Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Wednesday, May 13, 2020
Inflation, Deflation, or Both? / Economics / Coronavirus Depression
By: MoneyMetals
The forces of deflation and inflation continue to tug at the economy simultaneously.
The pressures on both sides are huge.
On the deflation side, jobs, industrial demand, and the small business lifeblood of communities are contracting at an unprecedented pace. Meanwhile, trillions in credit card, auto, student loan, and mortgage debt that props up consumer spending and home values is at risk of imploding – and bringing markets down with it.
On the inflation side, the Federal Reserve is pumping more than $6 trillion into the financial system.
Meanwhile, all pretenses of needing to be fiscally responsible are being discarded in Washington as Congress pushes stimulus after stimulus with money it doesn’t technically have.
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Tuesday, May 12, 2020
US Fourth Turning Accelerating Towards Debt Climax / Economics / Coronavirus Depression
By: James_Quinn
“At some point, America’s short-term Crisis psychology will catch up to the long-term post-Unraveling fundamentals. This might result in a Great Devaluation, a severe drop in the market price of most financial and real assets. This devaluation could be a short but horrific panic, a free-falling price in a market with no buyers. Or it could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on. Every slide in asset prices, employment, and production will give every generation cause to grow more alarmed.” – Strauss & Howe – The Fourth Turning
I’ve been writing articles about the Fourth Turning for over a decade and nothing has happened since its tumultuous onset in 2008, with the global financial collapse, created by the Federal Reserve and their Wall Street co-conspirator owners, that has not followed along the path described by Strauss and Howe in their 1997 book – The Fourth Turning.
Like molten lava bursting forth from a long dormant (80 years) volcano, the core elements of this Fourth Turning continue to flow along channels of distress, long ago built by bad decisions, corrupt politicians and the greed of bankers. The molten ingredients of this Crisis have been the central drivers since 2008 and this second major eruption is flowing along the same route. The core elements are debt, civic decay, and global disorder, just as Strauss & Howe anticipated over two decades ago.
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Monday, May 11, 2020
Finding Winners in the Wreckage of the Coronavirus Economic Downturn / Economics / Coronavirus Depression
By: Frank_Holmes
While the broader markets have seen sharp declines, Frank Holmes, CEO and chief investment officer of U.S. Global Investors, homes in on gold, gold stocks and bitcoin, and gives his prognosis for the airlines.
Streetwise Reports: Let's start with gold, which has seen an impressive rise in the last few months as the broader markets have declined on the back of the coronavirus pandemic. What do you think is ahead for the metal?
Frank Holmes: There is a short-term view and a long-term view. What's really hard for so many investors and asset allocators to recognize is that gold bullion since 2000 has far outperformed the S&P 500. In fact, of the last 20 years, in 16 of those years gold has been positive. So if we look at the numbers, it's double what the S&P 500 has done for the past 20 years.
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Sunday, May 10, 2020
US Rates Eye Negative Territory as Capital Prepares for Slow Death / Economics / Coronavirus Depression
By: MoneyMetals
Precious metals markets appear to be gearing up for another leg higher. On Thursday, the metals complex rose sharply across the board. Gold gained about 2.5% while silver packed on nearly 4%.
Both of the monetary metals showed signs of breaking out of the sideways trading ranges they’ve been stuck in over the past four weeks. Silver closed solidly above its 50-day moving average for the first time since late February.
Bulls will be looking for confirmation with strong weekly closes today and then follow-through early next week.
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Friday, May 08, 2020
The Giant Presumption behind Re-Opening America / Economics / Coronavirus Depression
By: Patrick_Watson
Newly “liberated” Americans are flocking to beaches, parks, and restaurants, eager to prove the novel coronavirus doesn’t scare them.
In fact, the virus doesn’t care how brave they are. It just wants to spread. I suspect it found many new hosts at those gatherings, and this will be apparent soon.
At the same time, many others are still staying home whenever possible, not yet convinced it is safe to go out.
But regardless of who’s right, Wall Street people are thrilled. The stock market shot higher in April. Many experts think the economy will soon be back to normal.
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Thursday, May 07, 2020
Covid-19: Major Risks as US Eyes Re-Open / Economics / Coronavirus Depression
By: Dr_David_J_Harris
SUMMARY
This article provides a quick review of the current state of the US lock-down in response to the COVID-19 pandemic. Major risks lie ahead in terms of re-starting the US economy without re-igniting the spread of the COVID-19 coronavirus.
- Current number of active cases is 50x the number when US lock-down started
- Peak number of US active cases still not yet reached, and likely weeks away
- Peak number of deaths for US in a day, observed relatively recently
- Model projections are predicting at least 100,000 US deaths by May 31
- Contact tracing in today’s complex society is a major problem to overcome
- The US is now in a recession that could last at least 12 to 18 months
Wednesday, May 06, 2020
A Tale of Two Economic Depressions / Economics / Coronavirus Depression
By: Richard_Mills
As the coronavirus continues to hammer state and provincial economies, politicians are being forced to consider whether lockdown “cures” are worse than the disease. Pressured by the Trump administration, and in some cases the public, several US states are planning a re-opening, or partial re-opening of their economies, sometime in May.
