Stock Market

Sabotage: The Deep State Has Destroyed Trump’s Chances Of A Trade Deal With China, And The Stock Market Is Tanking As A Result

Somebody out there apparently does not want President Trump to make a trade deal with China.  Just after U.S. and Chinese officials agreed to suspend the implementation of new tariffs for 90 days, one of China’s most important tech executives was literally kidnapped as she was changing planes in Canada.  Huawei CFO Meng Wanzhou was simply on her way to Mexico, but at the urging of U.S. authorities the Canadians grabbed her and are refusing to let her go.  Reportedly, the plan is to extradite her to the United States where she will apparently face charges relating to Huawei’s evasion of U.S. sanctions against Iran.  When Trump was negotiating face to face with the Chinese, he was not aware that this was taking place.  So now all of Trump’s hard work is out the window, and our relations with the Chinese are probably the worst that they have been since the Korean War.

If U.S. authorities wanted to punish Huawei, they should have just slapped a big fine on them and have been done with it.

The Chinese would have been annoyed, but not that much damage would have been done.

But kidnapping a high profile member of Chinese tech loyalty and throwing her in prison is something that the Chinese will not forgive.

The Chinese are a deeply nationalistic people, and the kidnapping of Meng Wanzhou is being treated as a grave national insult in China.  If the goal of the Deep State was to really upset the Chinese, they picked a perfect target.  The following comes from Robert Wenzel…

“This is a really big deal. Ms. Meng is by birth and position a member of China’s corporate royalty,” David Mulroney, a former Canadian ambassador to China, is quoted by TGM as having said.

According to TGM, Meng, 46, who also goes by the name Sabrina, was appointed CFO of Huawei in 2011 and is also one of four deputy chairs. She appears to be being groomed for the top job at Shenzhen-based Huawei, which is now the world’s second-largest maker of telecommunications equipment.

Just imagine how Americans would feel if China kidnapped a high profile member of our tech royalty and multiply that outrage by about 10.

Until Meng Wanzhou is let go, there is not going to be any deal with China.  Many Americans are not familiar with Huawei, but they are essentially China’s version of Apple or Microsoft.  The following originally comes from CNN…

Huawei is one of the world’s biggest makers of smartphones and networking equipment. It is at the heart of China’s ambitions to reduce its reliance on foreign technology and become an innovation powerhouse in its own right.

The country is pumping hundreds of billions into its “Made in China 2025” plan, which aims to make China a global leader in industries such as robotics, electric cars and computer chips. The introduction of 5G wireless technology, which hinges on Huawei, is a top priority.

Meng Wanzhou is not just the CFO of the company.  She is also the daughter of the founder of the company and she is considered to be a hero by millions of Chinese.

So what in the world is the Deep State thinking?  Are we going to start regularly kidnapping individuals that work for foreign corporations that have somehow violated U.S. laws?

And should Americans expect the same treatment?  How would you like it if your mother or daughter was kidnapped while changing planes in a foreign country because the company that she works for had committed some sort of violation?

I don’t want to make it sound like Huawei is perfectly innocent, because they aren’t.  But this is a move that is not just going to ensure a nightmarish trade war with China.  Ultimately, things could get a whole lot worse than that.

At this point, the Chinese have summoned the U.S. ambassador and have formally demanded Meng Wanzhou’s release…

The Chinese foreign ministry on Sunday summoned U.S. Ambassador to China Terry Branstad to protest the detention of a senior tech executive by the Canadian authorities “at the unreasonable behest of the United States.”

Vice Foreign Minister Le Yucheng demanded the release of Meng Wanzhou, chief financial officer of Huawei Technologies, who is accused by U.S. officials of attempting to circumvent U.S. sanctions on Iran.

It would be wonderful if Meng Wanzhou was released, but it doesn’t look like that is going to happen.

So now our relationship with China is officially in the toilet, and this is one of the factors that could push stock prices much lower once again this week.  In fact, as I write this article Dow futures are way down…

U.S. stock futures fell on Sunday night as traders feared an intensifying trade war between the United States and China.

Dow Jones Industrial Average futures dropped 197 points, implying a decline of 173.95 points at Monday’s open. S&P 500 and Nasdaq 100 futures also declined. The losses would add to a steep decline from last week.

This current “correction” was supposed to be over by the time December rolled around, but instead stock prices accelerated their decline last week.

And many of those that work in financial circles are starting to use language that is much more pessimistic than we have become accustomed to seeing.  Here is just one example…

“We’re very mindful once again where we’re at in the cycle,” Gregory Carmichael, chief executive of the Cincinnati-based lender Fifth Third, said at a conference last week. “We’re well positioned to deal with the downturn in the economy, and we’ll be very cautious.”

I don’t know what “well positioned to deal with the downturn in the economy” means exactly, but it sounds nice.

It frustrates me that so few people seem to understand the gravity of the situation that we are facing.  Our stores are filled with cheap products that come from China and they own more than a trillion dollars of our national debt.  The two largest economies in the entire world are decoupling from one another, and if the Chinese conclude that they are not able to salvage the relationship then they will rapidly become an exceedingly dangerous enemy.

