Stocks

Are We On The Verge Of A Massive Stock Market Crash?

Is time finally running out for “the bubble to end all bubbles”?  Over the past year, we have seen stock prices rise to levels that are completely and utterly absurd, and many have pointed out that we are currently in the largest stock market bubble in the entire history of our nation.  Of course this bubble will end the way that all of our other stock market bubbles eventually ended, and recent market activity has a lot of people wondering if the time for that is drawing near.  Signs of trouble have been percolating on Wall Street for weeks, and on Monday we finally witnessed an eruption of full-blown fear.  The Dow Jones Industrial Average was down 725 points, and that represented the worst day for the index since last October.  But one really bad day is not a crisis, and even though many individual stocks have already plunged into bear market territory, we have a long, long way to go before people start using the word “crash”.  In fact, I don’t think that anyone should even think of using the word “crash” until the Dow drops below 30,000.

But without a doubt, a crash is inevitably coming.

Whether it happens this month, next month or next year, stock prices will plummet from these ridiculously inflated levels.

As for the plunge that happened on Monday, many are blaming it on fears about the “Delta variant”…

“It’s a bit of an overreaction, but when you have a market that’s at record highs, that’s had the kind of run we’ve had, with virtually no pullback, it becomes extremely vulnerable to any sort of bad news,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “It was just a matter of what that tipping point was, and it seems we finally reached that this morning” with worries about the delta variant.

To me, there are other issues that are of much greater concern, but apparently this is what is spooking investors this week.

According to CNBC, the number of newly confirmed COVID cases per week has more than doubled over the past month…

Covid cases have rebounded in the U.S. this month, with the delta variant spreading among the unvaccinated. The U.S. is averaging nearly 26,000 new cases a day in the last seven days through Sunday, up from a seven-day average of around 11,000 cases a day a month ago, according to CDC data. Cases were already flaring up around the world because of the delta variant.

Now that the market has started to fall, some experts are warning that the drop could be quite substantial.

For example, one Morgan Stanley strategist believes that we could eventually see a “correction” of 10 to 20 percent…

“The market appears ready to take on a more defensive character as we experience a meaningful deceleration in earnings and economic growth,” Morgan Stanley chief U.S. equity strategist Mike Wilson said in a note Monday. “Market breadth has been deteriorating for months and is just another confirmation of the mid-cycle transition, in our view. It usually ends with a material (10-20%) index level correction.”

Actually, if that is the worst that happens we will be quite fortunate.

In recent days, the mood on Wall Street has shifted dramatically.  In fact, the CNN Fear & Greed Index is now sitting at 16 which is considered to be in the “extreme fear” range, and the VIX has been soaring.

As our friends at Zero Hedge have pointed out, the last time we witnessed this much fear on Wall Street the S&P 500 was absolutely plummeting…

With the S&P 500 around 3.5% off its record highs, we note that fear has exploded. The last time fear was this high, the S&P was down 40%!…

We shall watch and see what happens this time around.

Zero Hedge has also pointed out that Goldman Sachs has been aggressively selling off billions of dollars worth of stocks recently…

What is even more remarkable is just how much Goldman has harvested so far in 2021: as shown below, having started with a $20BN equity portfolio which has enjoyed a $5BN increase in market prices, Goldman dumped a whopping $5.5 billion of its equity assets so far (excluding a modest $1.5BN in purchases) or more than a quarter of its entire portfolio as of Dec 31.

This is not normal for Goldman Sachs.

In fact, you have to go all the way back to just before the financial crisis of 2008 to find another time when they did such a thing…

The last time Goldman was “aggressively” selling into a “supportive” market? Well, we have to go back all the way to 2007 and 2008 when Goldman was busy creating the very CDOs which its prop desk would then “aggressively” short.

We all remember how prophetic that particular move turned out to be…

That is “interesting” to say the least.

But as big financial institutions such as Goldman Sachs are dumping stocks, talking heads on television continue to assure all of us that a wonderful new era of great prosperity is just ahead.  Just check out what Bill Ackman told CNBC on Monday…

Billionaire investor Bill Ackman said Monday that the spread of the delta variant doesn’t pose a significant threat to the economic reopening, and he sees interest rates rising on the back of the big comeback.

“I hope what it does is that it motivates anyone who doesn’t get the vaccine to get the vaccine. I don’t think it’s going to change behavior to a great extent,” Ackman said in a interview on CNBC’s “Squawk Box.” “You are going to see a massive, my view, economic boom. … We are going to have an extremely strong economy coming in the fall.”

Wouldn’t it be nice if he was right?

I would love to see a “massive” economic boom.

Unfortunately, I don’t believe that is going to happen.  In fact, I believe that we are rapidly approaching some of the most difficult economic times that we have ever seen.

The laws of economics cannot be ignored forever.  The federal government is now 28 trillion dollars in debt, we are in the midst of the greatest corporate debt binge of all time, and U.S. consumers continue to go into debt as if tomorrow will never arrive.

But tomorrow always arrives eventually, and our “tomorrow” is going to be a day of reckoning that is going to be far more painful than most people would dare to imagine.