About half of Canadian provinces and territories are also in the midst of a re-start of some description; among those still locked down are British Columbia, Alberta, Nova Scotia, and Newfoundland/ Labrador.
The question weighing on the minds of both health officials and economists, is whether letting up on social distancing restrictions will cause the number of covid-19 cases to spike, thereby setting back virus containment efforts and the timeline of economic recovery. Yet regardless of what comes next, it doesn’t take a lot of analysis to see we are already in a heap of trouble.
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Wednesday, May 06, 2020
Why Americans Don't Have Any Savings / Economics / US Economy
By: Frank_Hollenbeck
In response to a likely worldwide recession, governments have turned on full blast the fiscal and monetary spigots. A $2 trillion spending plan has just been approved in the USA, central banks are on a buying spree, and the $1200 stimulus payment is just helicopter money. Since the government does not have a magical tree of plenty and can only redistribute from the left pocket to the right by taxing, borrowing, or printing money, how does this make any economic sense or make any country better off? Government and Keynesian economists will tell you it’s to protect us from the coming dangers of hoarding; specifically, that banks will stop lending and just let funds sit. Keynes brought hoarding to the forefront of economics in his The General Theory of Employment, Interest, and Money; a concept that the classical economist considered to be irrelevant.
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Monday, May 04, 2020
US Q1 GDP Data Masking The True Global Economic Future? / Economics / Coronavirus Depression
By: Chris_Vermeulen
As Q1 GDP data is released on Wednesday, April 29, which will reflect the first three months of 2020 in terms of total economic output, we believe the number will skew the current true global economic conditions to a large degree. The pandemic shutdowns started in the US on March 15th – nearly 2 weeks before the end of Q1:2020. Thus, we had a fairly normal Q1 in terms of economic activity, production, and consumer engagement. Everything changed after March 15th, 2020.
Skilled traders need to watch the current economic data and “week over week” data that is presented. Skilled traders also need to pay attention to the news items that are being pushed out to the public. Larger and larger corporations and sectors are moving towards bankruptcy or screaming for a bailout. Airlines, Hotels, Car Rental, and dozens of other sectors have all collapsed over the past 5+ weeks. We expect real estate activity and pricing to collapse as well. The results of the last 5+ weeks, after the March 15th shutdown started, have been anything but normal.
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Sunday, May 03, 2020
No, the Economy Isn’t Re-Opening Soon / Economics / Coronavirus Depression
By: Patrick_Watson
“America will be open for business very soon,” said President Trump on March 23, just a week after local authorities began issuing stay-at-home orders.
At that point, the novel coronavirus had killed a total of 689 Americans. Now, a little over a month later, 689 deaths would be a really good day. And America still isn’t open for business. But the president and some governors think it should be and are trying to make it so.
Unfortunately, politicians can’t order the economy open again because they didn’t close it. Consumers and businesses began shutting down long before they were forced to, and they won’t re-open just because they legally can.
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Thursday, April 30, 2020
The Coronavirus Greatest Economic Depression in History? / Economics / Coronavirus Depression
By: Nadeem_Walayat
It looks like the history books will need to be rewritten for if the noises emanating out of every nick and economic cranny are to be believed for the global economy is heading for an economic contraction WORSE than that of the Great Depression! Which will make the Financial Crisis of 2008 look like a walk in the park. And this is not from the usual perma doom merchants who like a broken clock will eventually be right.
However, even the UK governments Office for State Economic Propaganda (OBR) has warned to expect UK GDP to plunge by an unprecedented 35% in Q2!
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Saturday, April 25, 2020
Deflationary Psychology Versus the Fed: Here’s the Likely Winner / Economics / Deflation
By: EWI
Weeks before the February top in the DJIA, the January Elliott Wave Theorist (Elliott Wave International President Robert Prechter's monthly publication about financial markets and social trends since 1979) said:
Most economists believe the Fed can prevent financial crises and depressions. [EWI's analysts] disagree. Socionomic theory proposes that naturally fluctuating waves of social mood regulate financial optimism and the economy. They are unconscious and cannot be managed. [emphasis added]
In case you're unfamiliar with socionomic theory, socionomics is the study of how society's changes in mood motivate social actions in realms that include the economy, political preferences, financial markets, actions of peace and war, and the fads and fashions of popular culture. Robert Prechter began formulating socionomic theory in 1976.
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Wednesday, April 22, 2020
The Coming Impact of Coronavirus Economic Contraction in ASEAN Countries / Economics / Coronavirus Depression
By: Dan_Steinbock
After the COVID-19 earthquake and a historical contraction, China is rebounding, whereas advanced economies face a depression-like plunge. The consequent tsunami is about to hit Southeast Asia.
As the total number of confirmed cases may exceed 3 million and deaths will surpass 200,000 in a matter of days, the U.S. and Europe account for more than 80% % of both. What was an epidemic in China at the turn of January and February grew into a pandemic in the 1st quarter, thanks to the belated mobilizations in Europe and the US.
