in 1913.

This was the top combined tax rate for those earning $500,000 or more.

Incidentally… $500,000 in 1913 dollars equals $12,729,191.92 in 2019 dollars.

But America is a much fairer society today.

It is such a shame the AOC plan will never make it ashore.

It is fatally holed below the waterline… like the Titanic by its iceberg.

Any third-rater can see there aren’t enough super-rich to fleece.

Our agents inform us some 16,000 Americans earn over $10 million per annum — at least as of 2016.

What is the tax haul once the 70% rate kicks in?

According to Mark Mazur, former Treasury Department official now laboring for the Tax Policy Center — some $72 billion annually when all factors are considered.

But how will a slight $72 billion bump substantially fund a Green New Deal… jobs for all… universal Medicare… free college tuition?

And that is assuming the rich sit still, waiting for the tax man to seize them by the collar.

But the rich are moving targets

They tuck into loopholes within the tax code. They dodge into overseas tax shelters. They hide under shell companies.

Who knows how much money the tax would haul aboard once the accountants are done with it?

And as anyone who has looked at it honestly knows — the great broad middle class is where the real tax money is.

As famous bank robber Willie Sutton supposedly answered when asked why he robbed banks:

“That’s where the money is.”

But the fact is best not mentioned in polite company… or at campaign rallies.

Ah, but the great and the good have leapt to AOC’s defense, including Paul Krugman — winner of the Nobel Memorial Prize in Economic Sciences:

Peter Diamond… in work with Emmanuel Saez — one of our leading experts on inequality — estimated the optimal top tax rate to be 73%. Some put it higher: Christina Romer, top macroeconomist and former head of President Obama’s Council of Economic Advisers, estimates it at more than 80%.

But how would they know?

Have any of them ever earned over $10 million per year?

If they did… might they think of better things to do with their millions than hand them off in taxes?

But our enthusiasts will counter that the top tax rate exceeded 90% during the 1950s — when Eisenhower’s America bestrode the world like an economic Colossus.

It was obviously to no detriment whatsoever, they say. To the contrary in fact.

Yes, but misguided roosters claim credit for the dawn…

We might remind the 70%-90% crowd that the United States industrial machine was unscratched by WWII.

Meantime, much of the industrial world remained under rubble in the 1950s.

Thus America stole a lovely march on the competition. How could it be other than first?

The 8th Air Force likely explains the business far better than any tax on America’s rich.

And American economic kingship gradually yielded as Europe and Japan rebuilt the factories.

But to return to our budding young democratic socialist…

Sunday night AOC pounded her tom-toms for a “Green New Deal.”

Its objectives include “eliminating greenhouse gas emissions from the manufacturing, agricultural and other industries” and “meeting 100% of national power demand through renewable sources.”

But if you think its purpose is to simply lower a global fever, you are far off the facts.


The Plan for a Green New Deal shall recognize that a national, industrial, economic mobilization of this scope and scale is a historic opportunity to virtually eliminate poverty in the United States and to make prosperity, wealth and economic security available to everyone participating in the transformation.

Was any Soviet five-year plan one fraction so ambitious?

The communists could never get a handle on their own steel, iron and rubber.

But AOC and her fellows would command Nature herself… and dictate her temperature across all four corners of Earth.

And eliminate poverty into the bargain!

This much is certain:

It would be a “green” New Deal in one sense:

Loads of green would fall into the pockets of the clean energy industry.

It cannot go on its own without massive taxpayer subsidies.

Thus the corporations AOC normally thunders against would get their buckets in the stream, their snouts in the trough… and their hands in taxpayer pockets.

There is a term for it: crony capitalism. Endorsed, no less, by a socialist.

Let it never be said that politics lacks ironies.

If you happen to believe the plan is radical, you are in excellent company. AOC herself:

“If that’s what radical means, call me a radical”

We have nothing against radicals. In fact, we much esteem them.

They are far more interesting to listen to than members of the rotary club… or dentists… or presidents of banks.

Those who actually believe the absurdities issuing from their own mouths take on additional fascination.

We suspect AOC is pleasant enough off duty.

In her personal life she may be amiable, engaging and — like most people — reasonably sane.

But put her in power, put a nightstick in her hand… and you have unleashed a public menace.

She becomes the humanitarian with the guillotine.

As the great Mencken styled it:

“The urge to save humanity is almost always a false front for the urge to rule it.”

A nation can survive its fools, argued writer Taylor Caldwell — but not its traitors.

But we begin to suspect it’s the other way around…

The fools are far more common. And much more likely to succeed.

But what spectacle it all provides, what theater, what circus. And we enjoy a front-row seat to the entire show.

We would not give it up for all the perfume of Arabia.

A man in our seat is truly a man enthroned…

Despite the occupational hazard of a ruptured midriff…


Brian Maher
Managing editor, The Daily Reckoning

The post EXPOSED: the “Green” New Deal appeared first on Daily Reckoning.

Are Stocks Cheap Again?

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Are stocks “cheap” again?

Is it time once again to cast your bread upon the waters… and buy?

Today we rise above the daily hurly-burly of the market… take the long view… and ransack the past for clues about the future.

The major averages were negative for 2018. And the stock market has just emerged from its bleakest December since 1931.

But the market has found a toehold, bleats the consensus. The way ahead is higher. It is time to hunt bargains.

There is doubtless justice here — in specific cases and in the short run at least.

But are stocks cheap overall? And what can you expect for the next 10 years?

In general terms…

If stocks are cheap today, you can expect — generally, again — lovely returns for the following decade.

The reverse obtains if stocks are expensive today.

So once again: Are stocks presently cheap? Is it time to buy?

Warren Buffett’s preferred metric is the TMC/GNP ratio.

That is, the ratio of total market cap to U.S. GNP (which approximates but does not equal GDP).