***It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “7 Year Apocalypse” is now available on Amazon.com.  In addition to my new book I have written five others that are available on Amazon.com including  “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, “Get Prepared Now”, and “Living A Life That Really Matters”. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

You Might Want To Check On Your “Investments”, Because The Financial Markets Are Starting To Go Haywire

Is the party almost over?  Volatility has returned to Wall Street in a major way, and certain investors are getting absolutely crushed.  On Wednesday, a trillion dollars in paper wealth had been wiped out during the trading session at one point, but those losses were later pared back as cryptocurrencies rallied.  On social media, there has been a lot of weeping and wailing due to the huge financial losses that some people have experienced this week.  But if you think that these losses are bad, just wait until you see what is coming later.

In the old days, investors would carefully select the companies that they were going to invest in.  The key was to identify companies that had something of great value to add to society and that were being run very well.  In those days, strict adherence to the fundamentals would often bring great rewards.  Just ask Warren Buffett.

But these days our financial markets are little more than giant casinos.  Companies that lose giant mountains of money year after year are supposedly worth billions of dollars, and “assets” that have no inherent value whatsoever are endlessly gobbled up by drug-fueled “investors” that are looking for a way to get rich quick.

This speculative environment has driven the price of Bitcoin to absolutely insane heights in recent months, but now it is starting to fall.  After hitting a record high of $64,829 in the middle of April, Bitcoin fell to almost $30,000 on Wednesday before bouncing back a bit…

Bitcoin plunged 30% to near $30,000 at one point on Wednesday, continuing a major sell-off in the cryptocurrency markets that began a week ago.

But don’t feel too bad for Bitcoin investors just yet.  Bitcoin is still up more than 30 percent so far this year, and overall it is up close to 300 percent over the past 12 months.

Other cryptocurrencies that have also soared in recent months took a huge bath on Wednesday…

Other cryptocurrencies also plunged on Wednesday. Ether, the digital currency that powers the Ethereum blockchain, was down more than 22% at $2,620.97, according to Coin Metrics. Dogecoin, a cryptocurrency that started as a joke and has been talked up by Tesla CEO Elon Musk, fell 25% to less than 36 cents. Both had substantially larger losses earlier in the session.

Dogecoin is the poster child for the wild speculation that I so often deride on my websites.  It was started as a joke, it is a useless waste of digital space, and it has no inherent value whatsoever.

But at this moment the market cap for Dogecoin is still over 40 billion dollars.

I really wish that I would have started up a cryptocurrency called “Chickencoin” when this craze was first getting started.  It would probably be worth 100 billion dollars by now.

Sadly, at this point the opportunity to get rick quick has passed, because the bubble is starting to burst.  On Tuesday, China set off a wave of panic when a major announcement about the use of cryptos in the country hit the news wires…

The China Internet Finance Association said it will not allow the country’s financial institutions to partake in any business related to cryptocurrency due to the volatile nature of the digital coins, according to a Chinese media report Tuesday that was spotted earlier by Coindesk. This decision isn’t new. China took a similar stance back in 2017, which also resulted in a massive Bitcoin selloff.

The newest crypto investors are the ones that are being hit the hardest.  Many of them got in near the top of the bubble and now they are paying a great price for it…

New entrants to crypto are especially running for the exits, according to a note from Glassnode Insights. About 23% of crypto wallets are now at a loss, and 1.1 million of the addresses have spent all coins they held during this correction.

Needless to say, this is taking an enormous emotional toll on many people.  On Reddit, some users were even posting the telephone numbers for suicide hotlines…

People on Reddit trading boards described losing their shirts and some people even posted telephone numbers for a suicide help line in case the losses led to hopeless feelings.

Some investors have gotten rich by investing in cryptos, but others are literally losing everything.  On Wednesday, those that had made huge leveraged bets that cryptos would keep rising got absolutely monkey-hammered…

As of Wednesday afternoon in New York, about $9 billion of liquidations of leveraged bets had taken place in the previous 24 hours, according to data provider Bybt. The majority were of long positions in which traders bet on an increase in the price of bitcoin or another cryptocurrency. Such liquidations take place when the market moves against a trader who isn’t able to exit from the trade or post enough additional funds to meet the exchange’s margin requirements.

For the moment, the losses on the stock market seem quite tame by comparison.  The Dow has declined for six of the last eight trading sessions, and it was down another 164 points on Wednesday…

The Dow Jones Industrial Average closed down 164.62 points, or 0.5%, Wednesday, paring an earlier drop of as much as 587 points, as investors broadly retreated from riskier assets. The index has fallen in six of the past eight sessions.

But there is a whole lot more chaos going on under the surface.  As Zero Hedge has pointed out, “in the past 7 sessions, stocks have suffered 3 of the largest bouts of concentrated selling pressure in history”.

Insiders and wealthy investors have been bailing out of stocks at a staggering pace recently, and many believe that this summer will be a very troubled time for stock investors.

But whether it happens sooner or later, it is inevitable that the stock market bubble will burst as well.

The Ponzi scheme that we call “our financial system” is destined to fail, and that should be obvious to everyone at this point.

