The top trends forecaster in the world, Gerald Celente, just warned that we are now positioned for a global meltdown.
Positioned For A Meltdown
May 17 (King World News) – Gerald Celente: “Beyond the prospect of Middle-East War, equity markets worldwide, based on our tracking of several key economic indicators, are positioned for a meltdown whether or not war erupts…
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Since the Panic of ’08, markets have been artificially propped up with cheap money fueling merger and acquisition activity and stock buybacks, both of which have now accelerated to record-setting levels as a result of President Trump’s corporate-friendly tax bill.
THE TOXIC RECIPE
When equities began their decline in February, it was based on the fear of rising interest rates. On Tuesday, Treasury bond yields hit its highest level since 2011, peaking at 3.09 percent. As investors see the higher yields as a safe investment vehicle, they’ll pull away from investing in stocks.
Also on Tuesday, emerging market currencies sunk deeper as the dollar climbed to its highest perch since December on the news that robust retails sales in the U.S. would likely prompt the Federal Reserve to raise interest rates three more times this year.
The dollar has shown increases 17 of the past 21 days, while every major emerging market currency, with the exception of the Russian ruble and Philippine peso, has declined verses the dollar over the past month.
As their currencies weaken and the dollar grows stronger, the cost to emerging markets to service their $7 trillion of debt increases. Investor pullout from EMs have accelerated with equity funds suffering their worst outflows in a year, prompting investors to pull nearly $30 billion out of EM exchange markets.
Considering that the dollar is seven percent weaker than it was at the start of 2017, should it and interest rates rise higher, EM equities will be pushed sharply lower, as will all the deeply indebted and overvalued stock markets worldwide.
Beyond the Emerging Market retraction, recent data is also signaling economic slowdowns in the UK, Eurozone, China, Japan and India. Deep in debt, and pressured to keep their economies growing, their interest rates will not rise, their currencies will weaken and the dollar will grow stronger.
Already in the States, with the dollar and interest rates rising, mortgage applications, whose rates have hit a seven-year high, along with auto loans, are declining.
And, globally, with wages stagnant, higher prices at the pump will significantly eat into discretionary consumer spending. Indeed, should gas prices hit $3 per gallon in the U.S, some $30 billion of consumer spending that would have been spent in the retail market will be spent on fuel.
King World News note: The American consumer is already tapped out. Meaning, they don’t have the savings or money necessary to absorb higher gas prices. We are also, once again, entering a major inflationary cycle which will be led by higher commodity prices. But, as mentioned earlier, this comes at a time when the average US citizen is already broke. It will be much worse than the 1970s because it will be stagflationary hell. But gold and silver prices exploded in the 1970s. Expect the same thing this time around but on steroids.
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