If the total valuation of the stock market is less than GNP, stocks are cheap.

If it is greater than GNP… stocks are dear.

Mr. Buffett claims this formula is “probably the best single measure of where valuations stand at any given moment.”

Any ratio below 50% means stocks are “significantly undervalued.”

A ratio above 115% means they’re “significantly overvalued.”

Stretching four decades, the TMC/GNP ratio was lowest in 1982 — at 35%.

Not coincidentally, 1982 marked the onset of the lengthiest bull market of all time.

In violent contrast, the TMC/GNP ratio was highest in 2000, at 148%.

The dot-com catastrophe was close behind.

What is the TMC/GNP ratio today, Jan. 9, 2019?


That is, despite the worst December since 1931… by this measure stocks remain “significantly overvalued.”


What does that 127.5% imply for the stock market over the next decade, based on the historical record?

Negative 0.5% returns per year, including dividends.

You can expect negative returns for the next decade — if you take this TMC/GNP ratio as your guide.

Is it an infallible prophet?

It is not. None exists this side of eternity.

But financial journalist Mark Hulbert tracks eight market indicators he deems most credible. And he ranks it among the better of them.

But could negative 0.5% returns per year for the next decade — including dividends — actually be optimistic?

John Hussman captains a hedge fund, Hussman Strategic Advisors by name.

Mr. Hussman is what is known as a “perma-bear.”

Yet his crystal ball occasionally yields frightfully accurate pictures.

For example:

In March 2000 he soothsaid tech stocks would soon plummet 83%. How much did the Nasdaq lose between 2000 and 2002?


He also forecast in March 2000 that the S&P would post negative returns the following decade. It did.

In April 2007 Hussman said the S&P could plunge 40%. His vision was only off slightly. The S&P lost 55% from 2007–09.

And what does Hussman’s crystalline sphere reveal for the decade ahead?

First another question…

Assume you bought the S&P in 1999. You have held ever since — over hill, over dale, through every peak, every valley.

Keep in mind the S&P has raged some 300% since bottoming in 2009.

What has been your average yearly gain since 1999?

4.8% — again, dividends included.

A gain, yes.

But boring old gold would have yielded you a superior return since 1999… incidentally.

Perhaps “buy and hold” should read “buy and hope.”

But to return to the question at hand…

What can you expect for the next 10 years based on current stock market valuations?


At the March 2000 bubble peak, an understanding of market history… enabled my seemingly preposterous but accurate estimate that large-cap technology stocks faced potential losses of approximately 83% over the completion of the market cycle…

At the 2007 market peak, by contrast, stocks were generally overvalued enough to indicate prospective losses of about 55%…

And this market cycle?

In our view (supported by a century of market cycles across history), investors are vastly underestimating the prospects for market losses over the completion of this cycle… We presently estimate median losses of about 63% in S&P 500 component stocks over the completion of the current market cycle.

Kind heaven, no — a negative 63% return!

Take this vision with a heaping spoon of table salt… as you should with any forecast.

And the further out the reading the heavier the dose.

But if a hangover exists in direct proportion to the binge that caused it… investors may be laid up for the next decade.



Brian Maher
Managing editor, The Daily Reckoning

The post Are Stocks Cheap Again? appeared first on Daily Reckoning.

Here’s Where the Next Crisis Starts

This post Here’s Where the Next Crisis Starts appeared first on Daily Reckoning.

The case for a pending financial collapse is well grounded. Financial crises occur on a regular basis including 1987, 1994, 1998, 2000, 2007-08. That averages out to about once every five years for the past thirty years. There has not been a financial crisis for ten years so the world is overdue. It’s also the case that each crisis is bigger than the one before and requires more intervention by the central banks.

The reason has to do with the system scale. In complex dynamic systems such as capital markets, risk is an exponential function of system scale. Increasing market scale correlates with exponentially larger market collapses.

This means a market panic far larger than the Panic of 2008.

Today, systemic risk is more dangerous than ever because the entire system is larger than before. Due to central bank intervention, total global debt has increased by about $150 trillion over the past 15 years. Too-big-to-fail banks are bigger than ever, have a larger percentage of the total assets of the banking system and have much larger derivatives books.

Each credit and liquidity crisis starts out differently and ends up the same. Each crisis begins with distress in a particular overborrowed sector and then spreads from sector to sector until the whole world is screaming, “I want my money back!”

First, one asset class has a surprise drop. The leveraged investors sell the sinking asset, but soon the asset is unwanted by anyone. Margin calls roll in. Investors then sell good assets to raise cash to meet the margin calls. This spreads the panic to banks and dealers who were not originally involved with the weak asset.

Soon the contagion spreads to all banks and assets, as everyone wants their money back all at once. Banks begin to fail, panic spreads and finally central banks step in to separate winners and losers and re-liquefy the system for the benefit of the winners.

Typically, small investors (and some bankrupt banks) get hurt the worst while the big banks get bailed out and live to fight another day.

That much panics have in common. What varies in financial panics is not how they end but how they begin. The 1987 crash started with computerized trading. The 1994 panic began in Mexico. The 1997–98 panic started in Asian emerging markets but soon spread to Russia and the big banks. The 2000 crash began with dot-coms. The 2008 panic was triggered by defaults in subprime mortgages.

The problem is that regulators are like generals fighting the last war. In 2008, the global financial crisis started in the U.S. mortgage market and spread quickly to the overleveraged banking sector.

Since then, mortgage lending standards have been tightened considerably and bank capital requirements have been raised steeply. Banks and mortgage lenders may be safer today, but the system is not. Risk has simply shifted.

What will trigger the next panic?

Prominent economist Carmen Reinhart says the place to watch is U.S. high-yield debt, aka “junk bonds.”