This is a major turning point, and the kidnapping of Meng Wanzhou has put us on a road that doesn’t lead anywhere good.  Hopefully things can rapidly be fixed, because if not, events are likely to start escalating quite dramatically.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

“Panic-like selling” grips Wall Street as the economic numbers point to “a lot of unpleasant things that nobody wants to admit”

Fear is spreading like wildfire on Wall Street, and on Friday we witnessed yet another wave of panic selling.  The Dow Jones Industrial Average fell another 559 points, closing at 24,389.  Previously I had warned that once we solidly broke through 25,000 that it could trigger an avalanche of panic selling, and that is precisely what has happened.  The Dow is now down more than 9 percent from the peak in early October, but the S&P 500 is doing even worse.  The S&P 500 is now down 10.2 percent from the September peak, and that means that it is officially in correction territory.  It has now been two solid months, and the sell-off on Wall Street shows no signs of abating.

And for certain sectors, the carnage that has been unfolding can definitely be called a “crash”.

FANG stocks are now down 24 percent from the peak, and global systemically important banks have now fallen a whopping 33 percent from the 52-week high.

Ladies and gentlemen, the big banks are officially in trouble once again, and it is going to be a wild ride moving forward.

And the way that things wrapped up for the markets on Friday has many wondering what Monday will bring.  According to one key index, investors were dumping stocks so rapidly on the Nasdaq on Friday afternoon that it was officially considered to be “panic-like activity”…

Selling on the Nasdaq reached panic-like proportions Friday afternoon with less than an hour left in regular trade, as the exchange’s Arms index rose. The Arms is a volume weighted breadth measure, that tends to rise when the broader market falls, as the intensity of the selling in declining stocks is usually greater than the intensity of buying in rising stocks. Levels above 2.000 are considered panic-like activity. The Nasdaq Composite Index COMP, -3.05% was off 3% at 6,969. The number of advancing stocks compared against decliners was at 2,108 to 787, pushing the Arms index on the exchange to 2.068.

Thanks to Friday’s nightmare, this week ended up being the worst week for U.S. stocks since March.

This wasn’t supposed to happen in December.  According to the experts, we were due for a nice “Santa Claus rally” and everybody was supposed to go home for the holidays really happy.

But that hasn’t happened.  Instead, the markets are coming apart like a 20 dollar suit.

And guess who CNN is blaming for the stock market decline?

I’ll give you just one guess, and his name rhymes with “Gump”.  The following comes from CNN…

From “Tariff Man” tweets and inverting yield curves to conflicting messages from Trump advisers and the arrest of a Chinese executive, there is no shortage of headlines keeping investors awake at night.

They don’t want to admit that the same thing would be happening if Hillary Clinton was in the White House.

This isn’t about politics.  This is about a financial system that has always been destined to collapse.

Meanwhile, the stunning implosion of the cryptocurrency bubble continues to accelerate.  At this point, the price of Bitcoin has now fallen more than 80 percent from where it was a year ago…

In December 2017, bitcoin prices hit a record high of just under $20,000. Flash forward to December 2018 and bitcoin is now trading a little below $3,400. That’s a more than 80% plunge. Bitcoin is at a 15-month low.

But prices have really gotten whacked this week, falling nearly 20% in just the past five days alone.

Other major cryptos such as Ripple, Ethereum and Litcoin have experienced similar crashes.

Yes, this is really happening.  Bubble after bubble is bursting, and a day of reckoning for the global financial system is here.

Things are unfolding just as myself and so many others have been warning.  Over the past couple of years, there has been a bubble of false hope even though none of the problems that caused the last financial crisis were ever fixed.  Instead, the Federal Reserve and other global central banks simply patched things together and inflated the bubbles to a much larger degree than we had ever seen before.

Now everything is unraveling, and many of the “experts” are still in denial.  I really like how Peter Schiff made this point during a recent interview…

“What has happened in the last week is very, very bullish for the price of gold, and the price of gold is not catching much of a bid. I think again, the main reason for this is because nobody gets it. People still think this is a bull market. They’re not worried about the decline. They think it’s just a buying opportunity. It’s just a correction. They still think the economy is good. Even though the bond market doesn’t, even though the yield curve is inverting in the front end of the curve, people are dismissing that. They’re dismissing the housing data; they’re dismissing the build in the crude inventories. They’re not looking at any of the real data because nobody wants to believe it. Everybody still wants to believe all the hype — that this economy is great, that this economy is booming. Nobody wants to deal with the truth; because you know how grim the reality is? Because if you have to accept the fact that this economy is going into recession, then you have to accept a lot of unpleasant things that nobody wants to admit.”

As always, Peter Schiff is making a lot of sense.

If you follow my work on a regular basis, than you already know that I have been highlighting the gloomy economic numbers as they have been steadily rolling out.

All of the numbers tell us that economic activity is slowing down.

All of the numbers tell us that we are heading into a recession (if we are not already in one).

And all of the numbers tell us that another great financial crisis is now upon us.

