Why Does The Federal Reserve Keep Slamming The Panic Button Over And Over If Everything Is Okay?

What in the world is the Federal Reserve doing?  For months the Fed has been trying to publicly convince us that the U.S. economy is “strong”, and Fed Chair Jerome Powell recently unequivocally stated that “the Federal Reserve is not currently forecasting a recession”, but the Fed’s actions tell a completely different story.  If the U.S. economy really is performing well, any economics textbook will tell you that the Fed should not be reducing interest rates.  Interest rate cuts should be saved for times when the economy is in serious trouble, and using up all of your ammunition before a downturn has begun is simply foolish.  And the Federal Reserve continues to insist that the financial system is functioning normally, but meanwhile things are spinning so wildly out of control that they felt forced to announce overnight repurchase agreement operations for Tuesday, Wednesday and Thursday.  We haven’t seen this sort of emergency intervention since the last financial crisis, but the Fed’s message to the general public is that “all is well”.

Unfortunately, the truth is that all is not well, and we continue to get more troubling economic news with each passing day.

In a desperate attempt to inject some vigor back into the U.S. economy, the Fed cut interest rates for the second month in a row on Wednesday

For the second time in two months, the Federal Reserve on Wednesday agreed to press down on the economy’s accelerator to keep the 10-year-old expansion chugging along.

A divided Fed lowered its benchmark interest rate by another quarter percentage point to a range of 1.75% to 2% in an effort to stave off a possible recession triggered by a global economic slowdown and the U.S. trade war with China.

Of course this wasn’t enough to please President Trump, and shortly after the rate cut was announced he posted the following on Twitter

Jay Powell and the Federal Reserve Fail Again. No “guts,” no sense, no vision! A terrible communicator!

Apparently Trump wanted an even larger rate cut with the promise of more rate cuts in the future, but if the U.S. economy really is in good shape we shouldn’t be having any rate cuts at all.  This was a panic move by the Fed, and they are going to find themselves very short on ammunition when things really start to get crazy.

And conducting overnight repurchase agreement operations for three days in a row also reeks of desperation.  If you are not familiar with the repo market, the following is how Yahoo News described the key role it plays for our financial system…

Financial institutions use money markets to borrow for very short periods, from one day to a year, a crucial function to keep the gears of the economy running.

In so-called repurchase or “repo” agreements, banks borrow by putting up assets like Treasury notes as collateral and then repay the loans with interest the following day.

In a fit of panic, the Fed injected $53,000,000,000 into the system on Tuesday and another $75,000,000,000 on Wednesday.

But it turns out that Wednesday’s injection wasn’t nearly large enough.  The following comes from Zero Hedge

20 minutes after today’s repo operation began, it concluded and there was some bad news in it: as we feared, yesterday’s take up of the Fed’s repo operation which peaked at $53.2 billion has expanded substantially, and according to the Fed, today there was a whopping $80.05BN in bids submitted, an increase of $27 billion, or 50% more than yesterday.

It also meant that since the operation – which is capped at $75BN – was oversubscribed by over $5BN, that there was one or more participants who did not get up to €5 billion in the critical liquidity they needed, and that the Fed will see a chorus of demands by everyone (because like with the discount window, nobody will dare to be singled out) to either expand the size of its operations, implement a fixed operation and/or – most likely as per the ICAP note yesterday –  transition to permanent open market operations, i.e. QE

And then we learned that the Fed had announced that they were going to inject another $75,000,000,000 on Thursday.

This is utter insanity, and to many it is clear evidence that the Fed is losing control

“This just doesn’t look good. You set your target. You’re the all-powerful Fed. You’re supposed to control it and you can’t on Fed day. It looks bad. This has been a tough run for Powell,” said Michael Schumacher, director, rate strategy, at Wells Fargo.

We haven’t seen anything like this since the financial crisis of 2008, and many are deeply concerned about what will happen as liquidity demands reach a peak as we approach the end of the month.

As our financial system continues to become increasingly unstable, is this sort of Fed intervention going to become a regular thing?

Of course there are some analysts that are already projecting that a massive new round of quantitative easing is inevitable at this point, and there is a very good chance that they are right.

Meanwhile, the “real economy” continues to deteriorate as well, and one new survey has found that a majority of U.S. CFOs now expect our economy to tumble into a new recession by the end of next year

Chief financial officers in the United States have started to prepare themselves and their finances for a recession. For the first time in several years, economic uncertainty is now their lead concern, replacing worries about the difficulty of hiring and retaining talented workers.

