United States Economy Teetering On Collapse

The United States economy is teetering, despite what the stock and job markets are saying. The US economy is consumption-centric. Growth in the current recovery has focused on three sectors that have fed through to consumption in its various forms: autos, energy, and financial services.

The scariest set of financial indicators to emerge in decades reveals what is crushing the dreams of record numbers of young, middle-class and older Americans.

While nationwide unemployment is down to 4.3 percent, policy experts and economists are warning of disturbing signals in the economy.

As any industry veteran can tell you, those on the sell-side are the second-to-last to surrender to a downturn in economic activity. A 401K Advisor or money manager will not produce negative forecasts when their most important objective is keeping its customers completely invested in risky assets.

United States Economy

The Citi Surprise Index shows a big disconnect between the economy and Wall Street.

The disconnect will not last for long as the chart above shows. Either the economy improves a lot over a short period of time, else the stock market comes plunging down to earth. It’s easier for the stock market to come down than it is for the Federal Reserve and republicans to somehow get this economy going, a feat that has remained elusive for the last 8 years.

Debt is what has kept the United States economy going for the last 8 years. Debt placed a floor under and then helped commercial property reach for the skies. Debt kept dying retailers alive. Debt also caused back-to-back years of record car sales.

Salaries for the typical American worker have hardly grown for decades, well-paid middle-class jobs are disappearing, and lots of the new jobs are from the low-wage service sector.

Consumers are being crushed by high healthcare costs and it partially explains why the American population grew at a small 0.7 percent this past year, the lowest rise since the Great Depression. As Russ Zalatimo of HudsonPoint Capital said, the tendency around recessionary times is that the birth date really drops like we are now seeing.

Bank of America Merrill Lynch stated autos are headed for a “decisive downturn” that will trough in 2021 at about a 13-million-unit annualized rate, down from last year’s blistering record 17.6 million. A week earlier, Morgan Stanley, whose numbers aren’t quite as grim, also reduced its revenue forecast, recognizing that the best days of this cycle have come and gone.

With the Trump White House scrambling to advance different measures to fuel economic growth – tax reform, infrastructure spending, maintaining jobs from fleeing abroad, some analysts say more radical steps are desperately needed.

Manufacturing isn’t just dead, say analysts. But it’s no longer dominated by smokestacks and rudimentary assembly. There are about 360,000 jobs in US manufacturing that are vacant and not being filled and companies are saying, “We need people to fill them.”

Meanwhile, retailers are currently choking on their debt as profit margins implode. Restaurants today employ 10.6 million individuals.

According to the Tax Policy Center, Trump’s tax reform could cause overall tax cuts of $6.2 trillion over the next ten years.

Losses on securities backed by automobile loans are piling up even as the unemployment rate has hit 4.3 percent, the lowest since 2001.

Additional evidence that the United States economy is teetering is becoming more and more apparent in credit card delinquencies. Experian reported that the domestic bank card default rate climbed to 3.53 percent in May, a four-year high. There are even nascent signs that families have started to struggle to make their mortgage payments.

Kevin Duffy Profiting from this Impending Stock Market Decline

stock-market-videos w82zj4 - Kevin Duffy Profiting from this Impending Stock Market DeclineKevin Duffy of Bearing Asset Management thinks we are facing another major bear market.

Kevin Duffy thinks that this 8 year bull market has been one of the most anemic recoveries since World War II. Also, valuations are very stretched. Duffy thinks we are in a stimulus bubble.

The Tech Bubble was very narrow. The Credit Bubble was a bit more broader as it was focused on housing. This Stimulus Bubble we are in now is a very broad based bubble.

There is a tremendous amount of leverage in the system with margin debt hitting all-time highs.

Kevin Duffy lays out a powerful case for why we need to be defensive and on the alert for a stock market crash.

Kevin Duffy Profiting from this Impending Stock Market Decline

When Will the Stock Market Crash?

When I expressed caution to a trader last week and that the market exists to ruin the greatest number of amateur traders at any given time, the trader replied I don’t believe that. Another trader I expressed caution to about this market told me I have to just ride the wave higher.

Folks, your goal should be to “anticipate,” not “react.” If your big plan at getting rich from trading is to just “ride the wave higher,” you are in for some serious disappointment. Trading is harder than that. Riding the wave higher is a trading strategy of buy high and sell even higher. In other words, you are always chasing. Chasing as a strategy is ok until it’s not.

The wise Djellala trader has this to say about when will the stock market crash.

You will hear some people online always talk about how the stock market will crash. They don’t know. They just say the words that the stock market will crash. If the crash happens after a few days or one month or two they will say oh, didn’t I tell you the market was going to crash? If the market is still going up and up and up and up those people will change their mind and they begin to speak about the market is going up, so it means they don’t know people because no one knows if the market will crash.

I love listening to Djellala. He’s a funny, no-nonsense guy.