Unfortunately, many self-deluded “investors” will stay in the game until it is far too late, and they will lose everything as a result.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on Facebook, Twitter and Parler, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

Signs Of Trouble As We Make The Turn Toward The Fall?

Over the past several months we have been witnessing one of the most gloriously irrational stock market rallies in U.S. history.  Even CNN is admitting that this is “the worst economic crisis of our lifetimes”, but stock prices have just kept going higher and higher until this week.  Several months ago the Federal Reserve decided to do whatever it took to rescue the financial markets, and their exceedingly reckless behavior fueled a speculative boom that is unlike anything that we have ever seen before.  But now it appears that the boom may be ending.  The Dow Jones Industrial Average was down 807 points on Thursday, and it appears that Friday could be another very challenging day for Wall Street.  It is well documented that many of the greatest stock market crashes in history have happened in the fall, and many investors may be trying to bail out before this latest bubble bursts in spectacular fashion.

Tech stocks have led the way up during this latest rally, and now they could potentially start leading the market back in the other direction.  On Thursday, the biggest names in the tech world got hit particularly hard…

Apple shares fell 8% for their biggest one-day decline since March 16. Amazon and Netflix were both down more than 4% and Facebook slid 3.8%. Microsoft slipped 6.2%. Alphabet pulled back by 5.1%.

And Tesla has been absolutely monkey-hammered over the past several days.  If you can believe it, the stock is now 18 percent lower than it was on Monday…

Tesla shares slid 9% on Thursday, building on the stock’s recent losses after the company’s largest outside shareholder reduced its position, and after the automaker said it would raise up to $5 billion in a new share offering.

With Thursday’s decline, the stock is more than 18% below Monday’s close, a day when the name surged following its stock split.

But I wouldn’t be crying too much for those holding Tesla stock just yet.  The stock is still way, way up so far in 2020, and it is still massively overvalued.

In fact, if Tesla’s stock price fell 90 percent I would still think that it was overvalued.

Needless to say, the entire market is tremendously overvalued at this point.  It is absolutely absurd that the Dow is sitting above 28,000 at the moment.  Investors decided to divorce economic reality long ago, and even with the losses that we have seen this week they are still sitting really pretty.

But could that soon change?

According to one expert that was just interviewed by CNBC, the market could be heading into a “Minsky moment”…

Asset prices could be on the cusp of a sharp collapse known as a “Minsky moment,” and may retest lows last seen in March, according to Ron William, market strategist and founder of RW Advisory.

So exactly what is a “Minsky moment”?

The following is how CNBC defines it…

A “Minsky moment,” named after economist Hyman Minsky, refers to a sudden market collapse following an unsustainable bull run, which in this case could be fueled by the “easy credit” environment created as a result of unprecedented fiscal and monetary stimulus measures.

I think that may be a perfect description of what we are facing.  Since the second half of March, the Dow, the S&P 500 and the Nasdaq are all up more than 50 percent even though the U.S. economy as a whole has been falling apart all around us.

If we were ever due for a “Minsky moment”, it is now.

And it is interesting to note that the stock market also peaked in early September in 1929.  The following quote from Sven Henrich was just posted by Zero Hedge…

“September 3rd marked the top in 1929 following a furious rally fueled by wild optimism, excessive retail speculative behavior and markets disconnecting far above the fundamentals of the economy.”

It has been said that history doesn’t always repeat, but it often rhymes.

Meanwhile, we just learned that a huge number of Americans filed for unemployment benefits once again last week.

As I discussed a week ago, the Labor Department decided to change the way that it calculates seasonal adjustments for initial unemployment claims, and this week was going to be the first week when that change was going to show up.  So it wasn’t a surprise that the “official number” was lower than last week, but when you look at the unadjusted numbers the story is completely different.

In fact, those figures tell us that the number of Americans filing new claims for unemployment benefits was about 7,000 higher than the week before.

That is very troubling, because if we were going to have any sort of an “economic recovery” before the next wave of economic pain, it should be happening now.

And according to Wolf Richter, the number of continuing unemployment claims under all state and federal programs was way up over the previous week…

Powered by a nasty jump in continued unemployment claims under the federal Pandemic Unemployment Assistance (PUA) program for contract workers, established under the CARES Act, total continued claims under all state and federal programs jumped by 2.2 million, “not seasonally adjusted,” to 29.2 million people on unemployment rolls, the highest since August 1, according to the Department of Labor this morning.

In our entire history, we have never seen a spike in unemployment claims like we have in 2020.

But up until now, investors on Wall Street have been able to ignore what has been going on in the rest of the country.

In some ways it is easy to be in awe of their single-minded focus on speculative greed, and the mainstream media has been proudly touting how much richer some of the wealthiest investors have been getting.

Of course the truth is that you only make money in the stock market if you get out in time.  Nothing goes up forever, and this ridiculously absurd bubble will end the same way that so many others have.

Meanwhile, the real economy will continue to deteriorate as we plunge even deeper into the “perfect storm” that we are now dealing with.

In addition to everything else, a hotly contested presidential election is looming, and the fact that we are not likely to have a winner until some time well after November 3rd is just going to make matters even worse.