According to CNN, 53 percent of chief financial officers expect the United States to enter a recession prior to the 2020 presidential election. That information was sourced from the Duke University/CFO Global Business Outlook survey released on Wednesday. And two-thirds predict a downturn by the end of next year.

Unfortunately, we may not have to wait that long, and according to John Williams of shadowstats.com if honest numbers were being used they would show that the U.S. economy is already in a recession right now.

For the moment, most Americans are still buying the narrative that everything is going to be just fine, but that will soon change.

The pace at which things are deteriorating is beginning to accelerate, and the Fed is going to have to hit the panic button many more times in the months ahead.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Major Red Flag: The Fed Shocks Everyone With An Emergency Intervention In The Repo Market For The First Time Since 2008

For the very first time since the last financial crisis, the Federal Reserve has been forced to conduct an emergency intervention in the repo market.  I know that a lot of people out there don’t know what the repo market is or how it works, and so let me start out with a very basic analogy that may help people understand what we are facing.  It doesn’t really matter how shiny your toilet is – if the pipes underneath don’t work, you are in a whole lot of trouble.  The repo market plays a critical role in our financial system, because it allows our banks to rapidly borrow money to fund their short-term needs.  But this week interest rates in the repo market started to shoot up to frightening levels, and the Federal Reserve was forced to intervene for the first time since the financial crisis of 2008.  The following comes from Yahoo News

The New York Federal Reserve Bank on Tuesday stepped into financial markets for the first time in more than a decade to keep interest rates in line with the Fed’s target.

Analysts say the operation appears to have been successful but it caused some jitters, coming as the Fed’s policy-setting Federal Open Market Committee opens a two-day meeting expected to produce a second cut in the benchmark lending rate.

This is essentially a form of “quantitative easing”, and many are concerned that this temporary intervention will not fix the larger problems that have resulted in this crisis.

And of course officials at the Fed probably never imagined that they would be intervening so soon, but they were compelled to make a move when interest rates started to spiral wildly out of control on Monday and Tuesday

The rate on overnight repurchase agreements hit 5% on Monday, according to Refinitiv data. That’s up from 2.29% late last week and well above the target range set in July by the Federal Reserve, which is 2% to 2.25%. The surge continued Tuesday, with the overnight rate hitting a high of 10% before the NY Fed stepped in.

An “overnight repo operation” was hastily put together as interest rates soared, and it ultimately resulted in 53 billion dollars being injected into our financial system…

On Tuesday morning, the NY Fed launched what’s called an “overnight repo operation,” during which the central bank attempts to ease pressure in markets by purchasing Treasurys and other securities. The goal is to pump money into the system to keep borrowing costs from creeping above the Fed’s target range .

The first attempt by the NY Fed was canceled because of “technical difficulties.” Minutes later, the NY Fed successfully injected $53 billion into the system.

And guess what?

The Fed has already announced that they are going to do it again on Wednesday, and this time the goal will be to inject approximately 75 billion dollars into the system.

If that sounds absurd to you, that is because it is absurd.

Sadly, the truth is that our financial system is starting to show signs of serious distress for the first time in more than a decade, and nobody is quite sure what is going to happen next.

But everyone agrees that the Fed being forced to intervene in the marketplace is not a good sign.  In fact, one industry veteran said that it “is without a doubt one of the worst things that can happen”…

If the plumbing doesn’t work, then it’s going to dramatically affect secondary trading of Treasuries. Which is the last thing they need when there’s massive issuance going on.

This is without a doubt one of the worst things that can happen. In many respects it overshadows the Fed moving tomorrow, because if the plumbing doesn’t work everything starts to break down. Everything is predicated upon your getting a reasonable funding rate. Otherwise why would you buy this paper to begin with. If you’re funding your overnight position at 6 why would you buy a 10-year at 2?

And now that the Fed has begun to intervene, when will they be able to stop?

Will they have to keep doing it for the rest of the week?

And what happens if interest rates begin to go wild again next week or next month?

In essence, Pandora’s Box has now been opened, and things could get really crazy moving forward.  According to Zero Hedge, if this currently repo operation is not sufficient to calm things down, the Fed could soon formally launch a new quantitative easing program…

While the Fed did not disclose how many banks participated in the operation, it is safe to say it was a sizable number. Worse, the result from today’s unexpected repo operation, we can now conclude that in addition to $1.3 trillion in ‘excess reserves’, a Fed which is now cutting rates and will cut rates by 25bps tomorrow, the US financial system somehow found itself with a liquidity shortfall of $53 billion that almost paralyzed the interbank funding market.