I’ve also raised the same argument. We’re facing a devastating wave of junk bond defaults. The next financial collapse will quite possibly come from junk bonds.

Let’s unpack this…

Since the great financial crisis, extremely low interest rates allowed the total number of highly speculative corporate bonds, or “junk bonds,” to rise about 60% — a record high. Many businesses became extremely leveraged as a result. Estimates put the total amount of junk bonds outstanding at about $3.7 trillion.

The danger is that when the next downturn comes, many corporations will be unable to service their debt. Defaults will spread throughout the system like a deadly contagion, and the damage will be enormous.

This is from a report by Mariarosa Verde, Moody’s senior credit officer:

This extended period of benign credit conditions has helped many weak, highly leveraged companies to avoid default… A number of very weak issuers are living on borrowed time while benign conditions last… These companies are poised to default when credit conditions eventually become more difficult… The record number of highly leveraged companies has set the stage for a particularly large wave of defaults when the next period of broad economic stress eventually arrives.

If default rates are only 10% — a conservative assumption — this corporate debt fiasco will be at least six times larger than the subprime losses in 2007-08.

Many investors will be caught completely unprepared. Once the tsunami hits, no one will be spared. The stock market is going to collapse in the face of rising credit losses and tightening credit conditions.

But corporate debt is not the only dagger hanging over the economy. Credit conditions have already begun to affect the real economy. Student loan losses are also skyrocketing. Losses are also soaring on subprime auto loans, which has put a lid on new car sales. As these losses ripple through the economy, mortgages and credit cards will be the next to feel the pinch.

Have we already seen the beginning of the next crisis? No one knows for sure, but the time to prepare is now. Once the market falls apart, it’ll be too late to act.

That’s why the time to buy gold is now, while it’s cheap. When you need it most, once the crisis hits, it’ll cost a fortune.

Both the panics of 1998 and 2008 began over a year before they reached the level of an acute global liquidity crisis.

Investors has ample time to reduce risky positions, increase cash and gold allocations and move to the sidelines until the crisis abated. At that point there were bargains galore for those with cash.

An investor with cash in 2008 could have preserved wealth during the crisis and nearly quadrupled his money since then by buying the Dow Jones index at 6,550 (even with the recent turmoil, today it’s still around 23,600).

Relatively few investors did this. Instead they suffered from “fear of missing out” as markets rose until the panic began. They persisted in the mistaken belief that they could “get out in time” if markets reversed, not realizing that reversals happen much faster than rallies. They held onto losing positions hoping they would “come back” (they did after 10 years) and so on.

Simple behavioral biases stand in the way of doing the right thing almost every time.

For now, it’s not clear which way things will break next. Volatility is back and markets are still in a precarious position. Fed chairman Jay Powell threw markets a bone last Friday when he basically said all rate hikes are off until further notice and that he’s willing to scale back QT “if needed.” Markets have naturally rallied since Powell’s remarks.

If you still need proof that today’s rigged markets still require support from the Fed, here it is. But it’s far from clear the next crisis can be avoided at this point.

You don’t want to be heavily exposed to these markets. It’s far better to get out too early than too late. You should not be the last to be get ready. Start now to decrease equity allocations and increase your allocations to cash and gold so you can weather the coming storm.

Preparation means 10% percent of your investible assets in gold or silver and another 30% in cash. That allocation will preserve wealth and provide dry powder for bottom-fishing in the crisis to come.


Jim Rickards
for The Daily Reckoning

The post Here’s Where the Next Crisis Starts appeared first on Daily Reckoning.

The Origin of the Next Financial Crisis

This post The Origin of the Next Financial Crisis appeared first on Daily Reckoning.

Today, additional evidence that recession — or worse — is in sight.

But first, it appears the “Powell put” may extend the countdown clock…

Since Jerome Powell’s dovish comments on Friday, the Dow Jones has been up and away… as an addict thrills to the promise of additional stimulant.

It leaped another 256 points today.

Both S&P and Nasdaq have been similarly seduced.

The S&P ended the day up another 24 points; the Nasdaq, 73.

Thus Mr. Powell becomes the latest dealer to backstop Wall Street’s addiction to easy credit.

First came the “Greenspan put” after October 1987’s Black Monday.

The “Bernanke put” was on tap after 2008 — and was it ever.

This was of course succeeded by the “Yellen put.”

And now… Jerome Powell.

But the stuff at Powell’s disposal is far weaker his predecessors’.

The fed funds rate rose as high as 4.75% in September 2007 — as the foundations gave way on the housing market.

But it squatted at 1.50% when Powell came on station last February.

That is, he has far less space to cut rates.

Meantime, Bernanke and Yellen were able to inflate the balance sheet from a pre-crisis $800 billion to a delirious $4.5 trillion.

Powell could not possibly work an operation on that scale.

This at least partly explains why he has been withdrawing the narcotic since he came aboard — to rebuild his stocks for future use.

But Mr. Powell suggested last Friday that he is willing to call a halt “if needed.”

And so Pavlov’s dogs began drooling. And the stock market began its merry run.

But it is a false promise — as the promise of the needle is false — or the promise of the bottle.

It may put off reckoning day… but it only intensifies the ultimate and inevitable withdrawal.

Come we now to our evidence that recession is within view…

We have argued previously that sub-4% unemployment means recession is almost invariably close by.

Today we observe that recession is also close when corporate debt attains present heights.

U.S. corporate debt swelled a preposterous $2.5 trillion post-financial crisis… some 40% higher than its 2008 summit.

Corporate debt presently equals some 46% of GDP — the highest percentage on record.

And whenever corporate debt rises to present levels, recession is in the air… at least for the past 40-odd years:

Corporate Debt Far Into Red Zone

But whom shall we blame?