We truly live in historic times, and I have a feeling that they are about to get a whole lot more “interesting”.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.com.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  By purchasing the book you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

As The Stock Market Soars, The Numbers Say That The Real Economy Is In The Midst Of A Historic Crash

Have you been watching the madness that has been unfolding on Wall Street?  Even though we are in the middle of the worst global pandemic in 100 years, and even though rioters and looters have been turning our major cities into war zones, stock prices have been going up day after day.  In fact, the Nasdaq closed at an all-time record high on Monday.  Sometimes people ask me to explain this rationally, and I can’t, because the Federal Reserve has transformed our “financial markets” into a total mockery at this point.  The real economy is literally collapsing all around us, but thanks to Fed intervention stock investors are doing just fine.  It has been absolutely disgusting to watch, and if Adam Smith could see what was happening he would be rolling over in his grave.  Unfortunately, thanks to our rapidly declining system of education most Americans don’t even know who Adam Smith is anymore.

I can’t recall another time in modern U.S. history when stock prices skyrocketed as the U.S. economy plunged into a recession.  What we have been witnessing has truly been extremely bizarre, and it will be fascinating to see how long it can last.

Meanwhile, the real economy is a giant mess.  On Monday, the National Bureau of Economic Research finally got around to letting us know that a recession has officially begun…

It’s official: The United States is in a recession.

The National Bureau of Economic Research said Monday the U.S. economy peaked in February, ending the longest expansion in U.S. history at 128 months, or about 10½ years.

In truth, the announcement codifies the painfully obvious. States began shutting down nonessential businesses in mid-March to contain the spread of the coronavirus, halting about 30% of economic activity and putting tens of millions of Americans out of work.

And in other news, the sky is blue and the moon is not made out of cheese.

Anyone with half a brain can see that the economy is falling apart.  For example, we just learned that U.S. factory orders were down 22.3 percent in April compared to a year earlier…

Having collapsed by a record 10.4% MoM in March, April factory orders were expected to accelerate even lower and it did. However, the 13.0% plunge in April was modestly better than the 13.4% MoM drop expected… but is still the worst in American history.

Year-over-year, factory orders collapsed 22.3% – the worst since the peak of the financial crisis.

Of course it is not that difficult to find a number that is even worse than that.

Just look at heavy truck sales.  Last month they were down a whopping 37 percent from the same month in 2019…

The last three months have been catastrophic for segments of the trucking business, after an already tough period that started in late 2018. In May, orders for Class 8 trucks – the heavy trucks that haul much of the goods-based economy across the US – plunged 37% from the  low levels in May a year earlier, and by 81% from May two years ago, to 6,600 orders, according to estimates by FTR Transportation Intelligence today.

Not to be outdone, the number of corporate bankruptcies shot up 48 percent last month compared to the same period a year ago…

Corporate bankruptcies spiked during May as the coronavirus pandemic slammed the U.S. economy, pushing the number of filings to levels recorded in the wake of the 2007-09 recession.

U.S. courts recorded 722 businesses nationwide filing for chapter 11 protection last month, a yearly increase of 48%, according to figures from legal-services firm Epiq Global.

But every time we get another horrific economic figure, the stock market goes even higher.

The worse the news gets, the more investors seem to like it.  Week after week, we have seen unprecedented numbers of Americans file for unemployment benefits, and at this point a grand total of more than 42 million Americans have lost a job since this pandemic began.

And yet investors keep taking these job losses as signs that they should buy even more stocks.

Perhaps someone should spread a rumor that a planet-killing asteroid is about to hit us, because that would probably really get investors salivating.

Of course most ordinary Americans don’t get to live in a Fed-fueled fantasy world, and this new economic downturn is hitting most of them extremely hard.

In fact, it is being reported that approximately a third of all Americans “are now showing signs of clinical anxiety and depression”…

In the wake of the COVID-19 pandemic and resulting economic crash, which triggered depression-like unemployment with 40 million initial claims filed in ten weeks, a third of Americans are now showing signs of clinical anxiety and depression, according to new data collected by the Census Bureau. This, by far, is the most comprehensive and troubling sign yet of the psychological toll inflicted on Americans due to months of lockdowns.

The Census Bureau contacted one million households between May 7 and 12, and about 42,000 responded, said The Washington Post. The survey was about 20 minutes long and buried deep within, several questions asked respondents about depression and anxiety. Those who answered provided a laggard but clearest snapshot into people’s mental state at the tail end of the lockdown, where many folks were subjected to isolationism, virus fears, and widespread unemployment.

That is the most alarming number that I have shared with you so far in this article, but I am about to share with you some numbers that are even more alarming.

In recent days, we have watched rioters destroy large sections of our major cities all across America.  But when asked about “violent protests”, a surprising percentage of Americans actually support them…

A broad majority of Americans say the peaceful protests happening all across the country after police violence against African Americans are justified (84% say so), and roughly a quarter (27%) say violent protests in response to police harming or killing African Americans are justified. Both figures are higher than they were when similar protests rose in the fall of 2016. Then, 67% saw peaceful protests as justified while 14% felt violent protests were.