The time for false hope is over.  Now is a time to come to grips with reality, because things are going to get very tough in the months ahead.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

U.S. Accused Of “A Declaration Of War” Against China As The Stock Market Teeters On The Precipice Of Disaster

Things are sure getting wild on Wall Street.  On Thursday, the Dow Jones Industrial Average plummeted almost 800 points before roaring back and recovering nearly all of those losses.  The Dow closed just 79 points lower for the day, and if you only looked at the final number you would be tempted to believe that there is not much reason for concern.  But these wild swings up and down are precisely what we witnessed back in 2008, and they are a sign that the stock market is literally teetering on the precipice of disaster.  And it almost certainly would have been a historically bad day for stocks on Thursday if not for a very well-timed article in the Wall Street Journal.  Once news broke that the Federal Reserve is considering “a wait-and-see approach to rate hikes”, stock prices immediately began to rebound…

Stocks closed well off their session lows on Thursday after news broke that the Federal Reserve could tighten monetary policy at a slower pace than previously expected.

The Wall Street Journal reported the central bank is considering whether to signal a wait-and-see approach to rate hikes at its upcoming meeting this month. The report said Fed officials do not know what their next move on rates will be after December.

This just shows the immense power that the Federal Reserve possesses.

As I have discussed so many times previously, the Federal Reserve has far more power over the U.S. economy than anyone else does, and that includes the president of the United States.  Just the mere suggestion that the Fed may slow down the pace of rate hikes was enough to send Wall Street into a feeding frenzy.  Nothing that President Trump could have possibly said could have had that sort of a positive impact.

And this is a perfect example of how fundamentally flawed our system is.  Personally, I believe in free markets, and so it deeply, deeply offends me that we have an unelected, unaccountable panel of central bankers setting our interest rates for us.  As I have repeatedly proposed, we need to shut down the Federal Reserve and return to a system where interest rates are determined by the marketplace.

I’ll get off my soapbox for now.  As I noted yesterday, stocks originally began plunging when news broke that Huawei CFO Meng Wanzhou had been arrested in Canada and would be extradited to the United States…

Trade fears ratcheted up after news broke Wednesday that Huawei CFO Meng Wanzhou was arrested by Canadian authorities in Vancouver, where she faces extradition to the U.S. The arrest — which took place Dec. 1 — decreases the likelihood that a permanent U.S.-China trade deal will be reached. Huawei is one of the largest mobile phone makers in the world.

Meng Wanzhou is also the daughter of the founder of the company, and her arrest apparently has something to do with the Justice Department’s investigation into whether Huawei has violated U.S. sanctions on Iran.

To most U.S. citizens, this is rather meaningless news, but in China there has been a massive explosion of outrage.  The Chinese are demanding her immediate release, and the editor in chief of the Global Times is calling her arrest “a declaration of war”…

Hu Xijin, the editor in chief of the Global Times, described the arrest as a “declaration of war” against China, according to the New York Times.  The Global Times is a state-run newspaper whose views are thought to reflect the ruling communist party in China. Hu’s comments were made on Weibo, a Twitter-like service, the New York Times reported.

“Without any solid evidence, the Canadian and US governments trampled on international law by basically ‘kidnapping’ Chinese citizen Meng,” an official with the Chinese Ministry of Commerce said in a Global Times op-ed. “The China-US trade row could become a protracted war.”

Nothing is done or said at the Global Times without the approval of the Communist Party, and if Hu Xijin was out of line he would be immediately fired.

But he wasn’t fired, because he was simply expressing what most Chinese are feeling at this moment.  In China, the consensus is that relations between the U.S. and China have “gone nuclear”, and at this point the only thing that is going to soothe things is the immediate release of Meng Wanzhou.

Meanwhile, we just got more evidence that our trade war with China is not going very well at all.  Today we learned that the U.S. trade deficit shot up to a 10 year high during the month of October…

The U.S. trade deficit jumped to a 10-year high in October as soybean exports continued to fall and imports of consumer goods rose to a record high, suggesting the Trump administration’s tariff-related measures to shrink the trade gap likely have been ineffective.

The Commerce Department said on Thursday the trade deficit increased 1.7 percent to $55.5 billion, the highest level since October 2008. The trade gap has now widened for a five straight months.

And we also just got more evidence that the U.S. economy is slowing down.  Last month, factory orders declined at the fastest pace that we have seen in more than a year…

New orders for U.S.-made goods recorded their biggest drop in more than a year in October and business spending on equipment appeared to be softening, suggesting a slowdown in activity in the manufacturing sector.

Factory goods orders fell 2.1 percent amid a decline in demand for a range of goods, the Commerce Department said on Thursday. That was the largest decrease in orders since July 2017.

Economic conditions really are deteriorating, and our financial markets really are headed for big trouble.

But some people out there still refuse to accept reality.  For example, an article that was just posted by USA Today is strongly urging people “to buy the dip”…

If you have the courage, now might be a time to step in to buy stocks when they are beaten down and on sale, says Thorne Perkin, president of Papamarkou Wellner Asset Management.

The worst reaction is to panic and sell, as there’s a good chance you could miss a stock rebound in this environment, he says.

Sadly, a lot of people will take this advice and will watch their retirement savings go up in smoke.