As is our wont, we point an accusing finger at the Federal Reserve…

Year upon year of ultra-low interest rates hammered borrowing costs lower and lower.

Marginal corporations that would have been denied access to credit under normal circumstances took on debt.

And many corporations have issued bonds to raise funds rather than issue stock. It has proved less expensive given the bargain rates.

Did corporations use the borrowed money to increase productivity… increase research and development… or expand operations?

No, not particularly.

Many corporations have been using the money to purchase their own stock, which has artificially inflated their prices.

And as we have stated before, corporations have been the largest source of all stock purchases.

But interest rates have been climbing… like water in a flooding basement.

And the cost of existing debt is rising with it.

How will they meet their debts?

Bonds rated “BB” are considered “junk bonds.”

“BBB” is one level removed from junk.

MarketWatch informs us that the volume of the bond market rated BBB currently rises to $2.5 trillion — a record high.

That is, 50% percent of all investment-grade corporate bonds are presently one inch from junk status.

And once they start going over… watch out.

Explains Daily Reckoning associate John Mauldin:

This is the sort of thing that can quickly snowball into a financial crisis. Something similar happened with commercial paper in 2008, but this has the potential to be even worse… and, if it happens, could come at a time when the Federal Reserve and Treasury can’t help much. I see serious risk of a corporate bond crisis in 2019…

Analyst Jesse Colombo is similarly alarmed:

The U.S. corporate debt bubble will likely burst due to tightening monetary conditions, including rising interest rates. Loose monetary conditions are what created the corporate debt bubble in the first place, so the ending of those conditions will end the corporate debt bubble. Falling corporate bond prices and higher corporate bond yields will cause stock buybacks to come to a screeching halt, which will also pop the stock market bubble, creating a downward spiral. 

In conclusion:

There are extreme consequences from central bank market-meddling, and we are about to learn this lesson once again.

From where we sit… the only question is when.


Brian Maher
Managing editor, The Daily Reckoning

The post The Origin of the Next Financial Crisis appeared first on Daily Reckoning.

2019 Headwinds Are Getting Stronger

This post 2019 Headwinds Are Getting Stronger appeared first on Daily Reckoning.

In 2017, every prominent economic forecasting entity was shouting from the rooftops about “synchronized global growth.” This was a reference to the fact that not only were certain economies growing, but they were all growing at the same time.

Chinese GDP growth had come down but was still substantial at 6.85%. U.S. GDP growth was posting solid gains of 3.0% in the second quarter of 2017 and 2.8% in the third quarter. Japan and Europe were not growing as quickly as the U.S. and China, but growth was still accelerating from a low level.

Synchronization was a big part of the story. Growth was not isolated and episodic. Growth was fueling more growth in what seemed to be a sustainable way. The world economy was firing on all cylinders.

Then in 2018 the global growth story came screeching to a halt. Japanese growth went negative in the third quarter of 2018. Germany also went negative. Chinese growth continued its drop (6.5% in the third quarter) instead of stabilizing.

The U.K slowed partly because of confusion around Brexit. French growth slid amid riots triggered by a proposed carbon emissions tax. Australian home prices declined precipitously because export orders from China dried up and Chinese flight capital slowed to a trickle due to Chinese capital controls.

The U.S. economy held up fairly well in 2018, with 4.2% growth in the second quarter and 3.5% growth in the third quarter. But much of that growth was inventory accumulation from foreign suppliers in advance of proposed tariffs.

That inventory growth will likely dry up once the tariffs are either imposed or abandoned early this year. Fourth-quarter growth in the U.S. is currently projected at 3.0%, continuing the downtrend from the second quarter.

What happened?

Much of the global slowdown has to do with the high degree of interconnectedness of the global economy and the extent of global supply chains. The flip side of synchronized growth is a synchronized slowdown. Just as growth in one economy can lead to increased exports for trading partners, a slowdown leads to reduced exports.

Still, why has growth slowed down at all?

The answer has to do with debt, Fed policy, political developments, as well as trade wars. Specifically, the U.S. and China, the world’s two largest economies, are discovering the limits of debt-fueled growth.

The U.S. debt-to-GDP ratio is now 106%, the highest since the end of the Second World War. The Chinese debt-to-GDP ratio is a more reasonable 48%, but that figure is misleading because it does not include the debts and guarantees of provinces, state-owned enterprises, banks, wealth management products and numerous other entities that the government in Beijing is directly or indirectly obligated to support.

When that additional debt is taken into account, the real debt-to-GDP ratio is over 250%, about the same as Japan’s.

Debt-to-GDP ratios below 60% are considered sustainable; ratios between 60% and 90% are considered unsustainable and need to be reversed; and ratios in excess of 90% are in the red zone and will produce negative growth along with default through nonpayment, inflation or other forms of debt repudiation. The world’s three largest economies — the U.S., China and Japan — are all now deep in the red zone.

European growth is also slowing down. While the causes may vary, growth in all of the major economies in the EU and the U.K. is either slowing or has already turned negative.

What is striking is the speed with which synchronized global growth has turned to synchronized slowing. Indications are that this slowing is far from over. While growth can create a positive feedback loop, slowing can do the same.

The interconnectedness of global growth was summarized in this quote from Stephen “Sarge” Guilfoyle, director of floor operations for the New York Stock Exchange in a recent column for TheStreet’s Real Money:

There is an old adage, “When America sneezes, the world catches a cold.” What if the world’s two largest economies (U.S. and China) sneeze at the same time? Wait. I can top that. What if the U.S., China, the EU, Japan and the U.K. all sneeze at the same time? What if all mentioned are either involved in trade disputes, and/or the perverse use of both fiscal and/or monetary policies while suffering from heightened political risk? Oh, and at least temporarily, the U.S. faces a partial government shutdown as well. That’s a strong sort of fiscal/political mix.