There isn’t much of a racial or partisan difference over whether peaceful protests are justified now, but the gaps are larger over violent protests. Among Democrats, 42% consider violent protests justified in response to police violence against African Americans, while just 9% of Republicans agree.

Yes, you read that last sentence correctly.

42 percent.

Unfortunately, a lot more economic pain is on the way, and that is just going to fuel even more rioting, looting and violence.

These are definitely not “the best of times” no matter what stock market investors seem to think.

We have entered a deeply disturbing new chapter in American history, and life in this country will never be the same again.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with all many people as we possibly can.

12 Signs That The Economy Is Seriously Slowing Down As 2020 Begins

Lost in all of the headlines about Iran and impeachment is the fact that the U.S. economic slowdown which began during the latter stages of last year appears to be accelerating.  The final numbers which will tell us if we are officially in a recession at this moment won’t be released until months from now, but for millions upon millions of Americans it definitely feels like one has already started.  Yes, the stock market has been soaring, but at this point the stock market has become completely divorced from economic reality.  And as you will see later in this article, stock prices are now the most overvalued that they have ever been in all of American history.

But before we get to that, let’s talk about what is happening in the real economy.

The following are 12 signs that the economy is seriously slowing down as 2020 begins…

#1 The U.S. Manufacturing Purchasing Managers Index has been in contraction for 5 months in a row, and it is now at the lowest level we have seen since June 2009.

#2 Last month, manufacturing employment fell at the fastest pace we have seen since August 2009.

#3 Last month, new manufacturing orders fell at the fastest pace we have seen since April 2009.

#4 Chicago PMI has been contracting for 4 months in a row.

#5 European manufacturing PMI declined again in December.

#6 Borden Dairy, one of the largest dairy companies in the entire world, declared bankruptcy just a few days ago.

#7 Earlier this month, the Baltic Dry Index had its worst day in 6 years.

#8 Overall, the decline in the Baltic Dry Index this month is the largest that we have seen since 2008.

#9 The auto recession just continues to get even worse.  Thanks to the substantial slowdown we witnessed during the second half of 2019, the total number of cars and trucks sold in the United States during all of 2019 was actually below the level that we witnessed back in 2000 when our population was significantly smaller.

#10 Used heavy duty truck prices have fallen “as much as 50%“.

#11 Macy’s just announced that they will be closing 28 stores.

#12 To start the year, AT&T is laying off thousands of workers, and according to Robert Reich those being laid off “will have to train their foreign replacements“.

Of course many of the “experts” continue to assure us that everything will be just fine.

In fact, one panel of “experts” recently came to the conclusion that there is “almost no chance of a recession this year”.

That would be absolutely wonderful news if it was true.

Sadly, the numbers that I just shared with you tell a completely different story.  They tell the story of an economy that is most definitely heading for a recession.

And according to John Williams of shadowstats.com, if the government was using honest numbers they would show that we are actually in a recession right now.

But what about the stock market?

Shouldn’t the fact that stock prices have been soaring be seen as an optimistic sign?

Well, there have been a few other stock bubbles of this nature throughout our history, and all of them have ended very badly.

In 1929, stock prices were at an all-time record high and it seemed like the economic good times would never end.

But then the stock market crashed and we plummeted into the Great Depression of the 1930s.

In 2000, the dotcom bubble pushed stock prices to absolutely absurd heights, but then stock prices quickly collapsed when the bubble burst and the U.S. economy fell into a very painful recession.

During the years leading up to 2008, stock prices once again rose to dizzying levels and it seemed like the party would last indefinitely.

But then the financial crisis struck, and the Great Recession of 2008 and 2009 was the most excruciating economic downturn our nation has experienced since the 1930s.

Unfortunately, we are even more primed for a stock market crash now than we were in any of the previous examples that I just shared.

So how do I know this?

Well, for one thing P/E ratios have become ridiculously inflated.  The following comes from Marketwatch…

Indeed stocks are overvalued according to the popular measure of price-to-earnings (P/E) — which compares the price of one share of stock to one year of per-share earnings relative to recent history. The S&P 500 index SPX, -0.29% is trading at 18.6 times forward earnings, according to FactSet data, above the average ratio of 16.7 during the past five years and 14.9 over the past ten.

In addition, price-to-sales ratios for the S&P 500 are now at the highest level in all of U.S. history…

The above chart, from Ned Davis Research, shows that price relative to sales for the S&P 500 is at a record high, “well in excess of what they were in 2000 or 2007 at those peaks,” wrote Ned Davis in a Wednesday note to clients.

Other measures, like the median price to earnings ratio — which exclude the skewed effects of very profitable and very unprofitable companies — shows the S&P 500 overvalued by nearly 30% versus the typical valuation level seen since 1964.

In other words, in the entire history of the United States stock prices have never been more overvalued than they are at this moment.

And every other time we have seen stock price ratios get this high, an absolutely horrifying stock market crash has followed.

The optimists are insisting that things will somehow turn out differently this time.

They assure us that everything is under control and that very bright days are ahead.