Oh, and for those wondering why the Fed did a repo, the answer is simple: it did not want to launch QE just yet. But make no mistake, once repo is insufficient, the Fed will have no choice but to escalate to the next step which is open market purchases.

Which brings us to the bigger question of how long such overnight repos will satisfy the market, and how long before the next repo rate spike prompts the Fed to do the inevitable, and restart QE.

Of course quantitative easing is something that should never be done unless we have a major crisis on our hands, and with each passing day it is becoming clearer that the global economy is headed for enormous trouble.  In fact, we just received some more alarming news about global manufacturing

The gloom of the world is centered around auto manufacturing, which is dragging on the global economy, fuelling fears that a worldwide trade recession has already begun.

The first domino to fall has been auto manufacturing, already hitting a near-record low in August, reported the Financial Times.

New data from IHS Markit global car industry purchasing managers’ index shows some of the sharpest declines across all sectors, not seen since 2009.

It is time to “batten down the hatches”, because rough weather is ahead.

Over and over again we keep seeing trouble signs that we haven’t seen since the last financial crisis, but most Americans still seem convinced that everything is going to be okay.

This move by the Fed is one of the biggest red flags yet, but I have a feeling that what we have seen so far is just the tip of the iceberg.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

28 Signs Of Economic Doom As The Pivotal Month Of September Begins

Since the end of the last recession, the outlook for the U.S. economy has never been as dire as it is right now.  Everywhere you look, economic red flags are popping up, and the mainstream media is suddenly full of stories about “the coming recession”.  After several years of relative economic stability, things appear to be changing dramatically for the U.S. economy and the global economy as a whole.  Over and over again, we are seeing things happen that we have not witnessed since the last recession, and many analysts expect our troubles to accelerate as we head into the final months of 2019.

We should certainly hope that things will soon turn around, but at this point that does not appear likely.  The following are 28 signs of economic doom as the pivotal month of September begins…

#1 The U.S. and China just slapped painful new tariffs on one another, thus escalating the trade war to an entirely new level.

#2 JPMorgan Chase is projecting that the trade war will cost “the average U.S. household” $1,000 per year.

#3 Yield curve inversions have preceded every single U.S. recession since the 1950s, and the fact that it has happened again is one of the big reasons why Wall Street is freaking out so much lately.

#4 We just witnessed the largest decline in U.S. consumer sentiment in 7 years.

#5 Mortgage defaults are rising at the fastest pace that we have seen since the last financial crisis.

#6 Sales of luxury homes valued at $1.5 million or higher were down five percent during the second quarter of 2019.

#7 The U.S. manufacturing sector has contracted for the very first time since September 2009.

#8 The Cass Freight Index has been falling for a number of months.  According to CNBC, it fell “5.9% in July, following a 5.3% decline in June and a 6% drop in May.”

#9 Gross private domestic investment in the United States was down 5.5 percent during the second quarter of 2019.

#10 Crude oil processing at U.S. refiners has fallen by the most that we have seen since the last recession.

#11 The price of copper often gives us a clear indication of where the economy is heading, and it is now down 13 percent over the last six months.

#12 When it looks like an economic crisis is coming, investors often flock to precious metals.  So it is very interesting to note that the price of gold is up more than 20 percent since May.

#13 Women’s clothing retailer Forever 21 “is reportedly close to filing for bankruptcy protection”.

#14 We just learned that Sears and Kmart will close “nearly 100 additional stores” by the end of this year.

#15 Domestic shipments of RVs have fallen an astounding 20 percent so far in 2019.

#16 The Labor Department has admitted that the U.S. economy actually has 501,000 less jobs than they previously thought.

#17 S&P 500 earnings per share estimates have been steadily falling all year long.

#18 Morgan Stanley says that the possibility that we will see a global recession “is high and rising”.

#19 Global trade fell 1.4 percent in June from a year earlier, and that was the biggest drop that we have seen since the last recession.

#20 The German economy contracted during the second quarter, and the German central bank “is predicting the third quarter will also post a decline”.

#21 According to CNBC, the S&P 500 “just sent a screaming sell signal” to U.S. investors.

#22 Masanari Takada is warning that we could soon see a “Lehman-like” plunge in the stock market.

#23 Corporate insiders are dumping stocks at a pace that we haven’t seen in more than a decade.

#24 Apple CEO Tim Cook has been dumping millions of dollars worth of Apple stock.