We have reached a critical turning point, and things are really starting to heat up.  Unfortunately, most people out there still don’t seem to realize what is happening…

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

Somebody Pressed The Panic Button On Wall Street – Bank Stocks And Tech Stocks Crash As The Yield Curve Inverts

Stocks aren’t supposed to crash in December.  Most of the time we see a nice “Santa Claus rally” to close out the year, and so what happened on Tuesday is definitely extremely unusual.  The Dow Jones Industrial Average fell 799 points, which was the fourth largest single day point decline in stock market history.  In fact, there was not a single day during the entire financial crisis of 2008 when the Dow dropped by as many points as it did on Tuesday.  Many believed that this “stock market correction” would be limited to October, but then it stretched into November, and now it has extended into the “safe month” of December.  What in the world is going on out there?

It would be difficult to overstate the carnage that we just witnessed.  The Russell 2000 had its worst day in seven years, financial stocks plunged 4.4 percent, and as you will see below FAANG stocks lost enough money to literally buy McDonald’s.

There are many factors that are influencing the markets right now, but the biggest thing that spooked investors on Tuesday was an inversion of the yield curve…

Just when it looked like the battered bull was healing, the Dow Jones Industrial Average suffered a drop of nearly 800 points Tuesday when the bond market sent an ominous signal: The yield on the two-year U.S. government bond rose above the interest rate paid out by five-year notes.

Why the pessimism over that obscure-sounding shift? Historically, when short-term rates rise above longer rates – which is dubbed an “inversion of the yield curve” – it signals an economic slowdown is coming.

However, it should be noted that the yield on two year bonds has not yet risen above the yield on 10 year bonds, and until that happens many investors will still not consider the yield curve to have “officially” inverted yet.

But any way that you want to look at it, what has been happening in the bond market is really bad news for the big banks, because it is going to eat into their profits.  In an article posted on Tuesday, CNN explained how this works…

The flattening yield curve also affects the income banks collect from lending, since banks pay interest on short-term rates and lend at long-term rates. They make money off the difference.

Once the yield on two year bonds fell below the yield on five year bonds, investors took that as a sign of big trouble for the financial sector, and they started dumping bank stocks like crazy…

The flattening yield curve caused investors to bail on bank stocks on concern the phenomenon may hurt their lending margins. The SPDR S&P Bank ETF (KBE) dropped 5.3 percent. Shares of J.P. Morgan Chase, Citigroup and Bank of America all declined more than 4 percent. Citigroup and Morgan Stanley both reached 52-week lows along with Regionals Financial, Citizens Financial and Capital One.

Of course this is just a continuation of a trend that has been building for quite some time, and at this point the damage that has been done is immense.

The following numbers come from Zero Hedge…

  • Global Systemically Important Banks are down 30% from 52-week highs.
  • US Financials down 14.5% from 52-week highs.
  • Goldman Sachs is down 33% from 52-week highs.

We haven’t seen anything like this since 2008, and we will want to watch the “too big to fail” banks very carefully during the weeks ahead.

Meanwhile, the FAANG stocks have been getting monkey-hammered as well.

By the end of the day on Tuesday, those stocks had combined to lose more than 140 billion dollars in market value…

  • Facebook fell 2.2 percent, losing $7.6 billion in implied market value
  • Amazon fell 5.9 percent, losing $50.8 billion in implied market value
  • Apple fell 4.4 percent, losing $38.5 billion in implied market value
  • Netflix fell 5.2 percent, losing $6.5 billion in implied market value
  • Alphabet fell 4.8 percent, losing $37.5 billion in implied market value

That would be enough money to buy McDonald’s.

Yes, I am talking about the entire company.

Yesterday, I talked about the psychological shift that we have been witnessing.  Instead of endlessly promoting the idea that the U.S. economy is “booming”, the mainstream media is now using phrases such as “economic slowdown”, “the next recession” and “market crash”.  Here are just a few examples…

–“Dow plunges nearly 800 points on rising fears of an economic slowdown”

–“Worry Less About Inflation and More About Recession”

–“The years of easy money in the stock market are coming to an end”

Normally, the markets get very sleepy during the time period between Thanksgiving and Christmas, but that has not happened this year.

The markets will be closed on Wednesday due to the passing of former president George H.W. Bush, and perhaps this “time out” will have soothed a lot of nerves by the time the markets reopen on Thursday.

But as I have warned before, this crisis is not even close to being over.

In fact, it is only just beginning.

We have been waiting for a long time for the largest financial bubble in American history to burst, and now it is starting to happen.  It is being called “the Everything Bubble”, and as it implodes we are going to see things happen that we have never seen before.