You can believe them if you want, but every indicator is pointing in the opposite direction.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

The Cold, Hard Facts Which Prove That The Past Decade Was Actually Quite Awful For The U.S. Economy

If this is what “the good times” look like, how nightmarish are “the bad times” going to be?  In America today, more than 500,000 of us are homeless, about 40 million of us are living in poverty, 50 percent of all workers make less than $33,000 a year, and 70 percent of us have cried about money.  But at least the economy has been “growing”, right?  Well, in this article I would like to address that.  Even if you believe that the highly manipulated economic growth numbers that the government puts out are legitimate, they still show that we are in one of the worst economic stretches in all of U.S. history.

From 1930 to 1933, the U.S. economy experienced four years in a row during which GDP growth each year was under 3 percent.

Up until this current stretch, that was the longest streak in our entire history.

Of course we have absolutely shattered that old record, and now that 2019 is over we can add one more year to our growing total.  At this point, you have to go back to 2005 to find the last year in which the U.S. economy grew by at least 3 percent.

That means that the U.S. economy has not actually had a “good year” since the middle of the Bush administration.

14 years in a row of economic growth below 3 percent is not anything to cheer about.  In fact, it is downright abysmal.

But the good news is that stock prices have been steadily rising over the past decade.  Just check out the numbers that David Wessel recently shared with PBS…

So, look, the stock market had a terrific decade. The S&P 500 rose nine out of 10 years. The S&P 500 is up nearly 30 percent this year, just this year alone. And half the stock market wealth in America is held by the top 1 percent of people.

The Federal Reserve created trillions of dollars out of thin air and pumped that money into the financial markets, and of course that was going to be good for stock prices.  And pushing interest rates to the floor also helped inflate the massive bubble that we now see on Wall Street.  The following bit of analysis comes from CNBC…

The Fed has kept borrowing rates low throughout the decade, gradually raising them from the end of 2015 through 2018, only to cut quickly again in 2019 to try to fend off any uncertainty in the economy. The central bank’s balance sheet sits at roughly $4 trillion, quadruple its size in 2008.

Needless to say, there is going to be a great price to pay in the long-term for such manipulation, but as long as stock prices keep rising most people don’t seem to care.

Unfortunately, these high stock prices do not represent any sort of permanent wealth.  They are simply a snapshot of what people are willing to pay at this moment in time, and a major disaster could come along which could cut those prices in half by next month.

Economic optimists also like to point to the employment numbers as evidence that the economy is doing well, but those numbers are so manipulated that they are essentially meaningless at this point.

In fact, most of the people that are transitioning from not having a job to having a job each month did not even count as “unemployed” the month previously…

This year, the portion of people who got jobs each month who wouldn’t even have been counted among the unemployed the month before reached 75 percent. That’s by far the highest it’s been in the last three decades. The percentage of working-age Americans who have jobs only returned to its pre-Great Recession peak in the last few months. (It still has a ways to go before it returns to its previous peak, just before the 2001 recession.)

Today, more than 100 million working age Americans do not have a job, and John Williams has calculated that if honest numbers were being used that the real unemployment rate would be above 20 percent.

The truth is that we still have an employment crisis in this country, and anyone that suggests otherwise is not being straight with you.

Meanwhile, productivity growth has been absolutely terrible over the past decade, an increasing share of the economy has become concentrated in corporate hands, and small business creation has continued to collapse.  The following comes from an excellent article by Annie Lowrey…

In many ways, the American economy became more sclerotic. Corporate concentration increased, with more industry sectors dominated by a small handful of firms. All the stories about the furious innovation coming from Silicon Valley and other tech-dominated regions aside, the start-up economy continued its long, slow collapse. The number of IPOs has fallen, and there are now half as many publicly listed businesses as there were in the late 1990s. Our cultural obsession with start-ups peaked at a time when companies under a year old were half as common as they were 40 years ago.

At the same time, the cost of living for average American families has been skyrocketing but our paychecks have not.  As a result, more Americans are being squeezed out of the middle class with each passing month.  Here is more from Lowrey…

Millions of young families who tried to save for a home were unable to purchase one, sapped by the toxic combination of high rents and a lack of stock. Throw in sky-high child-care prices, spiraling out-of-pocket health-care fees, and heavy educational-debt loads, and the 2010s crushed a whole generation as it entered its prime earning years. The Millennials are on track to be the first generation in contemporary history to end up poorer than their parents—unless Gen X beats them to it.

The only thing that has saved our economy from plunging into a horrific depression has been the greatest debt binge in all of human history.

Over the last ten years we have added more than 10 trillion dollars to the national debt, state and local government debt has soared to record highs all over the nation, corporate debt has risen more than 50 percent, student loan debt has more than doubled and the total amount of U.S. household debt is now nearing 14 trillion dollars.

By stealing from the future, we have been able to stabilize the present, but the long-term cost will be more than we can bear.

It is only a matter of time before our mistakes catch up with us, and the clock is ticking.

So please don’t try to tell me that the U.S. economy is in good shape.

