This article was published by The McAlvany Intelligence Advisor on March 22, 2016:
Harry Dent, the author of The Great Crash Ahead, says that the current rebound in stocks is a head-fake of the first order, that the end of the seven-year bull market in stocks occurred last May. He said just look at a three-year chart of the SPX (Standard and Poor’s 500 Index) and see the rounded top formation.
Instead, talking heads all across the media are calling the recent rise following the precipitous decline that began the first day of trading of 2016 just a speed bump, a hiccup as the seven-year-long bull market in stocks is getting its second wind.
Markit Ltd., the monster financial services and advisory company located in London, issued its first warning in late February with its flash that its services purchasing managers’ index went negative for the first time in over two years. Two weeks later it published its global outlook that not only was the world economy slowing but that the slowdown was being led by the United States. Taking aim directly at US unbelievers in the media, Chris Williamson, Markit’s chief economist, said: “[Our report shows] a significant risk of the US economy falling into contraction in the first quarter [of 2016],” adding
Slumping business confidence and an increased downturn in order … backlogs suggest there’s worse to come.
Any bounce-back from the weather may therefore prove to be only a temporary improvement in a steady downward trend of business conditions.
The most persuasive evidence of the impending slowdown comes, however, from the Federal Reserve itself. The St. Louis branch, its “statistical center,” published nine charts confirming both Dent’s and Markit’s outlook.
The first was student loans, showing that in the first quarter of 2009 student loans stood at $146.6 billion. By the fourth quarter of 2015, that number was $945.6 billion, a staggering six-fold increase.
This was reflected in the second chart: home-ownership rates. That index has declined in almost a straight line since the collapse of the substandard real estate market in 2007 and now stands at a 48-year low. This reflects middle class workers, laboring under student loan payments, being unable to put aside enough to provide even a modest down payment on a new home. Even if they were able to, banks look at the staggering debt load applicants are carrying and, more often than not, turn them down.
The fourth was federal debt, exploding by more than 70 percent just since the start of Obama’s first term, to $18.9 trillion, with estimates that it’ll hit $20 trillion before he leaves office in 2017.
The fifth shows total monetary reserves, boosted by the idea that making money cheaper would somehow, magically, stimulate the economy. What it did instead was boost the money supply by a jaw-dropping 125 percent, with the Fed carrying $4 trillion of that new digital currency on its balance sheet.
Cheaper money hasn’t helped family incomes, which have suffered, on an inflation-adjusted basis, a seven percent decline since 2007. And the labor force participation rate has also declined as discouraged workers have given up looking for real full-time work during the so-called recovery. Shadow Stats’ John Williams had this to say about the BLS’s manipulation of the numbers for political purposes:
The broad economic outlook has not changed, despite the heavily-distorted numbers that continue to be published by the BLS. The unemployment rates have not dropped from peak levels [as reported by the BLS] due to a surge in hiring; instead, they have generally dropped because of discouraged workers being eliminated from [the BLS’s] accounting.
If final confirmation of the US heading into a recession is needed, it is provided by a most unlikely source: China. The unvarnished China Containerized Freight Index (CCFI), which tracks real-world market rates for shipping containers from major Chinese ports to 14 regions around the world, has just hit the lowest level ever recorded.
Markit.com: Faltering US economy leads global slowdown