#25 Instead of pumping his company’s funds into the stock market, Warren Buffett has decided to hoard 122 billion dollars in cash.  This appears to be a clear indication that he believes that a crisis is coming.

#26 Investors are selling their shares in emerging markets funds at a pace that we have never seen before.

#27 The Economic Policy Uncertainty Index hit the highest level that we have ever seen in the month of June.

#28 Americans are searching Google for the term “recession” more frequently than we have seen at any time since 2009.

The signs are very clear, but unfortunately we live at a time when “normalcy bias” is rampant in our society.

If you are not familiar with “normalcy bias”, the following is how Wikipedia defines it…

The normalcy bias, or normality bias, is a belief people hold when considering the possibility of a disaster. It causes people to underestimate both the likelihood of a disaster and its possible effects, because people believe that things will always function the way things normally have functioned. This may result in situations where people fail to adequately prepare themselves for disasters, and on a larger scale, the failure of governments to include the populace in its disaster preparations. About 70% of people reportedly display normalcy bias in disasters.[1]

For most Americans, the crisis of 2008 and 2009 is now a distant memory, and the vast majority of the population seems confident that brighter days are ahead even if we must weather a short-term economic recession first.  As a result, most people are not preparing for a major economic crisis, and that makes us extremely vulnerable.

In 2008 and 2009, the horrible financial crisis and the bitter recession that followed took most Americans completely by surprise.

It will be the same this time around, even though the warning signs are there for all to see.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Guess What Warren Buffett Is Doing With His Money Right Now?

Does Warren Buffett believe that a major financial crisis is coming?  In life, what people do is far more important than what they say, and what Warren Buffett is doing with his money right now speaks volumes.  During the second half of 2019, a lot of the “experts” are warning about the possibility of a market crash, and corporate insiders have been selling stocks at a rate that we haven’t seen since the last financial crisis.  There appears to be a widespread belief that the market is about to take a really negative turn, and we haven’t seen this sort of a “race for the exits” in a very long time.  But when there is a lot of fear on Wall Street, that can sometimes be an opportunity to make a lot of money.  Warren Buffett certainly hasn’t been afraid to “zig” when others are “zagging” over the years, and if he believed that there were great opportunities in the marketplace right now he would not hesitate to strike.  But as you will see below, he’s not doing that.

Warren Buffett is the most famous investor in America today, but if you are not familiar with him, the following is a pretty good introduction from Wikipedia

Warren Edward Buffett (/ˈbʌfɪt/; born August 30, 1930)[2] is an American business magnate, investor, speaker and philanthropist who serves as the chairman and CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world[3][4] and has a net worth of US$82 billion as of July 18, 2019, making him the third-wealthiest person in the world.[5]

Buffett was born in Omaha, Nebraska. He developed an interest in business and investing in his youth, eventually entering the Wharton School of the University of Pennsylvania in 1947 before transferring and graduating from the University of Nebraska at the age of 19. He went on to graduate from Columbia Business School, where he molded his investment philosophy around the concept of value investing that was pioneered by Benjamin Graham. He attended New York Institute of Finance to focus his economics background and soon after began various business partnerships, including one with Graham. He created Buffett Partnership, Ltd in 1956 and his firm eventually acquired a textile manufacturing firm called Berkshire Hathaway, assuming its name to create a diversified holding company. In 1978, Charlie Munger joined Buffett and became vice chairman of the company.[6][7]

Buffett became one of the wealthiest people in the entire country by aggressively investing his money.  His keen instincts have enabled him to make the right move far more often than not, and that is why what he is doing with his money right now has so many people concerned.

Instead of pumping his company’s cash into the stock market, Buffett has decided to hoard it.  In fact, Berkshire Hathaway currently has 122 billion dollars that is just sitting there and doing nothing at all…

Warren Buffett, known for being one of the world’s most prescient investors, has kept quiet on whether U.S. equities are too expensive at a time when the global economy is slowing, Bloomberg reports. But he’s reportedly hoarding a record $122 billion in cash at Berkshire Hathaway Inc., leading to some speculation that he sees a recession on the horizon, or at least is sending some sort of warning. The cash pile is more than half the value of Berkshire’s $208 billion portfolio of public companies, and the only time that percentage has reportedly been higher since 1987 was in the years leading up to the 2008 financial crisis.

Yet again, we are talking about something that hasn’t happened since the last financial crisis.

Red flags are popping up all around us, and yet most people are choosing not to pay attention.

If Buffett believed that an “economic boom” was coming and that stock prices were going to go higher, sitting on a giant mountain of cash wouldn’t make any sense at all.

