In October we took a look at a San Francisco Fed Report indicating that the critical threshold showing the probability of recession, had been breached. Today, the yield of the 3-year treasury went higher than the 5-year treasury. THIS IS A YIELD CURVE INVERSION! Historically, every time the yield curve has converted a recession followed shortly thereafter. So I’m taking this as the final warning. Consider yourself warned. Slides and Links: https://www.frbsf.org/economic-research/publications/economic-letter/2018/march/economic-forecasts-with-yield-curve/ https://www.stockcharts.com/h-sc/ui https://www.stockcharts.com/h-sc/ui https://www.stockcharts.com/h-sc/ui https://www.stockcharts.com/h-sc/ui https://stockcharts.com/h-sc/ui?s=$SILVER https://stockcharts.com/h-sc/ui?s=$Gold Youtube … Read More »
Tag: interest rates
ENTERING THE MINEFIELD: Is Your Armor Ready? By Lynette Zang
In 1986 the British Bankers’ Association first published LIBOR interest rates (consensus of 15 commercial banks), which went on to become the most important number in the financial world, with over $300 trillion financial contracts tied to it. As the derivative triggered financial crisis unfolded, in 2008 all IBORs failed as market liquidity evaporated and banks stopped lending to each other. Since LIBOR is a “consensus” interest rate number it’s easily manipulated. This manipulation was revealed to the public in … Read More »
THE BOTTOM FELL OUT: Market Support Just Crumbled by Lynette Zang
How do we know when seasons change? There is a recognizable pattern shift. If you live in the north east, as summer changes to fall the air cools and leaves change. The same things also happens in Arizona, but the shift is subtler. If you just moved there, you’re not likely to notice the change, but over time…you will learn to recognize the pattern shift and prepare for the season change. Markets are the same and repeatable patterns let you … Read More »
THE ECONOMY JUST CRACKED: The Interest Rate Alert… by Lynette Zang
On October 3rd the Dow hit another all-time high and the S&P came close as well. If you believe the Fed, it makes sense. After all, according to them the economy is doing extremely well with payrolls surging and inflation “expectations” subdued, therefore a perfect time to raise the overnight interest rate they pay banks to hold reserves, which impacts market rates. This does not seem to be a problem though, since rising interest rates have not stopped the markets … Read More »
THRESHOLD BREACHED: Critical Fed Report…by Lynette Zang
Interest rates have risen substantially since July 2016, with shorter term rates rising faster than longer term rates. At this time, the US is in jeopardy of a yield curve inversion which means that shorter term rates are higher than longer term rates. Why does that matter you ask? Because this inversion has indicated a recession 100% of the time including the brief inversion the US experienced on December 27, 2005. We are being told, once again, that this time … Read More »
BANKS WILL MODIFY YOUR CONTRACTS DURING THE RESET by Lynette Zang
The Most Important Number in the World What I’m going to show you today is the most likely trigger to blow the financial system up where it is NOT repairable; and how the banks have the legal right to change YOUR contracts on mortgages, auto loans etc., without your permission. Originally LIBOR was supposed to reflect the actual cost to banks to borrow from another bank (interbank lending) overnight. But as the 2007 – 2008 crisis unfolded, the Interbank Lending … Read More »
RIGGING THE RATES; Libor, the Scandal That You Forgot by Lynette Zang
The first earning season after the tax changes is upon us. Earnings have not disappointed with many corporations posting the expected 20% earning surge YOY. While the stock market is a bit higher, volatility continues to whipsaw the markets with intra-day swings in the triple digits. With the stock markets off their recent high and earnings surging, who is buying? With volume declining, wall street is asking this same question. It might be easier to tell you who is NOT … Read More »
The Danger of Emerging Market US Dollar Denominated Debt by Lynette Zang
In 2007 the US dollar hit an all-time low, establishing a new lower trading range. As the 2008 crisis unfolded interest rates were also pushed to all-time lows. These events created an opportunity for global corporations to take on cheap debt in terms of cheap dollars. The most current figures show Emerging Markets now hold a record $217 trillion in debt with much of that denominated in USDs. These corporations, many in China, do not earn USDs so to service … Read More »
A-Mark Bullion Update
Just when it looked like gold had exhausted its move to the upside, an entirely unexpected market event gave it new legs in today’s trading session. A shocking move from the Swiss National Bank reignited markets fears and caused investors to flock to the safe haven appeal of gold. Switzerland’s central bank abandoned its long-standing floor against the euro which spurred double digit reactions in the CHF and EURCHF, colossal intraday moves for currencies. The SNB also cut its interest … Read More »
Consumers Keeping Their Money Close
Although they do not advise the consumer of where to buy gold coins, the super-store Wal-Mart, is viewed as an economic predictor for many households, where they shop for groceries, home supplies and gasoline. Wage gains, which are slim to none, and a disappointing recovery hinder consumer buying in America and Europe, at the same time they get in the way of growth in many companies and keep the struggling middle class from spending as much as they used to. … Read More »
