U.S. Economy: Soft Landing or Crash Landing?

It's not like the Fed is gonna finally see a small reaction to one rate hike that will enable them to quickly reverse course and engineer this soft landing that everybody likes to talk about. The minute there is a problem from the rate hikes it's gonna be a crash landing. There's going to be no opportunity to try to soft land this thing because as soon as it goes down it's going to come crashing down even if the Fed immediately goes from whatever they've raised rates to, to zero and launches another round of quantitative easing it's not going to be in time to stop the damage.

Federal Reserve: The Removal of the Word "Accommodative"

The only thing that was significant or potentially significant about this interest rate hike was the removal of the word accommodative by the Federal Reserve in their official statement to describe the current state of monetary conditions or monetary policy.

Now, I initially thought that was a significant removal of a word obviously the Federal Reserve thinks very carefully about the written statements and so if they chose to remove a word that was there and they know that people parsed through these words with a microscope and so the fact that the word was missing and obviously it's missing by intention it wasn't just an accident that they're trying to send a message and what I first thought the message was and I still believe that was the Federal Reserve views a two percent interest rate as neither accommodative or restrictive but maybe neutral. The Federal Reserve now believes that interest rates are high enough that they would no longer be described as accommodative.

Treasury Yields: The Chart Looks Ominous

Look at the bond market, yields on the 10-year and on the 30-year were up again today. We haven't completely broken down yet but to me the chart looks ominous I mean there is the potential for a big break in the bond market: drop in price, up in yield above 3.50% in the 10-year maybe above 4.00% in the 30-year in the short run.

Trump, The Stock Market, & The Mid-Term Elections

Donald Trump said that if the Democrats get voted, the stock market gonna get cut in half. So, that is a pretty bold statement to say that, "the stock market is worth twice as much with me as President as it would be worth if the Democrats got in power" now, I don't know if he was referring to the Democrats taking control of the White House in 2020 or taking control of the Congress later this year.

I mean maybe the President is pre-blaming a future sell-off in the stock market on the Democrats taking control of Congress. I wouldn't put it past him if we start to see the markets selling off later in the year and the Democrats do take control even if it's only the house and the market tanks I bet that the President will say, "You see, if the Republicans had retained control of Congress then the market would still be going up."

The Trade War Continues To Escalate

This trade war continues to escalate and people still think that we're going to win and they still believe that there is some type of method to the madness in that all of these tariffs are simply a down payment on a future where all the tariffs are gone right where the goal here is free trade it's just that in order to get to free trade we have to make trade less free first.

Europe Wants The Euro To Become The World's Reserve Currency

European Commission President Jean-Claude Juncker just this week said publicly that their plan, their hope is that the Euro becomes a reserve currency that rivals the US dollar because Europe is tired of being depended on the US Dollar. 

In fact, he specifically mentioned the fact that 90 plus percent of European payments for oil are made in dollars he says, "Why is this? Why are we buying oil from Russia and paying in US dollars? It makes no sense!" And so Europe wants to wean itself from dollar dependence.

Currency Markets: ECB is Hawkish, The Fed Is A Dove

The European Central Bank (ECB) is saying "we're gonna keep inflation under 2 percent no matter what" and so to me they're taking opposite positions: the ECB is tighter and the hawkish bank and the Federal Reserve is a dove and therefore the Euro currency (EUR) on that basis alone is going to be stronger than the US Dollar (USD).

How The Federal Reserve Is Thinking About Inflation Right Now

The Federal Reserve is saying that they're gonna err on letting inflation break out, that they are fine with symmetrical inflation around 2 percent.

Podcast: The Next Economic Hurricane Will Be a Category 5

Podcast: The next economic hurricane will be a category 5

Ford (F), General Motors (GM) Trading At 52-Week Lows

The auto industry is suffering. I mentioned just a minute ago about how many Americans have to borrow to buy cars and that's one of the reasons that both General Motors (GM) and Ford (F) are again hitting new 52 week lows. 

Ford (F) is trading close to  an eight or nine year low or something like that. But General Motors (GM) is again at a new 52-week low as both of these stocks are venturing further into bear market territory.

Crude Oil: $80/Barrel By The End Of The Year

Crude oil is getting more expensive again. The chart to me looks very, very strong. I still think we have a shot of 80 dollars a barrel crude before the end of the year and then north of a 80 dollars a barrel next year especially when the US Dollar rolls over. If you think about how strong crude oil prices are today with the US Dollar strong, imagine how much stronger oil prices will be tomorrow when the US Dollar is weak.

10-Year Treasury Yields Can Explode Higher At Any Time

Interest rates are going up, in fact the yield on the 10-year Treasury today was up I think 40 basis points to 2.98 percent. So, we're almost at 3 percent right now in the 10-year. The chart though to me looks like we can explode higher up to three and a half four percent almost any time.

The Last Time We Had A Trade Deficit This Big...

The last time we had a trade deficit this big was 2008 which of course was right before the financial crisis and Great Recession and it probably is no coincidence that were having such large trade deficits again probably on the eve of what will be an even greater economic recession than the one that we had in 2008.

The Bear Market Can Start At Any Minute

In a recent tweet, Peter Schiff drew a parallel between the current market and the tech bear market that started in 2000:

"The Nasdaq had the biggest gain last month since the year 2000. But do you recall what happened in 2000? The Nasdaq – it declined approximately 80 percent from peak to trough."

When asked when the bear market would start, peter Schiff replied:

"It’s long overdue. It can start at any minute … But people are oblivious.”

Related trading instruments: Nasdaq 100 Futures, Nasdaq 100 Index ETF (QQQ)

We Will Have Inflation And Recession At The Same Time

In a recent podcast, Peter Schiff warned us that we should be prepared for inflation and recession to his us in the face and at the same time.

Read the complete article here: https://www.zerohedge.com/news/2018-08-29/peter-schiff-we-will-have-inflation-and-recession-same-time