But if he believed that the market was about to crash and that stock prices would soon be far cheaper than they are now, having a mammoth cash hoard would make all of the sense in the world.

Of course Buffett is not the only one that can see what is coming.  Earlier today, a CNBC article lamented the fact that there has been a “sudden pullback” in spending among wealthy individuals all over America…

From real estate and retail stores to classic cars and art, the weakest segment of the American economy right now is the very top. While the middle class and broader consumer sections continue to spend, economists say the sudden pullback among the wealthy could cascade down to the rest of the economy and create a further drag on growth.

Luxury real estate is having its worst year since the financial crisis, with pricey markets like Manhattan seeing six straight quarters of sales declines. According to Redfin, sales of homes priced at $1.5 million or more fell 5% in the U.S. in the second quarter. Unsold mansions and penthouses are piling up across the country, especially in ritzy resort towns, with a nearly three-year supply of luxury listings in Aspen, Colorado, and the Hamptons in New York.

When an economic crisis is ahead, the correct thing to do is to reduce spending, and obviously that is precisely what many at the top of the economic pyramid have decided to do.

Meanwhile, millions of other Americans do not understand what is happening, and they just assume that everything is going to be just fine somehow.

A lot of people out there seem to believe that the problems that caused the last financial crisis were “fixed” and that the good times will just keep on rolling for many years to come.

Perhaps the blind optimists will be proven right and Warren Buffett will be proven wrong this time.

It is theoretically possible that this could happen, but I certainly wouldn’t bet on it.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Preparing For A Financial Apocalypse: Insiders Are Selling “$600 Million Of Stock Per Day In August”

In the U.S., corporate insiders have been selling stocks at an average rate of 600 million dollars per day during the month of August.  This kind of wild selling indicates that there is a tremendous amount of fear among corporate insiders right now, and such selling would only make sense if a stock market crash is imminent.  And without a doubt, we have already seen volatility return to Wall Street in a major way as our trade war with China has dramatically escalated.  Many Americans are hoping that things will start to calm down and that our trade conflict with China can be resolved calmly, because if things take a bad turn many analysts are warning that we could soon be facing the worst financial crisis since 2008.  Here is one example

Remember the brutal sell-off last year when stocks suffered their worst December since the Great Depression? Something worse than that could happen in days, a Nomura analyst said.

Macro and quant strategist Masanari Takada turned heads earlier this month with his bold call for a “Lehman-like” plunge. He’s sticking with this prediction as market sentiment shows no signs of improving, leading him to believe a monster sell-off could arrive this week.

With chilling forecasts like that being thrown around on a regular basis these days, it is understandable that corporate insiders would be tempted to get out of the market, and right now they are racing for the exits at a pace that is absolutely breathtaking.  The following comes from CNN

Corporate insiders have sold an average of $600 million of stock per day in August, according to TrimTabs Investment Research, which tracks stock market liquidity.

August is on track to be the fifth month of the year in which insider selling tops $10 billion. The only other times that has happened was 2006 and 2007, the period before the last bear market in stocks, TrimTabs said.

In other words, the last time we saw corporate insiders dump stocks like this was just before the last financial crisis.

Clearly, many among the elite are preparing for the worst.  They can see financial disaster looming on the horizon, and they are getting out of the market while the getting is still good.

On the other hand, there are multitudes of Americans out there that are completely convinced that President Trump will be able to successfully navigate us through any storms that may be ahead.

When Barack Obama was in the White House, national interest in prepping soared to all-time highs, but since Trump entered the White House things have completely reversed.  The following comes from Business Insider

But since President Trump took office in 2016, prepping has taken a dive nationwide. There are fewer prepper conventions held across the US, and several prepper business owners who spoke with Business Insider (as well as Mills), say the prepping community is not as active as it was three years ago. It’s an indication of how Trump relieves many of the worst fears of his voters, including conservative preppers.

“It definitely seems to be cycling with the White House,” prepper and inventor Mikhail Merkurieff, who builds and sells prepping and camping tools including stoves, cooking utensils, and portable shelters, told Business Insider.

With a Republican in the White House, many conservatives simply do not see any reason to prep anymore, and so things are completely different than they were about four or five years ago.  Many former preppers seem to believe that having Trump in the Oval Office means that “we don’t have to worry about anything”

Rick Austin, who organizes a popular “Prepper Camp” in the hills of North Carolina every year, which is attended by roughly 1,400 worst-case-scenario preparers hoping to beef up their skills, also noted a downturn.