Well, we already have the partial shutdown, now over two weeks old. On the political front, it’s sufficient to say that the dysfunction is getting worse, not better, and it will have an adverse effect on investor portfolios.

Democrats took charge of the House of Representatives last week on, Jan. 3, and they will use their committee control to launch literally dozens of investigations into “Russia collusion,” Trump’s business dealings, Trump’s inaugural financing, Trump’s tax returns, campaign finance, regulatory reforms, appointments and much more.

But Republicans continue to hold the U.S. Senate. They will use their committee control to hold hearings on FBI corruption, Intelligence Community abuse of spying powers, Hillary Clinton’s private server that held classified information and Democratic coverups on Benghazi, tea party IRS attacks, the Clinton Foundation “pay for play” deals with former Secretary of State Clinton, false accusations related to the confirmation of Justice Kavanaugh and more.

In short, it’s war.

Some of these hearings are political stunts just for show. They will make great headlines over a one-day (or one-hour) news cycle but won’t lead to any substantive charges or changes. Yet other hearings could have grave consequences — especially those that may result in criminal charges, including the Clinton Foundation case.

Hanging over all of this is the specter of impeachment. The impeachment process begins in the House of Representatives. If the president is impeached, the matter is referred to the Senate for a trial. If convicted in a Senate trial, the president is removed from office and the Vice President (Mike Pence) becomes president.

Conviction in the Senate requires a super-majority of 67 votes to remove the president. Republicans currently hold 53 Senate seats. Assuming all 47 Democrats vote to remove the president, 20 Republicans would have to switch sides and vote to remove President Trump from office. This is extremely unlikely to occur.

The worst case for impeachment is that the House impeaches Trump but the Senate does not vote to convict him so he remains in office. The best case is that the House makes noise about impeachment, holds hearings but in the end does not vote to impeach.

Either scenario will be positive for Trump’s reelection chances in 2020. Americans may dislike a lot about Trump’s day-to-day demeanor, but Americans are also fair-minded people on the whole.

They will see impeachment as another over-the-top move by Democrats (like the made-up “Russia collusion” story) and actually begin to sympathize with the president. Trump is also a master at turning attacks around on his opponents.

Whether impeachment happens or not and whether Trump benefits or not is unimportant for investors. What is important is the impact of political dysfunction and uncertainty on portfolios.

There the news is not good.

Regardless of the outcome of impeachment, investors should be prepared for a bumpy ride as headlines swing from good to bad and back again for Trump.

Meanwhile, the Fed is raising interest rates and reducing its balance sheet. The Fed’s balance sheet has been reduced by $375 billion in the past 14 months. That balance sheet is scheduled to fall by another $600 billion this year and $600 billion the following year until the balance sheet reaches a level of $2.9 trillion by the end of 2020.

This kind of extreme balance sheet reduction is entirely experimental. It has never been attempted before in the 106-year history of the Federal Reserve.

Analysts estimate that reducing the balance sheet by $600 billion per year (the current tempo) is equivalent to increasing the fed funds target rate by 1% per year. This implied rate hike comes on top of the 0.25% rate hikes the Fed has been announcing every quarter. QT and actual rate hikes taken together are increasing rates by 2% per year from a 2.5% base, an extreme form of monetary tightening.

The Fed is tightening into weakness and will have to pivot towards easing once it becomes obvious. But it may very well be too late.

The bottom line is that uncertainty reigns and it’s not going away anytime soon. Investors can profit from this with a combination of long-volatility strategies, safe-haven assets, gold and cash.


Jim Rickards
for The Daily Reckoning

The post 2019 Headwinds Are Getting Stronger appeared first on Daily Reckoning.

Jerome Powell Caves to Market

This post Jerome Powell Caves to Market appeared first on Daily Reckoning.

Fed Chair Jay Powell just sent the most powerful signal from the Fed since March 2015. 

He has pretty much taken a March 2019 rate hike off the table until further notice. At a forum hosted by the American Economic Association in Atlanta last Friday, Powell used the word “patient” to describe the Fed’s approach to the next interest rate hike. 

When Powell did this, he was reading from a script of prepared remarks in what was otherwise billed as a “roundtable discussion.” 

This is a sign that Powell was being extremely careful to get his words exactly right. When Powell said the Fed would be “patient” in reference to the next rate hike, this was not just happy talk. The word “patient” is Fed code for “no rate hikes until we give you a clear signal.” 

This interpretation is backed up by the Fed’s past use of verbal cues to signal ease or tightening in lieu of actual rate hikes or cuts. Prior to March 2015, the Fed consistently used the word “patient” in their FOMC statements. 

This was a signal that there would not be a rate hike at the next FOMC meeting. Investors could do carry trades safely. Only when the word “patient” was removed was the Fed signaling that rate hikes were back on the table. 

In that event, investors were being given fair warning to move to risk-off positions. 

In March 2015, Yellen removed the word “patient” from the statement. In fact, the first rate hike (the “liftoff”) did not happen until December 2015, but the market was on notice through the June and September 2015 FOMC meetings that it could happen. 

Now, for the first time since 2015, the word “patient” is back in the Fed’s statements, which means no future Fed rate hikes without fair warning. 

For now, the Fed is rescuing markets with a risk-on signal. That's why the market rallied last Friday. But we're not out of the woods by any means. 

The U.S. stock market had already anticipated the Fed would not raise rates in March. Friday’s statement by Powell confirms that, but this verbal ease is already priced in. As usual, the markets will want some ice cream to go with the big piece of cake they just got from Powell. 

The next FOMC meeting is Jan. 30. If the Fed does not repeat the word “patient,” markets could be in for an extremely negative reaction.

Looking ahead to rest of 2019, what are my models and methods telling us today about the prospects for the economy and markets?