When historians look back on this time of history someday, the crisis of 2008 will be just a footnote compared to what is coming.  It has taken decades of very foolish decisions to get us to this point, and the consequences for our unwise choices are going to be far more painful than most people would dare to imagine.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

The Psychological Bubble That Has Been Propping Up The U.S. Economy Is Starting To Implode

Optimism can be a very powerful thing.  For a long time Americans believed that things would get better, and that caused them to take action to make things better, and that actually resulted in things moving in a positive direction.  But now things have abruptly shifted.  In late 2018, an increasing number of Americans believe that an economic downturn is coming, and they are taking actions consistent with that belief.  As a result, they are actually helping to produce the result that they fear.  And without a doubt, any rational person should be able to see that signs that the U.S. economy is slowing down are all around us.  So it isn’t as if those that are preparing for the worst are being irrational.  It is just that when large numbers of people all start to move in the same direction, it has a very powerful effect.  We witnessed this in the stock market in recent years when people just kept buying stocks even though they were massively overvalued.  The collective belief that there was money to be made in the stock market became a self-fulfilling prophecy which pushed stock prices up to absurd heights.  But now that process is beginning to reverse as well, and ultimately the unwinding of that bubble will be quite painful.

Over the past couple of years the dominant economic narrative that the mainstream media was pushing was that the U.S. economy was “booming”, and this encouraged businesses to expand and consumers to go out and spend money.

But now the dominant economic narrative has changed, and businesses are starting to take actions that are consistent with the new narrative.  In the retail industry, if executives truly believed we would see an economic boom in the years ahead they would be expanding, but instead stores are being closed at a record pace…

Mall and shopping center owners across the U.S. are preparing to be hit by more store closures, following a brutal year that included department store chains like Bon-Ton and Sears going bankrupt, Toys R Us liquidating and even Walmart shutting dozens of its club stores.

Now, a slew of specialty retailers like Gap and L Brands are getting serious about downsizing, which will leave more vacant storefronts within malls until landlords are able to replace tenants.

As a result of these store closings, large numbers of workers will be without jobs, vendors will not be receiving orders and mall owners will be without tenants.

In other words, economic activity will slow down.

Another sector where there has been a major psychological shift is in the real estate industry.  Home prices have been falling all over the nation, and this includes markets that were once extremely hot such as San Francisco…

In San Francisco, the number of homes with a price cut in October nearly doubled, to 238 from 124 last October, according to data from Realtor.com.

That’s nothing compared to Santa Clara County, where the number of price cuts rose to 818 last month, more than six times last year’s number. Santa Clara County had been one of the nation’s hottest markets this year, and the Bay Area’s price appreciation leader until September.

“Clearly, there is a market shift,” said Rich Bennett, a Zephyr agent in San Francisco.

If homeowners believed that this dip was just temporary and that home prices would start surging again next year as the U.S. economy thrives, it would be quite foolish of them to slash their prices like this.

In some cases, home prices are being reduced by hundreds of thousands of dollars.  Why throw all of that money away if the market is going to bounce back shortly?

Over in the auto industry, there has also been a noticeable psychological shift.

If the U.S. economy was going to be doing extremely well in the years ahead, the major automakers should all be gearing up for record sales.

But instead, General Motors just shut a bunch of factories and laid off 14,000 workers, and Morgan Stanley analyst Adam Jonas is projecting that Ford will soon be laying off large numbers of employees…

“We estimate a large portion of Ford’s restructuring actions will be focused on Ford Europe, a business we currently value at negative $7 billion,” Jonas wrote. “But we also expect a significant restructuring effort in North America, involving significant numbers of both salaried and hourly UAW and CAW workers.”

Ford’s 70,000 salaried employees have been told they face unspecified job losses by the middle of next year as the automaker works through an “organizational redesign” aimed at creating a white-collar workforce “designed for speed,” according to Karen Hampton, a spokeswoman.

“These actions will come largely outside of North America,” Hampton said of Ford’s restructuring. “All of this work is ongoing and publishing a job-reduction figure at this point would be pure speculation.”

Shifting gears, let’s talk about agriculture.

If farmers believed that the trade war was just temporary and that things would soon swing back in their favor, many of them would keep trying to hold on for as long as they possibly could.

But instead, farm bankruptcies are absolutely surging…

A total of 84 farms in the upper Midwest filed for bankruptcy between July 2017 and June 2018, according to the Minneapolis Star Tribune. That’s more than double the number of Chapter 12 filings during the same period in 2013 and 2014 in Wisconsin, Minnesota, North Dakota, South Dakota, and Montana, reported Vox.

Farms that produce corn, soybeans, milk, and beef were all suffering due to low global demand and low prices before the trade war, according to economists, but president Trump’s trade war is making the problem even worse by exacerbating the weaknesses in the American economy. China has retaliated against the tariffs by slapping billions of dollars worth of tariffs on United States agriculture exports in response to Trump’s tariffs on Chinese products. Other countries, including Canada, have also added duties to US agriculture products in response to Trump’s tariffs on all imported steel and aluminum.

Most Americans want to have hope, but when they look at our economic situation all they see is a very bleak future.

And in some parts of the nation, there still hasn’t been any sort of a “recovery” from the last recession.  For example, a recent Bloomberg article took a hard look at what conditions are currently like in eastern Kentucky…

Tiffany Hensley’s drive home takes her through some picturesque scenery, and an ugly economy.

“The first thing you see when you get down here is beauty,” says Hensley, midway through her shift at a diner in the rolling hills of eastern Kentucky. “But then you get to looking around. It’s real rough.’’