“Businesses are down because people have kind of gone, ‘Oh, you know, Trump’s in office, we don’t have to worry about anything,'” he said while milking his goats from an “undisclosed location” in the Appalachian Mountains.

So we are witnessing something extremely strange right now.

Corporate insiders and the Wall Street elite are feverishly preparing as if a “perfect storm” was about to strike, but meanwhile millions upon millions of hardcore conservatives feel completely relaxed because they feel like Trump has everything under control.

And President Trump did cause quite a turnaround in the financial markets on Monday when he told the press that China had called and had requested a return to the negotiating table…

“China called last night our top trade people and said. ‘Let’s get back to the table,’ so we will be getting back to the table and I think they want to do something. They have been hurt very badly but they understand this is the right thing to do and I have great respect for it. This is a very positive development for the world,” Trump said.

Subsequently, however, the Chinese denied that such a call had taken place

In Beijing, Foreign Ministry spokesman Geng Shuang said he was not aware that a phone call between the two sides had taken place. And Hu Xijin, editor-in-chief of Chinese state-run newspaper the Global Times, denied that negotiators had held the phone calls Trump described.

“China didn’t change its position. China won’t cave to U.S. pressure,” said Hu, who is widely seen as a mouthpiece for Beijing’s messaging.

We shall see where things go from here.

It would certainly be a step in the right direction if the two sides start talking again, and the Chinese have definitely expressed a desire to avoid any further escalations

In response, Chinese Vice Premier Liu He told a state-controlled newspaper on Monday that “China is willing to resolve its trade dispute with the United States through calm negotiations and resolutely opposes the escalation of the conflict,” Reuters first reported, citing a transcript of his remarks provided by the Chinese government. Liu is China’s top trade negotiator.

Speaking at a technology conference in China, Liu added: “We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world.”

But with a presidential election looming about a year away, the Chinese are simply not going to accept any deal that is appreciably different from what they expect that they could get from Joe Biden or Elizabeth Warren.

And it is also very unlikely that President Trump will cave in and give the Chinese what they want.  So ultimately we will see episodes of hope on Wall Street on the days when it looks like the two sides may start talking again, but there won’t be a deal any time soon.

Many people believe that we are living during one of the most critical moments in U.S. history, and we haven’t seen this sort of fear in the financial markets in a long time.

At this moment, corporate insiders are dumping stocks as if “the everything bubble” was about to burst in a major way.  And if those corporate insiders are correct, millions upon millions of other Americans will be completely and utterly unprepared for what is about to happen.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

We Are Being Warned That The Last Week Of August “Could Be Highly Volatile” For Global Financial Markets

Are things about to break loose in a major way?  At the end of last week, the trade war between the United States and China escalated dramatically, and investors all over the globe really started freaking out.  Unfortunately, developments over the weekend have only made things worse, and that means that this could be a very “interesting” week for global financial markets.  As I write this article, stock prices around the world are plunging, the price of gold is spiking and the Chinese yuan is crashing.  There is clearly a lot of fear out there right now, and at this point even CNBC is warning that the last week of this month “could be highly volatile”…

The final week of August — the bittersweet end of summer for many— could be highly volatile, as markets fret over the economy and the latest developments in trade wars.

Of course things can swing rapidly from moment to moment in this environment.  President Trump could say something in a few hours that temporarily gives investors some hope, and that could cause markets to swing wildly upward for a little while.  Everyone is on edge right now, and every piece of significant news is likely to cause gyrations in the marketplace.

But overall the trend is clearly down.  U.S. stocks have now fallen for four weeks in a row, and many are becoming deeply concerned about what September will bring.

And for many U.S. businesses, this trade war has turned into a complete nightmare.  Executives crave predictability, but now everywhere we look there is chaos, and this is causing a lot of headaches for business leaders

Businesses crave predictability so they can make informed decisions and plan for the future. Many companies that depend on Chinese manufacturers and consumers have already shifted supply chains out of the country and taken other steps to reduce their exposure to China. And while Mr. Trump’s tweets are unlikely to trigger immediate changes, more uncertainty is unwelcome.

“Continued escalation and rhetoric are harmful to American businesses, workers and farmers,” said Tom Linebarger, chief executive of Cummins Inc., which makes diesel engines. Cummins pays a tariff on components it imports from its own plants in China for engines assembled at U.S. factories by American workers. The tariffs amount to a tax paid by Cummins’ customers, he said.