The answer to that question requires an overview of many markets and sovereign economies around the world. While forecasts for China, the U.S. and Europe may differ in many particulars, what they have in common is interconnectedness.

For example, a slowdown in China due to excessive debt and trade wars can reduce exports from Europe. In turn, reduced European exports can slow down European purchases of raw materials and other inputs and lead to a weaker euro. 

The weaker euro can translate into a stronger dollar, which causes disinflation in the U.S. That disinflation can increase the real value of debt burdens in the U.S. if nominal growth is lower than the increase in the nominal deficit.

In other words, what happens in China does not stay in China. The world is densely connected. Any sound analysis must consider the ripples spreading out from any one factor. 

We need to look at the synchronized global slowdown, the Fed’s misguided policies, currency wars, trade wars and political dysfunction in the U.S. to arrive at conclusions and forecasts for the U.S. and beyond.

All this takes place against a backdrop of mounting global debt.

According to the Institute of International Finance (IIF), it required a record $8 trillion of freshly created debt to create just $1.3 trillion of global GDP. The trend is clear. The massive debts intended to achieve growth are piling on every day. Meanwhile, many of the debts taken on since 2009 are still on the books.

This is a crisis waiting to happen. The combination of slow or negative growth and unprecedented debt is a recipe for a new debt crisis, which could easily slide into another global financial crisis.

The Fed will have to pivot back to loosening, including a possible reintroduction of quantitative easing. But by then, it may be too late.

Below, I show you why the economic head winds are getting stronger as we begin 2019. What can you do to prepare? Read on.


Jim Rickards
for The Daily Reckoning

The post Jerome Powell Caves to Market appeared first on Daily Reckoning.

Today’s “Huge” Jobs Report Is a Bad Omen

This post Today’s “Huge” Jobs Report Is a Bad Omen appeared first on Daily Reckoning.

Markets paced the floor this morning… like a man condemned awaiting word on his final appeal.

For the December unemployment report was due out at 8:30.

A poor jobs report would send stocks spiraling down the greasy pole — again.

The market staggered into 2019 off its worst December since the Great Depression. It is also off to its worst start in 19 years.

Could it absorb another blow?

Economists as a whole forecast 176,000 jobs.

What number did the report actually reveal?

312,000 jobs — a “blowout” number — and the largest monthly increase since last February.

We were also informed that American wages increased a gorgeous 3.2% over the previous December.

Only once since April 2009 has this 3.2% year-over-year increase been equaled.

And the sweet scarlet treat atop the sundae:

The unemployment level increased from 3.7%… to 3.9%.

Come again, you say?

How in the name of all things holy is higher unemployment good news?

For this reason:

It means more Americans are entering the labor force.

If they cannot secure immediate positions, they are counted among the unemployed… and the unemployment rate increases.

In December, 419,000 previously idle Americans volunteered for duty.

And the labor force participation rate increased to 63.1% — up from November’s 62.9%.

Wall Street went and had itself a day at the races…

The Dow Jones stormed back 747 points today.

The S&P surged 84.

The Nasdaq leaped 275 points — a thumping 4% rally.

(The unemployment report alone does not account for today’s raucous numbers. Answer below).

From the cheering section rose exultant gloats and howls today…

“The far-bigger-than-expected 312,000 jump in nonfarm payrolls in December would seem to make a mockery of market fears of an impending recession,” beamed Paul Ashworth, chief U.S. economist at Capital Economics.

“What recession?” mocked Stu Hoffman of PNC Financial.

Jared Bernstein — former chief economist for Joe Biden — says it “looks like the jobs market didn’t get the recession memo.”

Just so.

But let us dispatch a recession memo of our own…

As we have illustrated before, an unemployment rate below 4% is no cause to celebrate.

The proof is clear as gin… and every bit as stiff:

Recession is never far behind when unemployment sinks below 4%.

U.S. unemployment dipped beneath 4% last May.

Unemployment previously slipped beneath 4% in April 2000 — at the peak of the dot-com derangement.

The economy was in recession by March 2001 — less than one year later.

A similar schedule would put this April on recession watch.

Before 2000, unemployment had previously fallen below 4% in December 1969.

The economy was sunk in recession shortly thereafter.

Do we stretch the facts to fit into a theory?

We do not.

Nicole Smith is chief economist at Georgetown University’s Center on Education and the Workforce.

From whom:

If we look historically at other times when the unemployment rate has fallen below 4%… what we find is that the low unemployment rate is often associated with a boom phase just before a recession. It’s almost a precursor for a recession or a precursor for another slumping economy.

Perhaps you are unconvinced.

We therefore hammer you upon the head with the following evidence — a chart giving the history since 1950.

On each occasion the unemployment rate fell below 4%, it reveals, recession was on tap:


Of course… recessions are not always occasioned by unemployment rates below 4%.

But once again, the chart proves it beyond all cavil:

When the official unemployment rate sinks beneath 4%… recession is close by.

In pleasant reminder, unemployment presently hovers at 3.9%.

But why should recession rapidly follow peak employment?

Mainstream economics equates extremely low (official) unemployment with an “overheating” economy.

Central banks must therefore raise interest rates to lower the temperature, to bring the business under control.

Our own central bank has been following the operator’s manual.

But instead of slowing things down… the clods end up slamming the engine into reverse.

As the following chart informs us, rising interest rates preceded each U.S. recession since 1950:


Confirms analyst Jesse Colombo:

Economic recessions, financial crises and bear markets have occurred after virtually all Fed rate hike cycles, and there is no reason to believe that the current one will be an exception.

Which brings us now to Mr. Jerome Hayden Powell, chairman of the Federal Reserve System…

He appears to be a man with a bit between his teeth.

He has seemed determined, that is, to increase interest rates at any excuse.

Last month, for example — as the stock market was plunging into correction, no less — he went ahead anyway.