Of course eastern Kentucky is far from alone.  Yes, coastal cities such as San Francisco and New York have prospered in recent years, but rural communities all across America have been deeply suffering.

And now economic conditions are deteriorating once again nationally, and things are about to get a whole lot tougher for everyone.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

3 Things That Happened Just Before The Crisis Of 2008 That Are Happening Again Right Now

Real estate, oil and the employment numbers are all telling us the same thing, and that is really bad news for the U.S. economy.  It really does appear that economic activity is starting to slow down significantly, but just like in 2008 those that are running things don’t want to admit the reality of what we are facing.  Back then, Fed Chair Ben Bernanke insisted that the U.S. economy was not heading into a recession, and we later learned that a recession had already begun when he made that statement.  And as you will see at the end of this article, current Fed Chair Jerome Powell says that he is “very happy” with how the U.S. economy is performing, but he shouldn’t be so thrilled.  Signs of trouble are everywhere, and we just got several more pieces of troubling news.

Thanks to aggressive rate hikes by the Federal Reserve, the average rate on a 30 year mortgage is now up to about 4.8 percent.  Just like in 2008, that is killing the housing market and it has us on the precipice of another real estate meltdown.

And some of the markets that were once the hottest in the entire country are leading the way down.  For example, just check out what is happening in Manhattan…

In the third quarter, the median price for a one-bedroom Manhattan home was $815,000, down 4% from the same period in 2017. The volume of sales fell 12.7%.

Of course things are even worse at the high end of the market.  Some Manhattan townhouses are selling for millions of dollars less than what they were originally listed for.

Sadly, Manhattan is far from alone.  Pending home sales are down all over the nation.  In October, U.S. pending home sales were down 4.6 percent on a year over year basis, and that was the tenth month in a row that we have seen a decline…

Hope was high for a rebound (after new-home-sales slumped), but that was dashed as pending home sales plunged 2.6% MoM in October (well below the expected 0.5% MoM bounce).

Additionally, Pending Home Sales fell 4.6% YoY – the 10th consecutive month of annual declines…

When something happens for 10 months in a row, I think that you can safely say that a trend has started.

Sales of new homes continue to plummet as well.  In fact, we just witnessed a 12 percent year over year decline for sales of new single family houses last month…

Sales of new single-family houses plunged 12% in October, compared to a year ago, to a seasonally adjusted annual rate of 544,000 houses, according to estimates by the Census Bureau and the Department of Housing and Urban Development.

With an inventory of new houses for sale at 336,000 (seasonally adjusted), the supply at the current rate of sales spiked to 7.4 months, from 6.5 months’ supply in September, and from 5.6 months’ supply a year ago.

If all of this sounds eerily similar to 2008, that is because it is eerily similar to what happened just before and during the last financial crisis.

Up until now, at least the economic optimists could point to the employment numbers as a reason for hope, but not anymore.

In fact, initial claims for unemployment benefits have now risen for three weeks in a row…

The number of Americans filing applications for jobless benefits increased to a six-month high last week, which could raise concerns that the labor market could be slowing.

Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 234,000 for the week ended Nov. 24, the highest level since the mid-May, the Labor Department said on Thursday. Claims have now risen for three straight weeks.

This is also similar to what we witnessed back in 2008.  Jobless claims started to creep up, and then when the crisis fully erupted there was an avalanche of job losses.

And just like 10 years ago, we are starting to see a lot of big corporations start to announce major layoffs.

General Motors greatly upset President Trump when they announced that they were cutting 14,000 jobs just before the holidays, but GM is far from alone.  For a list of some of the large firms that have just announced layoffs, please see my previous article entitled “U.S. Job Losses Accelerate: Here Are 10 Big Companies That Are Cutting Jobs Or Laying Off Workers”.

A third parallel to 2008 is what is happening to the price of oil.

In 2008, the price of oil shot up to a record high before falling precipitously.

Well, now a similar thing has happened.  Earlier this year the price of oil shot up to $76 a barrel, but this week it slid beneath the all-important $50 barrier…

Oil’s recent slide has shaved more than a third off its price. Crude fell more than 1% Thursday to as low as $49.41 a barrel. The last time oil closed below $50 was in October 4, 2017. By mid morning the price had climbed back to above $51.

Concerns about oversupply have sent oil prices into a virtual freefall: Crude hit a four-year high above $76 a barrel less than two months ago.

When economists are asked why the price of oil is falling, the primary answer they give is because global economic activity is softening.

And that is definitely the case.  In fact, we just learned that economic confidence in the eurozone has declined for the 11th month in a row…

Euro-area economic confidence slipped for an 11th straight month, further damping expectations that the currency bloc will rebound from a sharp growth slowdown and complicating the European Central Bank’s plans to pare back stimulus.

In addition, we just got news that the Swiss and Swedish economies had negative growth in the third quarter.

The economic news is bad across the board, and it appears to be undeniable that a global economic downturn has begun.

But current Fed Chair Jerome Powell insists that he is “very happy about the state of the economy”…

Jerome H. Powell, the Federal Reserve’s chairman, has also taken an optimistic line, declaring in Texas recently that he was “very happy about the state of the economy.”