Unfortunately, nobody can no longer deny that global economic activity is really starting to slow down.  We just learned that global trade was down 1.4 percent in June from a year earlier, and that represented the largest decline that we have seen since the last financial crisis

World trade volume – a measure of imports and exports of merchandise across the globe – declined in its zigzag manner in June to the lowest level since October 2017, according to the Merchandise World Trade Monitor by CPB Netherlands Bureau for Economic Policy Analysis. The index was down 1.4% from June 2018. This small year-over-year decline is the biggest year-over-year decline since the Financial Crisis, and it’s a reversal from the heady growth in 2017 and 2018 that had topped out at 6.7%.

I have been using phrases like “since the last financial crisis” and “since the last recession” in almost every article recently.  We are seeing so many things happen that we haven’t seen for a decade or longer, and yet most Americans still don’t seem to understand that we have a real crisis on our hands.

If the U.S. and China were to mend their relationship and agree to a comprehensive trade deal, that would certainly help things.

Unfortunately, that isn’t going to happen.

In fact, both sides appear to be digging in even more.  For example, the White House just told us that President Trump “regrets not raising the tariffs higher”

When asked if Trump had second thoughts about Friday’s move to escalate the trade war with China, Trump said “Yup.” “I have second thoughts about everything,” he added.

Hours later, the White House issued a statement saying that Trump meant to say that he wished he had raised tariffs on Beijing even higher.

“His answer has been greatly misinterpreted. President Trump responded in the affirmative – because he regrets not raising the tariffs higher,” White House spokeswoman Stephanie Grisham wrote in a statement.

And the Chinese are warning that we should not “underestimate the determination” of the Chinese people and that they will be the ones to “have the last laugh”

On Saturday, China’s commerce ministry issued a statement calling on Washington not to “misjudge the situation and underestimate the determination of Chinese people” after US President Donald Trump announced new tariffs on Chinese imports.

“The US should immediately stop its wrong action, or it will have to bear all consequences,” the statement said.

At the same time, a sharply worded commentary in the official party mouthpiece, People’s Daily, said China had the strength to continue the dispute and accused Washington of sacrificing the interests of its own people. Published under the pseudonym “Wuyuehe”, the piece described the latest tariff measures by the US as “barbaric”. The op-ed said China’s own tariffs on $75 billion worth of American products, announced late on Friday, were a response to America’s unilateral escalation of the trade conflict, and vowed that China was determined to fight back “until the end”.

“China’s will to defend the core interests of the country and the fundamental interests of the people is indestructible, and will not fear any challenge,” the author wrote, promising that “history will prove that the side on the path of fairness and justice will have the last laugh.”

As I have repeatedly warned, there isn’t going to be a trade deal before the 2020 presidential election.

So that means that things are going to get progressively worse, and we need to be prepared for a lot of economic pain.

At this point, even U.S. Senator Lindsey Graham is telling us that the American people are just going to have to “accept the pain that comes with standing up to China”

Sen. Lindsey Graham, R-S.C., said on Sunday that Democrats should not criticize President Trump for taking on China over trade as they have complained for years about Beijing’s policies but done nothing.

“Every Democrat and every Republican of note has said China cheats,” Graham said on CBS News’ “Face the Nation.” “The Democrats for years have been claiming that China should be stood up to, now Trump is and we’ve just got to accept the pain that comes with standing up to China.”

Sadly, the truth is that the American people are not well equipped to deal with pain.  We have been spoiled by decades of debt-fueled “prosperity”, and even a relatively minor economic downturn would result in a massive national temper tantrum.

Right now our nation is a seething cauldron of anger and frustration, and the mainstream media is stirring the pot on a daily basis.  It isn’t going to take much to spark an explosion, and this will especially be true the closer we get to the next presidential election.

The season of “the perfect storm” is upon us, and what is coming next is going to be one of the most chaotic chapters in modern American history.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

We Just Witnessed The 4th Largest Single Day Point Decline In U.S. Stock Market History

You had better buckle up, because it looks like we are in for a bumpy ride.  On Wednesday, the Dow Jones Industrial Average was down a whopping 800 points.  Not only was that the worst day of 2019, but as you will see below, there have only been three days in U.S. history that have been worse.  An inversion of the yield curve sent investors into panic mode, and the selling was fast and furious.  And of course back on August 5th we witnessed a 767 point decline.  So this is now the second historic decline that we have seen so far this month, and the month is only about half over.  Could it be possible that we are on the verge of a major stock market meltdown?