Many analysts believed the continued stock market horrors would back him off.

But will today’s go-go jobs report encourage him to press ahead?

MarketWatch on Powell’s dilemma:

On the one hand, the markets are reflecting fears of a deceleration in activity, but more fundamental sources of information on the economy show the danger of an overheating economy remain present.

“This will be very difficult for Powell to reconcile,” warns Carl Tannenbaum, chief economist at Northern Trust.

But what does the man himself have to say?

Powell addressed the American Economic Association this morning.

His comments suggest a new flexibility

He said he is “prepared to adjust policy quickly and flexibly.”

What about the balance sheet?

We contend that quantitative tightening (QT) has throttled markets far more than a series of pinprick rate hikes.

Last month Powell said QT was running “on autopilot,” a remark that sent stocks careening.

Not today.

The chairman said this morning the Fed is “listening carefully” to markets.

He further pledged to announce a halt “if needed,” adding, “We wouldn’t hesitate to change it.”

By sheerest coincidence… the Dow Jones jumped 400 points following the remarks.

We can only come to one conclusion:

The Federal Reserve will never truly “normalize” its balance sheet — despite all gabble to the contrary.

Wall Street will simply not allow it.

But it will not be enough to keep the show going.

We stand by our 2019 forecast:

Dow 18,000 by year’s end.

And recession — just look at the unemployment rate.


Brian Maher
Managing editor, The Daily Reckoning

The post Today’s “Huge” Jobs Report Is a Bad Omen appeared first on Daily Reckoning.

Where the Stock Market Will End 2019

This post Where the Stock Market Will End 2019 appeared first on Daily Reckoning.

Yesterday we ventured a cowardly 2019 forecast, in humble recognition of our erring psychic vision.

Markets would rise, we soothsaid — or fall — or end the year precisely where they began.

We likewise predicted the economy would advance, retreat or jog in place.

Some readers denounced our abject cowardice.

Take your stand upon one hill or the other, they thundered. But take your stand:

“Make a call,” demanded one reader, Michael by name. “We are counting on you to make actual predictions…”

“Please do not waste my time with something that says nothing,” argued another reader, Richard.

A third — Gary — believes our dish of applesauce actually diminished his cognitive powers:

“I think I lost IQ points in reading the article… So you know nothing…. Why publish it?”

Our character thus slandered, today we summon our best blood — “not the blood of our finger but the blood of our heart”…

And come out flat-footed with a 2019 forecast guaranteed to keel you over.

First we train our sights on a far more immediate vista — today’s market activity.

But perhaps it is best we not…

The Dow Jones hemorrhaged another 660 crimson points today.

The S&P lost another 62. The Nasdaq shed 202 dreadful points — a 3% trouncing.

What accounted for today’s thunder and lightning?

A falling Apple, primarily.

Apple slashed its quarterly revenue forecast late yesterday — for the first time in over 15 years.

CEO Tim Cook cited an “unforeseen” slowdown in the Chinese economy.

And so a bellwether of global economic conditions presents a distressing omen. Explains Greg McKenna, markets strategist at McKenna Macro:

That Tim Cook and his company mentioned China as the reason behind the downturn in the company’s outlook seemed to hit exactly the pressure point traders and investors were already alarmed over. 

Apple stock plunged 10% today… incidentally.

But it was not Apple alone that frightened the horses today…

The Institute for Supply Management reports that U.S. manufacturing has plunged to a 15-month low.

Manufacturing sentiment also suffered its largest one-month drop since October 2008 — when the financial crisis was in full blast.

On that note…

We are reliably informed that global liquidity is evaporating at its fastest clip since 2007–08.

According to analyst Michael Howell of the CrossBorder Capital blog, global liquidity has slipped some 25% below its long-term trend.

The Federal Reserve is driving the business.

It is tightening financial conditions far more than generally realized… once we account for quantitative tightening.

Howell estimates the “true” fed funds rate is not the official 2.5% — but closer to 5%.

“In other words,” says he, “tight liquidity conditions are equivalent to the Fed undertaking around 20 rate hikes rather than the nine it has so far implemented this cycle.”

Thus the ground is laid for another 1997 Asian crisis — though not limited to Asia:

Unlike the 200708 crisis, which was more about a broken banking system involving the sudden collapse of leverage among overextended banks and shadow banks, the current credit squeeze looks more like the 199798 Asian crisis when central banks, led by the U.S. Fed, tightened the supply of primary liquidity… This time around, financial markets are probably even more interconnected and more global. Consequently, this could be an Asian crisis-like sell-off, but one not only confined to Asia.

Perhaps someone should alert Jerome Powell?

But to return to our thumping market prediction…

We have suggested previously that the Federal Reserve’s most recent rate hike may have taken the fed funds rate over the “neutral rate.”

That is, interest rates are no longer “accommodative.”

Nor are they merely neutral.

They begin to drag and tug.

History suggests recession or market crisis is on tap six–12 months after rates cross the neutral line.


The stock market generally turns in its worst performance six months preceding a recession.

Well, it has pointed south since early October — for precisely three months, that is.

At present speed and heading, the economy is on course for recession by April perhaps.

Unless, that is, the stock market finds a fair wind beforehand.

We have further furnished evidence that the “true” money supply is falling violently (see linked article for details).


Let the record show:

Recession or credit crisis followed previous occasions when the true money supply decelerated at the present clip:


The chart suggests trouble starting in March.

In conclusion… we have strong circumstantial evidence pointing to recession sometime this year.

March 1 — incidentally — is when Trump’s hard trade deadline with China lapses.

If no accord is reached by March 1, the trade war resumes at full pitch.

Mixing it all together, let us proceed to our rafter-shaking 2019 forecast:

Trump realizes the extent to which his presidency hinges upon a thriving economy and stock market.