That is just great.  He can be as happy as he wants, and he can continue raising interest rates as he sticks his head in the sand, but nothing is going to change economic reality.

Every single Fed rate hiking cycle in history has ended in a market crash and/or a recession, and this time won’t be any different.

The Federal Reserve created the “boom” that we witnessed in recent years, but we must also hold them responsible for the “bust” that is about to happen.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

Now Even Paul Krugman Of The New York Times Is Admitting That The Next Crisis Will Likely Be Worse Than 2008

There is a growing consensus that once the next economic crash finally arrives that it will be significantly worse than what we experienced in 2008.  This is something that I have been saying for a very long time, but now even mainstream economists such as Paul Krugman of the New York Times are admitting the reality of what we are facing.  And without a doubt, the stage is set for a historic collapse.  We are living at a time when everything is in a bubble – the current housing bubble is much larger than the one that collapsed in 2008, student loan debt has now surpassed the 1.5 trillion dollar mark, corporate debt has doubled since the last financial crisis, U.S. consumers are 13 trillion dollars in debt and the federal government is nearly 22 trillion dollars in debt.  And even though stock prices have fallen dramatically in recent weeks, the truth is that stocks are still wildly overpriced.  What goes up must eventually come down, and Paul Krugman insists that we “are poorly prepared to deal with the next shock” and that “there’s good reason to think it will be worse”…

“We are poorly prepared to deal with the next shock,” Krugman said. “Interest rates are still close to zero in the US and in most of the rest of the advanced world. The fiscal policy we did was badly handled in the aftermath of the 2008 crisis, and there’s no particular reason to think it will be better. In fact, there’s good reason to think it will be worse.”

Hmmm.

Where have I heard talk like that before?

You know that it is very late in the game when even Paul Krugman can see what is coming.

Meanwhile, a stunning new study that was just released came to the conclusion that the globe is heading for “a massive worldwide financial meltdown” that will be unlike anything that we have ever experienced before…

Previous crashes will appear as “minor stumbling blocks” in comparison to what nuclear scientists are predicting as a massive worldwide financial meltdown “such as never before” in the mid-2020s. Analysts from the Institute of Nuclear Physics of the Polish Academy of Sciences in Kraków are forecasting the future of the global economy as “extremely bleak” as “nervousness of the world market is growing all the time”. The academics’ “catastrophic” predictions come from “multi-fractal” analysis of financial markets published in the journal Complexity. The researchers looked at various economic measures, including Standard & Poor’s 500 index – the largest global stock market index including the largest 500 firms, largely of a worldwide nature – from January 1950 to December 2016.

Wow.

It seems like everyone is in a gloomy mood lately.  Just take a look at the latest GDP forecasts.  Virtually everyone is predicting that U.S. economic growth will be way down this quarter compared to the third quarter.

And we continue to get confirmation after confirmation that economic activity is definitely slowing down.

For example, Apple just reduced factory orders for their new iPhones a second time…

Demand for Apple’s latest iPhones may be worse than previously thought.

The tech giant has reportedly issued a second cutback on iPhone orders as a result of weaker-than-expected demand for the high-end devices, according to Taiwan-based news site Digitimes.

It follows earlier reports of production cuts for the iPhone XR and XS.

In addition, housing numbers from all over the nation are deeply troubling.  Just check out what has been happening in Seattle…

House prices in the Seattle metro dropped 1.3% in September from prior month, after having dropped 1.6% in August, and 0.5% in July, according to the Case-Shiller Home Price Index. Over those three months, the index dropped 3.5%, the sharpest such decline since December 2011, during Housing Bust 1. So home prices are beginning to unwind a historic spike. The index is now below where it had been in April. This confirms that the inflection point — when the direction changes — was in July and that conditions have deteriorated since.

For more key indicators such as this, please see my previous article entitled “11 Signs That The U.S. Economy Is Starting To Slow Down Dramatically”.

Yes, things are rapidly getting worse for the economy, but did General Motors really have to announce job cuts just before the holidays?  According to the Daily Mail, some workers were seen wiping away tears when the layoffs were announced…

Heart-wrenching photos show General Motors workers wiping tears away after the company laid more than 14,000 people off without warning and just before the holidays.

In a massive restructuring, the auto giant announced Monday that it will cut 15 percent of its workforce to save $6 billion and adapt to ‘changing market conditions’.

‘You’re going right into Christmas. You’re looking for celebration and that’s not there now,’ one GM worker told Today.

If the U.S. economy really was in good shape, this wouldn’t be happening.

For the last few years, America has experienced a time of relative economic stability, and many have been fooled into believing that this time of relative economic stability will last for a very long time.

But the truth is that all of the numbers are telling us that things have now shifted.  For instance, Mike Maloney believes that a decline in corporate tax receipts strongly indicates that another recession is imminent…

You might think that tax revenues would fall after a recession starts – but what the data show is that tax revenue in most cases has fallen before a recession.

As Mike shows, in 14 of the last 17 times that corporate tax receipts have begun to roll over and decline, a recession started not long after. In other words…

A drop in corporate tax receipts has frequently predicted a recession.