The last decade was one of the worst stretches for economic growth in our history, and a day of reckoning awaits us during the decade that is directly ahead.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

We Haven’t Seen A Manufacturing Slowdown Like This Since The Last Financial Crisis

This isn’t what was supposed to happen.  According to the economic optimists, there was going to be a great “manufacturing renaissance” as America entered a wonderful new golden age of boundless prosperity.  But of course that is not what has happened.  Manufacturing activity has been declining for the past three months, and all across the country we are seeing economic conditions rapidly deteriorate.  Over and over, we are seeing economic numbers that are worse than anything we have seen since the last recession, but the economic optimists keep assuring us that these are just temporary blips on the way to America’s glorious economic renewal.  Well, they can keep believing in a mirage of future prosperity if they want, but the hard numbers keep telling us another story.  For example, the Chicago Purchasing Managers Index has now fallen to a level that was “last sustained during the financial crisis”…

Manufacturing activity across the country has contracted for three months, according to closely watched ISM data. In the Midwest, the slowdown has been more severe. The Chicago Purchasing Managers Index shows backlogs dropping to a level touched briefly four years ago but last sustained during the financial crisis.

In the middle of the country, it already feels like a manufacturing recession for many business owners.  Manufacturing facilities are being closed down, machines are being idled and thousands of workers are being let go.  The following comes from a CNBC article about our current manufacturing slowdown…

At Ameri-Source Metals’ machine shop outside Pittsburgh, stacks of graphite stubs have begun to pile up in a quiet corner.

Founder Ajay Goel said the customer who typically buys the stubs – a multinational chemicals company – now only needs one-fourth of the amount he used to produce. As a result, the machines have been idled and the workers who serviced them, laid off.

That sure doesn’t sound like a “booming economy” to me.

So far this year, thousands upon thousands of manufacturing workers have been laid off in the Upper Midwest.  By now, we were supposed to be adding large numbers of these good paying jobs, but instead we are losing them at a frightening pace.

In fact, it is being reported that more than 8,000 manufacturing jobs have been lost in the key state of Pennsylvania alone…

From January to September, the states bordering the Great Lakes have lost more than 25,000 manufacturing jobs: Pennsylvania lost 8,100; Ohio lost 6,000; Michigan lost 6,500; and Wisconsin lost 4,700.

Of course it isn’t just the manufacturing industry where employment is cooling off.  At this point, the number of job openings in the U.S. has fallen to an 18 month low, and it is expected to fall ever further in the months ahead.

Things have already gotten so bad that the mainstream media is running articles about how ordinary Americans can prepare for the coming recession.  For instance, the following comes from a CNN article entitled “What can you do now to financially prepare for a layoff later?”…

Sometimes, there are warning signs that you are in danger of being laid off — a buyout of your company, a merger or a strategic change in direction. Other times, the cuts come without warning. But while being laid off is not in your control, being financially prepared for such an event is.

“Companies evolve, change and fail and employees, and even business owners, need to be prepared for the unexpected,” said Mike Silane, a chartered financial analyst with 21 West Wealth Management.

And remember, all of this is happening even though the federal government is running trillion dollar deficits and the Federal Reserve is using up all the ammunition that they should be saving for the depths of the next recession.

In essence, the authorities are already implementing emergency measures in a desperate attempt to support the faltering U.S. economy, but it isn’t working.

This week, we learned that orders for Class-8 trucks in the month of October were down 51 percent from a year ago.

Can anyone explain to me how that is consistent with the “booming economy” narrative that the economic optimists are endlessly pushing?

Unfortunately, the truth is that we can see signs of a major slowdown all around us.  U.S. business hiring has fallen to a 7 year low, the Cass Freight Index has declined for 10 months in a row, and manufacturing is now the smallest share of the United States economy that it has been in 72 years.

But despite all of the evidence that is staring them right in the face, the economic optimists continue to insist that everything is probably going to be okay.  In fact, Goldman Sachs CEO David Solomon is telling us that “the chance of a U.S. recession between now and the election is small”…

“I’ve said that I still think the chance of a U.S. recession between now and the election is small — in the distributions of outcomes, it’s a smaller outcome — I said roughly 25%,” Solomon told Bloomberg Television in Berlin on Tuesday. “Nine months ago I probably would have told you it was very small, kind of 15%,” he said. “So I do think the uncertainty has increased a little bit some of the risk,” but economic data and earnings momentum have held up well and American consumers are “still very healthy,” he said.

Of course the truth is that American consumers are actually not “very healthy” at this moment.  Consumer confidence has fallen for 3 months in a row, and 44 percent of all Americans currently do not make enough money to cover their monthly expenses.

That is one of the reasons why consumers are piling up staggering amounts of debt, and that consumer debt bubble is starting to burst.

Unfortunately, the economic optimists will continue to push their false narrative up until the very end, and lots of people will believe them.

You can believe them too if you want, but it won’t change what is about to happen.

The crisis that so many have been anticipating is starting to play out, and our problems are likely to greatly accelerate in the months ahead.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

More Bad Economic Numbers Put A Huge Dent In The Case Of The Economic Optimists

For a long time, people have been trying to tell me that the U.S. economy is headed for a new golden era.  They insist that the U.S. will be more powerful and more respected than ever before, and that we will see unprecedented prosperity in this nation.  But despite extremely wild spending by the U.S. government and exceedingly irresponsible intervention by the Federal Reserve, the U.S. economy has not even had a “good” year in ages.  As I have pointed out numerous times, we have not had a year when U.S. GDP grew by at least 3 percent since the middle of the Bush administration, and that makes this the longest stretch of low growth in all of U.S. history by a very wide margin.  Many believe that brighter days may still be ahead, but all of the economic numbers that we have been getting in recent months make it abundantly clear that a new economic slowdown has begun.  I shared 14 of those numbers earlier this week, and I will share some brand new ones with you today.