An 800 point drop is definitely rare.  According to CNN, the following were the 10 largest single day point declines for the Dow Jones Industrial Average prior to Wednesday…

02/05/2018 … -1,175.21

02/08/2018 … -1,032.89

10/10/2018 … -831.83

12/04/2018 … -799.36

09/29/2008 … -777.68

08/05/2019 … -767.27

10/15/2008 … -733.08

03/22/2018 … -724.42

09/17/2001 … -684.81

12/01/2008 … -679.95

So that means that Wednesday’s plunge was officially the 4th largest single day plunge that we have ever seen.

The “too big to fail” banks were on the cutting edge of the decline, and some of the biggest names in banking got absolutely monkeyhammered

Bank stocks led the declines as it gets tougher for the group to make a profit lending money in such an environment. Bank of America and Citigroup fell 4.7% and 5.2%, respectively, while J.P. Morgan also dropped 4.15%. The S&P 500 Financials Sector dipped into correction territory on an intraday basis.

If you will remember, bank stocks also led the way down in 2008.

Is history about to repeat itself?

The primary thing that set off this fresh wave of panic on Wall Street was a yield curve inversion

The U.S. government bond market sounded alarms Wednesday as investors fleeing riskier assets drove the 30-year bond’s yield to a record low and the 10-year yield fell below the rate on the two-year for the first time since 2007.

The 10-year Treasury yield dipped as much as 1.9 basis points below the two-year yield in what’s considered a harbinger of a U.S. economic recession beginning in the next 18 months.

When longer-duration bonds are yielding less than shorter-duration bonds, that is a sign that investors are anticipating that economic conditions will be deteriorating.  And as history has shown us, recessions are almost always preceded by yield curve inversions, and so many are taking this as an extremely troubling sign.

So now all eyes are on the Federal Reserve and other global central banks, and many analysts are strongly urging them to do something

“The bond market is saying central banks are behind the curve,” said Marc Ostwald, global strategist at ADM Investor Services in London. “It’s all doom and gloom on the global economy.”

Personally, I don’t really like to use the term “gloom and doom”, but it is definitely an appropriate phrase for what we are witnessing at the moment.  On Wednesday, we got some more really bad economic news from Germany and from China

Economic output in Germany, the world’s fourth-largest economy, contracted in the second quarter, according to a report Wednesday, while a report on factory output in China, the second-largest economy, came in lower than expected.

“It’s almost like we’re starting to see a textbook version of a pre-recessionary period,” Nicholas Akins, chief executive of Ohio-based American Electric Power Co. , said in an interview Wednesday. The company provides electricity to industrial, commercial and residential customers in 11 states.

Of course the more everyone on Wall Street talks about a “recession”, the more everyone is going to start acting like one is coming, and that is actually going to make one more likely.

And it isn’t just Wall Street that is buzzing about the potential for an economic slowdown.  According to the Federal Reserve Bank of New York, the odds of a recession happening during the next 12 months are now the highest they have been since the last financial crisis

The curve isn’t the only thing flashing high alert. The Federal Reserve Bank of New York’s index showing the probability of a U.S. recession over the next 12 months is close to its highest level since the global financial crisis, at around 31%.

Over and over again, we are seeing things happen that have not happened since the last recession.  At first the mainstream media was slow to catch on, but now just about everybody is acknowledging the warning signs that are all around us.

Unfortunately, the financial bubble that we are facing today is far, far larger than the one that burst in 2008.  And so when this one also bursts, the pain will be much greater than we experienced the last time around.

Many are fearing the worst.  For example, just check out what Martin Armstrong is saying

I am overseas as a crisis is brewing which many might rename the “Lehman Moment” to something more up to date. Clearly, the stakes are far higher to the world economy than anyone may truly appreciate. We are cascading toward a perfect financial storm.

Hmm – there is yet another prominent name that is using the words “perfect” and “storm” together.

Very interesting.

We’ll see where things go from here.  Since the Dow is already so ridiculously high, an 800 point drop is definitely not the end of the world.  But without a doubt, the market’s downward momentum is beginning to pick up speed, and it isn’t going to take much to turn this into a full-blown crash.

As I have stated numerous times, our financial markets are more primed for a crash right now than they were in 2008.  And when this “everything bubble” finally completely bursts, the financial carnage is going to be off the charts.  I very much encourage you to get your financial house in order, because it looks like the chaos could start escalating quite rapidly.

Every major stock market bubble in U.S. history has ended badly, and this one will too.  We have been waiting for this twisted game to start unraveling for quite some time now, and it may be starting to happen.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

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