Powell is Completely Blind
to the Leading Indicators
On July 1st, 2005, Chairman of the Federal Reserve Ben Bernanke was interviewed, and here is one Q&A that will live in infamy:
INTERVIEWER: Tell me, what is the worst-case scenario? We have so many economists coming on our air saying ‘Oh, this is a bubble, and it’s going to burst, and this is going to be a real issue for the economy.’ Some say it could even cause a recession at some point. What is the worst-case scenario if, in fact, we were to see prices come down substantially across the country?
BERNANKE: Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So, what I think is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.
We all know what happened NEXT!
When I think of Jerome Powell’s latest interview with David Rubinstein, which can be seen here in full, Powell has clearly built a narrative in his mind that we have a labor shortage and a very strong and robust service sector.
Looking at data doesn’t help navigate the treacherous waters of a future recession because the information is always about the past… what we care about are the LEADING INDICATORS, and they point to a recession in 90 days!
There are three critical components of the economy that predict recessions, broadly speaking, and they look terrible right now!
The first among them is the yield curve inversion:
The inversion of the yield between the 2-year Treasury bond and the 10-year one is of immense importance. If you’ve ever heard about yield inversion but haven’t delved deep, here’s what it means:
When lending funds to another, be it an individual, an entity (corporation or institution), or a government, the consensus is that the future is uncertain, so the interest rate the lender should expect should grow with the duration of the loan.
As I write this, the 30-year Treasury rate is 3.83% while the 10-year one is 3.74% and the 1-month one yields 4.66%.
93% Of Investors Generate Annual Returns, Which Barely Beat Inflation.
Wealth Education and Investment Principles Are Hidden From Public Database On Purpose!
Build The Knowledge Base To Set Yourself Up For A Wealthy Retirement and Leverage The Relationships We Are Forming With Proven Small-Cap Management Teams To Hit Grand-Slams!
If someone asks me for a 30-day loan, the interest I would ask for is normally FAR LOWER than if they want my money until 2053.
This inversion means that lenders expect turmoil and plenty of uncertainty in the short term and want to be compensated appropriately for the risk they are taking.
As you can see, this scenario has led to wealth flowing to bonds for income. The rich are parking their funds in short-term bonds while waiting for the recession and getting paid handsomely for it.
The Federal Reserve continues to think the economy is robust and strong because of the low unemployment that isn’t consistent with a slowdown, but the three major industries that indicate we are running towards a recession in 90 days (housing, auto sales/appliances/durable goods, and office/business equipment) scream that Powell is thinking like Bernanke did.
In the next 90 days we think it will become clear that a hard landing is coming!
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
Protect Yourself Now, By Building A Fully-Hedged Financial Fortress!
We are not brokers, investment or financial advisers, and you should not rely on the information herein as investment advice. We are a marketing company. If you are seeking personal investment advice, please contact a qualified and registered broker, investment adviser or financial adviser. You should not make any investment decisions based on our communications. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT recommendations. The securities issued by the companies we profile should be considered high risk and, if you do invest, you may lose your entire investment. Please do your own research before investing, including reading the companies’ SEC filings, press releases, and risk disclosures. Information contained in this profile was provided by the company, extracted from SEC filings, company websites, and other publicly available sources. We believe the sources and information are accurate and reliable but we cannot guarantee it.
Please review our entire disclaimer at FutureMoneyTrends.com/disclaimer.