And guess what? Corporate tax revenue has started to fall.

Unfortunately, it appears that we are even less prepared for the next recession than we were for the last one.

For some reason we are never able to learn important lessons from what has happened in the past, and now even Paul Krugman is convinced that the next recession will be exceedingly painful indeed.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

George Soros Sold Huge Amounts Of Facebook And Netflix Just Before Tech Stocks Crashed

George Soros avoided a loss of more than 17 million dollars by dumping shares of Facebook, Netflix and Goldman Sachs just before the big crash started happening.  In other words, he made out like a bandit by selling at the peak of the market.  Is he smarter than all the rest of us, did he have some inside information, or was he simply lucky?  In recent months, tech stocks have lost approximately a trillion dollars in value, and many investors have been absolutely devastated.  But not George Soros.  According to the most recent filing with the SEC, Soros Fund Management was able to dump shares in Facebook and Netflix just in time…

Soros Fund Management, which Soros founded and chairs, exited social-network giant Facebook (FB) completely in the third quarter, while also slashing positions in Netflix stock (NFLX) and Goldman Sachs Group stock (GS). Those three stocks have tumbled in the fourth quarter so far, with Facebook and Goldman setting new lows Tuesday. They are down almost 20% and 15%, respectively, so far this quarter. Highflying streaming-content giant Netflix has tumbled almost 29% since the end of September.

Soros saved a chunk of cash by selling: Barron’s estimates that, had he maintained positions in those stocks, he would have unrealized losses of about $17.7 million so far in the fourth quarter.

Perhaps we will never know what prompted those moves, but with George Soros these strange “coincidences” have happened again and again throughout his career.

Unfortunately, the top executives at the major tech companies were not as prescient, and so some of them have literally lost billions of dollars…

Amazon CEO Jeff Bezos has lost a stunning $42 billion since early September, according to the Bloomberg Billionaires Index, as the e-commerce giant’s stock has dropped more than 25 percent.

Embattled Facebook CEO Mark Zuckerberg has also taken a beating as reports indicate he’s lost some $34 billion since late July and is now worth $52 billion – ranking as the seventh-richest person in the world.

Google chiefs Larry Page and Sergey Brin have lost a combined $20 billion from their peak wealth in July as the search engine’s stock has dropped 20 percent and closed in a bear market on Monday for the first time since 2011.

Could you imagine losing 42 billion dollars?

If I lose 42 dollars I get upset.  So I couldn’t even imagine how I would feel if I lost $42,000,000,000.

The atmosphere on Wall Street has completely shifted over the last couple of months.  Not too long ago those of us that were calling for a bear market were being mocked, but nobody is mocking anymore.

One of the big things that has been propping up the stock market in recent years has been corporate buybacks.  In fact, I wrote a major article about this not too long ago that you can find right here.  Big corporations have literally been spending hundreds of billions of dollars to prop up their own stock prices, and many of these corporations have been going into tremendous amounts of debt in order to do this.

For a long time General Electric was one of the biggest offenders.  They borrowed billions upon billions of dollars for stock repurchases, and it worked for a while.  But now GE shares have been absolutely tanking, and they can’t keep the game going anymore because they are drowning in about 100 billion dollars of debt.  The following comes from an excellent Marketwatch article…

GE was one of Wall Street’s major share buyback operators between 2015 and 2017; it repurchased $40 billion of shares at prices between $20 and $32. The share price is now $8.60, so the company has liquidated between $23 billion and $29 billion of its shareholders’ money on this utterly futile activity alone. Since the highest net income recorded by the company during those years was $8.8 billion in 2016, with 2015 and 2017 recording a loss, it has managed to lose more on its share repurchases during those three years than it made in operations, by a substantial margin.

Even more important, GE has now left itself with minus $48 billion in tangible net worth at Sept. 30, with actual genuine tangible debt of close to $100 billion. As the new CEO Larry Culp told CNBC last Monday: “We have no higher priority right now than bringing those leverage levels down.”

GE was once one of the greatest corporations on the entire planet, but now they stand on the precipice of collapse because they were addicted to borrowing money for stock buybacks.

Of course GE is far from alone.  Other corporations that have gone into serious amounts of debt in order to fund share repurchases are also now paying a very great price for doing so.  Ultimately, it was a giant Ponzi scheme of epic proportions, but now the game is collapsing.

In my first novel, there is a stock market collapse that begins in the fall, and things begin to deteriorate very rapidly in this country thereafter.  Unfortunately, we are starting to watch a very similar scenario play out right in front of our eyes.  In recent years a booming stock market has been a big point of pride for a lot of Americans, but now that bubble is bursting.

For many people, money is more important than anything else in life.  In fact, a recent survey discovered that Americans find more meaning and purpose in life from “career” and “money” than they do from “faith”.

But when “the god of money” fails, how are most Americans going to respond?

I do not believe that the United States is going to handle another economic meltdown very well.  We are already a deeply angry and divided nation, but at least our debt-fueled “prosperity” has kept things relatively calm.

If that “prosperity” completely disappears, we are going to have a complete and utter national nightmare on our hands.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

+ More