Let’s start by taking a look at how U.S. consumers are faring.  U.S. consumer confidence has now fallen for 3 months in a row, and this week we learned that the Bloomberg Consumer Comfort Index has just fallen at the fastest pace in more than 8 years…

U.S. consumer comfort suffered its biggest weekly decline in more than eight years on a pullback in Americans’ assessments of the economy, personal finances and the buying climate, possibly signaling more moderate household spending approaching the holiday-shopping season.

The Bloomberg Consumer Comfort Index fell 2.4 points, the most since March 2011, to 61 in the week ended Oct. 27.

How in the world can anyone possibly claim that we have a “booming economy” after reading that?

We also just got another depressingly bad manufacturing number.  Experts were expecting a reading of 48.3 for the Chicago Purchasing Management Index, but instead it came in at just 43.2…

The Chicago Purchasing Management Index sank to 43.2 in October from 47.1 in the prior month. This is the lowest level since December 2015. Economists has expected a reading of 48.3, according to Econoday.

Any reading below 50 indicates deteriorating conditions.

We were promised a “manufacturing renaissance”, but instead manufacturing is now the smallest share of the U.S. economy that it has been in 72 years.

That is terrible.

Manufacturing traditionally provides good paying jobs, and as I pointed out the other day, U.S. business hiring has now declined to the lowest level in 7 years.

But at least we have plenty of government jobs, eh?

In the private sector, things are getting really tough, and we are starting to see lots of big companies lay off workers.

For example, Molson Coors just announced that they will be laying off up to 500 workers as they desperately search for a way to survive in this difficult economic environment…

To further drive efficiency and enable growth, Molson Coors is consolidating and reorganizing office locations. The Denver office will be closed and Chicago will be designated as the North American operational headquarters. Functional support roles currently housed in several offices around the country will now be based in Milwaukee, Wisconsin.

As a result, we expect to reduce employment levels by approximately 400 to 500 employees as part of this restructuring, primarily in our existing United States, Canada and International reporting segments, as well as Corporate.

You know that things are getting tough when even beer companies start laying people off.

Of course the “retail apocalypse” continues to escalate, and we just learned that Forever 21 will be closing most of their stores and laying off most of their employees…

More than 100 Forever 21 stores are slated to close as part of the fashion retailer’s Chapter 11 bankruptcy protection case, according to court documents filed this week.

The family-owned company, which has about 32,800 employees, said it would close “most” of its stores in Asia and Europe and up to 178 stores in the U.S. when it filed for protection Sept. 29.

A similar scenario is playing out for Dressbarn.  According to USA Today, all of their 544 stores “will close no later than Dec. 26″…

Liquidation sales at the remaining Dressbarn stores will start Friday, the struggling retailer announced Wednesday.

While the 544 stores will close no later than Dec. 26, the women’s clothing website is expected to relaunch in 2020 with a new owner, the company said in a news release.

It has been hoped that a limited trade agreement with China might bolster the economy at least temporarily, but now we are learning that Chinese officials expect “phase one” of the deal to “soon fall apart”.  According to CNN, the Chinese are pessimistic that our two countries will ever be able to “reach a full trade deal”…

Chinese officials have expressed doubts about whether the world’s two largest economies can reach a full trade deal, Bloomberg reported. That is casting a long shadow over the “phase one” agreement that the countries reached earlier in October.

This is consistent with my warnings from previous articles.  The Chinese wanted the Trump administration to stop the implementation of any more tariffs, and they were able to achieve that with “phase one”.  But in order to move forward with “phase two”, the Chinese are going to insist on the removal of all tariffs…

According to BBG’s sources, this is the bare minimum that Beijing would accept to move ahead with Phase 1: a commitment from the Americans to removing tariffs in Phase 2, and agreeing to cancel the next round of tariffs, set to take effect in December.

This is something that the Trump administration will never agree to, and so that puts us back where we originally started.

The Chinese will continue to “negotiate”, but only for stalling purposes.

There is only about a year left until the 2020 elections, and the Chinese are hoping to run out the clock on the Trump administration with as little disruption to their own economy as possible.

Unfortunately for the Chinese, Trump could possibly win another term, and if either Elizabeth Warren or Bernie Sanders win they could potentially be even tougher on trade with China.

In any event, we should not expect a comprehensive trade deal with China any time soon, and that is really bad news for the economic optimists.

Of course the truth is that everything that I have just shared is bad news for all of us.  The U.S. economy is seriously deteriorating, and things are only going to get worse in the months ahead.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep.  My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters.  (#CommissionsEarned)  By purchasing those books you help to support my work.  I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I can only allow this to happen if this “About the Author” section is included with each article.  In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished.  This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished.  I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

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