He will therefore settle upon a deal and declare resounding victory.

The stock market will rally hard on the news.

But it will be short-lived.

Political uncertainty will play the devil with markets…

The Mueller investigation will soon come out.

We hazard it will reveal no evidence whatsoever of Russian collusion.

But give a man nearly two years and millions of dollars to find skeletons in closets… and he will find skeletons in closets.

Especially, we may add, if he ransacks the closets of a horse trader like Donald John Trump.

Once the Democrat-controlled House impeaches Trump — yes, that is correct — exhausted markets will lose remaining steam.

This will drag on much of the summer.

Trump will survive — the Senate will not convict him of charges — but the process will leave him severely diminished.

Meantime, markets will confront the reality of drying liquidity… and economic growth will slow to a glacier’s pace.

The economy will finally be in recession by December.

The stock market will likewise end 2019 sunk in a bear market…

The Dow Jones will end the year at roughly 18,000.

The S&P will hold above 2,000 — but barely.

The Nasdaq will take a good 40% lacing from today’s levels.

Gold will challenge $1,500.

There is your preview of 2019, down to the last jot and tittle, down to the last decimal point — and you can just take it to the bank.

Never you mind our last prediction. Or the prediction prior. Or…


Brian Maher
Managing editor, The Daily Reckoning

The post Where the Stock Market Will End 2019 appeared first on Daily Reckoning.

REVEALED: 3 Wild Market Predictions for 2019

This post REVEALED: 3 Wild Market Predictions for 2019 appeared first on Daily Reckoning.

A new year is upon us.

It is time to ring out the old, as Tennyson counseled — and ring in the new.

So today we retrieve our crystal ball from mothballed storage… and gaze for previews of 2019.

Is this finally the year of the bear? Or will the bulls roar back to life?

Are we months away from recession? Years away? Or days away?

The shocking answers anon.

But before we chart the way ahead, let us first take stock of where we stand today.

Stocks concluded the year with their worst December since the Great Depression.

Both the Dow Jones and S&P came within an ace of tumbling into bear markets — a bear market defined as a 20% fall from the most recent height.

Only a fevered Dec. 26 rally kept the bears officially at bay.

But what was responsible for the Dow’s 1,086-point leap?

The folks at Phoenix Capital sniff a rodent:

“Someone” took advantage of the extremely light holiday volume to ramp markets higher via indiscriminate buying…

This was a clear and obvious buying program made by “someone” who didn’t want stocks to officially enter a bear market by falling 20%. One of the key “tells” that this was manipulation is that underperformers like banks and homebuilders didn’t lead the rally.

Normally during real market bottoms, the underperformers turn first and rally hardest as REAL buyers and value investors put in REAL buy orders.

That didn’t happen. Both sectors lagged on the bounce.

But who might this “someone” be? And why the hijinks?

We’ve put our agents on the case.

In the meantime one fact remains, clear as gin:

Global stock markets hemorrhaged $12 trillion in 2018.

These were the largest losses since 2008 — and the second largest on record.

And so markets stagger into 2019 bloodied, battered, bandaged… like Napoleon limping home from Russia.

The new year began this morning where the old one ended, with stocks in retreat.

Weak manufacturing data out of China and Europe came out overnight, confirming the global economy is grinding to a crawl.

Stocks later rallied on rising oil prices. Our friends the Saudis are reportedly cutting exports, lifting energy stocks.

The Dow Jones, S&P and Nasdaq all scratched out modest gains by the closing bell.

But what will determine the fate of markets this year?

Analyst Adam Shell in USA Today:

“Market returns in 2019 will hinge on Fed interest rate policy, whether the economy can continue to grow and avoid recession and whether the U.S. trade fight with China can be resolved.”

Just so.

But doesn’t hinge No. 2 pivot upon hinge No. 1? And is either truly independent of hinge No. 3?

What are the odds of them all swinging in the right direction this year?

The Federal Reserve has given every indication it will proceed with additional rate hikes this year — at least two.

Incidentally… rate hikes are not generally considered antidotes to bear markets.

Peter Boockvar, CIO at Bleakley Advisory Group, says forget the technical definition of a bear market.

Stocks are already sunk in one — and will be for a good long time:

“We are in a bear market, and a bear market is not just going to end in a couple of months considering the 10 years of a bull market.”

Assume for the moment a bear market is upon us.

When might it end?

From our trading desk weighs in Greg Guenthner of The Rude Awakening:

The first half of 2019 will feature negative headlines about the trade war, rising rates, a stalling housing market and an economic slowdown that will contribute to wild swings and bear market action. Trade war fears and other political shenanigans dominate the news cycle and stocks will suffer.

So much for the first half of 2019. What about the second half?

But when the worst-case scenarios don’t materialize and the last seller turns out the lights, stocks will bottom and a new rally will begin, leading to a strong fourth-quarter performance.

We are not convinced.

So now we come to our own jaw-dropping predictions for 2019 — predictions guaranteed to knock you to the floor…

Prediction No. 1:

In 2019 the stock market will rise. Or fall.

Or — or — it will end the year precisely where it began.

Prediction No. 2:

Bitcoin, gold, oil, United States Treasury notes and all remaining assets will rise, fall, or hold steady.

Prediction No. 3:

The economy will expand in 2019 — unless it contracts.

Bear in mind… the economy may do neither.

There you are — three thundering predictions for 2019.

And remember, fortune favors the bold.

What’s your big market prediction for 2019?

Let us know:

Below, Robert Kiyosaki shows you his 2019 outlook. Is this the year the bubble finally bursts? How should you approach this year? Read on.


Brian Maher
Managing editor, The Daily Reckoning

The post REVEALED: 3 Wild Market Predictions for 2019 appeared first on Daily Reckoning.