Sunday, October 13, 2019

Stock Market Overview -- Top 21 Signs of an Economic Collapse

Top 21 Signs of an Upcoming Economic Collapse....

The outlook for the economy has never been as dire as it is right now, since the end of the last economic collapse. Economic red flags are popping up everywhere you look, and the mainstream media is suddenly full of stories about the coming stock market crash.
Things appear to be changing dramatically for the US and global economies, after several years of relative economic stability. We are seeing things happen that have not been witnessed, since the last economic collapse, and many analysts expect our troubles to accelerate as we head into the final months of 2019.

There are hopes that things will turn around, but at this point that does not appear to be likely. Below are the top 21 signs of a global economic collapse at this key and pivotal point:
1.) The US and China trade war has just escalated to an entirely new level, with the commencement of 15% US tariffs on Chinese goods worth an estimated $110 billion, and the retaliatory action of China imposing tariffs on about $75 billion worth of US goods. 

The world has already lived through two rounds of US tariffs and subsequent retaliation, but these recent tariffs, along with the ones being delayed until mid-December 2019, are different than the ones that came before, since they will broadly affect global economic growth.

2.) US tariffs on China have already caused American households $600 per year, which will now rise to over $1,000 annually, after the September and December 2019 tariffs go into effect.

3.) Interest rate yield curve inversions have preceded every economic recession since the 1950s -- a major reason for the enhanced stock market volatility, globally.

4.) The US consumer sentiment index just posted a monthly decline in August 2019 of -8.6 points, the largest drops since December 2012 of -9.8 points. The overall consumer buying attitude towards appliances and other household durable goods fell to their lowest level in five years, with "net price" references more negative than anytime since 2008.

5.) The mortgage default rate is rising for the first time since the last financial crisis, with the national default rate increasing 3% in the second quarter of 2019, when compared to the same quarter in the prior year -- the first such rise in over a decade.

6.) Luxury real estate is having its worst year since the financial crisis, with pricey markets like New York City seeing six straight quarters of sales declines. Sales of homes priced at $1.5 million or more fell 5% in the US for the second quarter of 2019. Unsold mansions and penthouses are piling up across the United States, especially in ritzy resort towns where there is a three-year supply, like in Aspen, Colorado as well as the Hamptons in New York.

7.) The US manufacturing sector has contracted for the first time since 2009 as manufacturing companies continue to feel the slowing economic conditions, with global ramifications. The US manufacturing purchasing managers index (PMI) was 49.9 in August 2019, down from 50.4 in July 2019, and below the neutral 50.0 threshold for the first time since September 2009.

8.) The Cass Freight Index has been contracting for the past eight months, falling 6% in May, then 5.3% in June, and 5.9% in July 2019. It is subsequently predicting negative Gross Domestic Product (GDP) growth by the third or fourth quarter of 2019.

9.) Gross Private Domestic Investment tumbled 5.5%, the worst since the fourth quarter 2015, as spending on structures slumped 10.6%. This decline reduced the US second quarter 2019 GDP growth by one full percentage points, being revised downward to 2.0%. The falling inventories also caused a 0.86% drag on the economy.

10.) Crude oil processing at US refiners has fallen by the most since the financial crisis, due to slack fuel demand. US refineries slashed an average of 247,000 barrels per day, since January 2019, compared with the same period in 2018. Crude oil processing has fallen for the first time since 2011, and by the most since the 2008 and 2009 financial crisis.

11.) Retailers Sears and Kmart will be closing an additional 100 stores by the end of 2019, further confirming the reduced consumer spending abilities, which represents 70% of the US economy.

12.) Sales of US recreational vehicles (RVs) are down 20% so far in 2019, partly due to some of the imposed tariffs. Recreational vehicle shipments to domestic dealers have subsequently plummeted 20%, compared to the same period last year, after already dropping 4% in 2018. The RV industry is a great bellwether of the US economy, and right now it is screaming that a financial crisis is coming.

13.) There are actually 102 million working age Americans that do not have a job right now, but according to the Bureau of Labor Statistics (BLS), there were 6.1 million unemployed working age Americans in August 2019, which would be incredible if it was an honest number. but it does not include all working age Americans that are not currently employed. The BLS is not considering them officially unemployed, because they're not part of the labor force. 

The Federal Reserve indicated in August 2019 that there were 95.9 million not in the labor force, an all-time record high. The BLS unemployed number keeps going down, and the "not in the labor force" number keeps going up. Hence, you come up with a grand total of 102 million working age Americans that do not have a job right now, when you add 6.1 million and 95.9 million together.

14.) The S&P 500 earnings per share estimates have been declining, since the beginning of 2019 -- a clear and established trend.

15.) Global trade fell 1.4% compared to a year earlier. World trade volume, a measure of imports and exports around the globe, declined in June 2019 to the lowest level since October 2017, representing the biggest year-over-year decline, since the financial crisis -- a major reversal from the strong growth in 2017 and 2018 that topped at 6.7%.

16.) Germany stands on the edge of a recession precipice. Their government's statistics agency reported that their economy shrink by 0.1% in the second quarter 2019. Furthermore, Germany's central bank is predicting that they will post declining third-quarter growth as well, confirming the definition of a recession -- two consecutive quarters of economic contraction.

17.) The correlation between present day sentiment and that of the 2008 financial crisis is quite similar. Even the recent risk-on phase (rally) after the initial shock of the yield curve inversion, and the risk-off mood (sell-off) that struck later, neatly track patterns recorded in 2008.

18.) Corporate insiders have been selling an average of $600 million per day in August 2019, as they prepare for a financial apocalypse. This confirms the level of fear that presently exist within corporate insiders -- such selling would only exist if a stock market crash was possible.

19.) Investors are liquidating emerging funds at a never seen before pace, representing nearly $12 billion in just the past 11 weeks.

20.) The economic policy uncertainty index reached its highest level ever in June 2019, exceeding all prior peaks, since the index was established in January 1997.

21.) Americans are searching on Google the term "recession" more times today than what was realized during the financial crisis in 2008. 

The signs are clear, but, unfortunately, we live at a time when "normalcy bias" is rampant in our society. This is also referred to as "normality bias," which is defined as the belief that people hold, when considering the possibility of a disaster. It causes people to underestimate both the likelihood of a disaster and the possible effects, because people believe that things will always function the way things have normally functioned. 

This may result is situations where people fail to adequately prepare themselves for disasters, and, on a larger scale, the failure of governments to include the populace in its disaster preparations. About 70% of people reportedly display "normalcy bias" in disasters.

In summary, the financial crisis of 2008 and 2009 is a distant memory for most Americans and global investors. The vast majority of the population feel confident that brighter days are ahead, even if we must first whether an economic recession. As a result, most people are not preparing for a major economic crisis, and that makes them extremely vulnerable. 

Most Americans were completely surprised by the horrible financial crisis of 2008 and 2009 as well as the recession that followed -- it will be the same, this time around, even though the warning signs are there for everyone to see. 

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