As I predicted in a mid-March briefing (TMT, March 23), what is about to follow is the great coronavirus contraction. Its economic impact will be comparable to the 1930s Great Depression. With more data available today, we have a better idea what’s about to happen, despite extraordinary uncertainty.
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Wednesday, April 22, 2020
Coronavirus Burning Down the House / Economics / Coronavirus Depression
By: James_Quinn
Watch out you might get what you’re after
Hold tight wait till the party’s over
Hold tight We’re in for nasty weather
There has got to be a way
Burning down the house
Talking Heads – Burning Down the House
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Tuesday, April 21, 2020
Bending the Inflation Curve / Economics / Inflation
By: John_Mauldin
Our responses to the coronavirus threat, necessary though they may be, are creating massive supply and demand shocks, the rapidity of which is like nothing seen in centuries, if ever.
The Federal Reserve and other central banks are doing unprecedented things. Some think inflation will be the result. While that may happen eventually, I believe we will first go through the most massive deflationary shock of all time.
Milton Friedman famously said, “… inflation is always and everywhere a monetary phenomenon.” During the timeframe in which he and his colleague Anna Schwartz did their famous study, there was clearly a correlation between money supply and inflation. What is not often noted is that the velocity of money (i.e., the rate at which money changes hands) was stable during that time.
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Monday, April 20, 2020
COVID-19 and the Greater Recession / Depression of 2020-2021 / Economics / Coronavirus Depression
By: Christopher_Quigley
In February2012, utilising the chart below, I published an essay courtesy of Market Oracle outlining how, based on Kondratieff wave theory, the world economy could head into a depression between 2013 and 2020. We are now entering that depression, or at least great recession, in my humble opinion. This long wave analysis was developed by Nikolai Kondratiev, a Russian economist. He was shot by firing squad on the orders of Stalin in 1938. His execution was ordered because his academic work propounded that the capitalist system would not collapse as a result of the great depression of 1929. He saw recessions and depressions as normal cycles of the capitalist system due to its reliance on debt. He explained that:
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Sunday, April 19, 2020
Why the Coronavirus Could Raise Wages / Economics / Coronavirus Depression
By: Patrick_Watson
US unemployment shot higher in the last month, thanks to coronavirus closures. Some 17 million people filed new jobless benefit claims.
But it’s actually even worse.
Overwhelmed web sites and bureaucratic snafus kept many from applying. Others, while still nominally “employed,” saw their wages or hours cut. It’s terrible and will keep getting worse until the shutdowns ease and people believe they can circulate safely again.
But while the immediate outlook is dire, these events could ultimately mean higher wages for many workers. To see why, we have to think a few steps ahead.
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Sunday, April 19, 2020
An Alternative to the Lockdown Strategy in the Fight Against Coronavirus / Economics / Coronavirus Depression
By: Frank_Hollenbeck
The current coronavirus strategy of most governments is a recipe for a worldwide economic disaster. In many countries, the strategy of confinement and forcing shops to close is a sure-fire path to large-scale business failures. The cascade of economic and financial repercussions to come is likely to lead to another Great Depression.
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Saturday, April 18, 2020
SILVER AND COVID-19, CAPITALISM’S BLACK SWAN / Economics / Coronavirus Depression
By: Darryl_R_Schoon
Regarding today’s markets and gold and silver, on April 15th, Sandeep Jaitly wrote:
COURSE OF THE EXCHANGE
♦♦♦♦♦♦♦
Metals update: backwardation or not?
Over the past few weeks and months, there have been seismic changes in the way people are thinking of markets – and the concept of markets – generally.
As evidenced by movements in the Federal Reserve’s sale and repurchase facility from last September, which has resulted in the TARP balance sheet reaching a record of $6,000bn and at a record rate of over $630bn/month since the year began, there are ‘issues’ with all markets – in as much as markets are markets with ‘monetary’ fiat.
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Saturday, April 18, 2020
If Stock Investors Crunched Economic Data Like This Their Expectations Would Change Dramatically / Economics / Coronavirus Depression
By: Chris_Vermeulen
New economic data being released as earnings start to hit may alter how investors perceive the recent price recovery in the US and global markets. Many institutional analysts began suggesting “the bottom is in” and recently began to issue stronger forward guidance. The new data suggests we are seeing an economic contraction that, in some cases, maybe 2x or 3x the contraction that took place in the 2008-09 Credit Crisis.
The US stock markets reacted to this news and earnings data by collapsing over -2% in early trading. Gold and Silver are both lower as we write this article which would indicate weakness across the broader market. We continue to believe a deeper price low will set up in the near future with the US and global stock prices attempting to retest recent price lows – possibly falling below these levels. We believe the collateral damage to consumer engagement, manufacturing, transportation, retail/leisure, real estate and other sectors of the economy is just now starting to become evident. What the economy may look like near Mid-May is anyone’s guess.
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