The business cycle has its stages, and they’re usually both predictable and logical. For example, governments tend to generate a lot of tax revenue late in an expansion as more people get jobs and start paying income taxes and rising stock prices generate big capital gains. Meanwhile, less has to be spent on social safety […]
Recession And Stocks In Free-Fall: Michael Pento’s 2019
Money manager Michael Pento has been bearish on both stocks and bonds for some time. 2019 is the year, he says, when the big crash finally arrives. Some Predictions for 2019 Bond Yields Continue to Fall in First Half of Year The bond bubble continues to build and become a dagger over the worldwide economy […]
Three Things That Will Definitely Happen In 2019
Much about 2019 is uncertain. But a few things are pretty much guaranteed, including the following: Government debt will rise at an accelerating rate Like a life-long dieter who finally gives up and decides to eat himself to death, the US is now committed to trillion-dollar deficits for as far as the eye can see. […]
California Is In Great Financial Shape – And Headed For An Epic Crisis
California Governor Jerry Brown inherited a $27 billion deficit from Arnold Schwarzenegger eight years ago. This month he’s leaving his successor a $13.8 billion surplus and a $14.5 billion rainy day fund balance. Pretty good right? Approximately 48 other governors would kill for those numbers. Unfortunately it’s all a mirage. California, as home to Silicon […]
The Yield Curve Flattens And Bank Stocks Plunge. Here’s The Connection – And The Prediction
Despite all the ominous press being devoted to the soon-to-be-inverted yield curve, it’s not always clear why such a thing matters. In other words, how, exactly does a line on a graph slipping below zero translate into a recession and equities bear market, with all the turmoil that those things imply? The answer (which is […]
Yet Another Trillion-Dollar Unfunded Liability: WHY California Is Burning
The apocalyptic fires that hit California last month have left observers scratching their heads and wondering how destruction on that scale could be possible – and how much it will cost in the future if the causes aren’t addressed immediately. This morning’s Wall Street Journal concludes that 1) the problems aren’t being addressed and 2) […]
As Oil Plunges, Energy Junk Bonds Turn Dangerous — Again
Back in 2104 oil was falling and hundreds of billions of dollars of energy junk bonds and leveraged loans looked to be at risk. Wolf Street had this to say at the time: Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next The price of oil has plunged nearly 40% since June […]
Yet Another Trillion-Dollar Unfunded Liability, California Wildfires Edition
Yesterday an entire California town burned down. Paridise, CA has (had) 27,000 residents and over 1,000 buildings, and now it’s pretty much gone. A fire started nearby on a windy day and within hours everything was ash and cinders. That fire and several others are still expanding across the state, threatening tens of thousands of […]
Oil And General Electric Join The Roll-Over Parade
First developing countries blew up. Then real estate topped and started to roll over. Now oil has entered what CNBC just called its “longest losing streak in three decades.” The oil rout just became a bear market for U.S. crude In a volatile turnabout, the U.S. crude benchmark fell into a bear market Thursday just […]
The Election’s Finally Over. Now Things Can Go Back To “Normal”: Rising Interest Rates, Rising Debt, Rising Volatility
As contentious as the US midterm elections were, there was never a scenario in which they mattered. Any possible configuration of Republicans and Democrats in the House and Senate would have yielded pretty much the same economy going forward: Ever-higher debt, upward trending interest rates and (through the combination of those two) rising volatility. So […]
Rising Interest Rates Start Popping Bubbles — The End Of This Expansion Is Now In Sight
Towards the end of economic expansions, interest rates usually start to rise as strong loan demand bumps up against central bank tightening. At first the effect on the broader economy is minimal, so consumers, companies and governments don’t let a slight uptick in financing costs interfere with their borrowing and spending. But eventually rising rates […]
Another Trillion-Dollar Unfunded Liability, Part 2: Running The Hurricane Numbers
The idea that as more people move to Hurricane Alley and other storm-prone places, the future cost of those storms will rise – and that we’re not accounting for that future cost and are therefore likely to be shocked by it – makes intuitive sense. Now some recent studies have fleshed out the numbers, making […]
Yet Another Trillion-Dollar Unfunded Liability: Too Many People In Hurricane Alley
One of the big recent changes in American life is the ongoing mass-migration from the middle of the country to the coasts, especially those of the Southeastern and Gulf States. Florida and the Carolinas, along with Houston and surrounding Texas counties, have gained millions of new residents seeking to trade snow and monotony for sun […]
Will Disney’s Epic Buyout of Fox Mark The End Of The Everything Bubble?
As bubbles expand and hot money starts burning holes in corporate pockets, merger and acquisition deal terms begin to leave reality behind. Often one deal of such breathtaking size, scope and hubris is struck that — in retrospect – it heralds the end of the era. The junk bond bubble of the 1980s, for instance, […]
Fake Markets Produce A Fake Economy
Automtaic Earth’s Raúl Ilargi Meijer just posted an essential essay on the world’s financial markets – or what used to be the world’s financial markets. Here’s an excerpt: “[Price discovery] is the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers”, says Wikipedia. Perhaps not a […]
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