Global Economic Slowdown 2019 Continues – Protect Yourself and Profit by Taking These Simple Steps

Financial headlines around the world seem to have taken a liking to the phrase “global economic slowdown 2019.”

Everywhere you look, data about declining trade, failing currencies, or falling stock markets abound. Bloomberg, Forbes, Business Insider, CNBC, RT Business, and The Washington Post are just a few of the mainstream sources now acknowledging that something is seriously wrong with the global financial system.

While there are almost endless ways to cover this story, here we will focus on a few main points:

• There is a massive slowdown in global trade occurring. FedEx and the Baltic Dry Index prove this. The inverted yield curve is also suggesting that a Recession may be ahead.

• The Fed may slow down on rate hikes this year, but has the damage caused by higher rates already been done?

• Global stock market growth has been good in the US, but the rest of the globe has suffered. Why is this the case? Have corporate share buybacks distorted market prices?

Global Growth Not Looking Good in 2019

There are too many indications of a global slowdown in growth for 2019 to count. Everything is pointing toward signs of another serious economic meltdown coming in the near future.

And this time around will be much worse than in 2008. There has never been more debt in the system and interest rates have never been this low for this long.

Stock markets around the world have been declining since October 2018, as we covered here at GSB. But the US has bounced back for some reason. How can this be?

Corporate Buybacks Boost Share Prices

It’s no secret that the huge rally in stocks over the last decade has been fueled by quantitative easing and corporate share buybacks. There’s a reason that corporate debt has become one of the many big debt bubbles in the US economy.

With interest rates at or near zero, corporations can borrow money for free and use it to purchase shares of their own stock. The result is increasing share prices without any real underlying economic fundamentals to justify those share prices.

It’s worth noting that share buybacks began tapering off just months before the sharp selloff during Q4 2018.

FedEx Reports Weak Earnings, Issues Warning to World About Global Economic Slowdown 2019

International shipping giant FedEx (FDX) has issued a warning that the entire world economy is slowing down.

CNBC reports:

Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue,” Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer, said in statement.

FedEx reported weaker-than-expected third-quarter earnings and revenue after the closing bell on Tuesday, and cut its full-year guidance. Shares fell more than 4 percent in after-hours trading.

And it’s not just FedEx that has been hurting. Looking to other indicators of global trade, it becomes obvious that there’s more to the story here than just a single economic bellwether suffering lower revenue.

Baltic Dry-Index Further Validates FedEx’s Warning

The Baltic Dry Index is considered to be the hallmark indicator of global trade. The index is currently hovering around a 1 year low and is not far from its all-time record low reached in 2016.

The fact that the Baltic Dry Index has been doing so poorly is a clear indication that things are not going well at all.

Curiously, we don’t hear this indicator mentioned much by most mainstream economists. But what’s been happening with treasury yields is perhaps even more ominous.

The Yield Curve is Inverting

One of the most surefire indicators of a recession is what’s known as an inversion of the yield curve. This happens when the yield on short-term debt becomes higher than the yield on long-term debt.

This happened leading up to the dotcom bubble bursting in 2000. It happened before the 2008 global meltdown. And it’s happening again now.

Historically, a recession has followed within 14 – 34 months of the yield curve going upside down. This has happened every single time for the past fifty years.

Federal Reserve Reverses Rate Hikes

In what has become a classic move for the Fed, Jerome Powell reversed course when he announced on Wednesday that more rate hikes may not be coming this year after all.

Recall that for several years leading up to the first rate increase from a federal funds rate of zero in December 2015, the Fed claimed it was getting ready to raise rates at almost every single FOMC meeting.

Will we see the opposite trend take hold beginning this year? Will the Fed continue to raise rates despite Powell’s comments to the contrary?

Given the central bank’s track record, no one can say for certain. It’s almost as if the Fed intends to confuse people and prevent any kind of predictability from entering the markets (I’m not saying they’re doing that, but they couldn’t possibly do a better job of it if they were).

On the one hand, if the trend of the past decade were to continue, markets should rally as a result of the Fed turning dovish, or at least claiming to.

But things don’t look so rosy this time around.

While US stocks rallied on Thursday, they tanked again on Friday, with the Dow falling 450 points at session lows and the S&P 500 having its worst day since January.

The QE punchbowl has been taken away and the party is ending. Even a modest increase in interest rates has pricked the massive debt bubble that has been inflated through years of accommodative monetary policy including a $14 trillion global bailout of banks in 2009. The Federal Reserve alone has printed over $4 trillion and now claims its intention to pause the unwinding of its balance sheet.

How do the rest of us cope with the results of this never-before-seen monetary experiment that is beginning to go horribly wrong?

How to Best Position Yourself for the Ongoing Global Economic Slowdown in 2019

Things keep getting worse for most of the financial world. The global economic slowdown of 2019 appears to be accelerating. But those who subscribe to the GSB newsletter aren’t feeling the pain.

As usual, there are a few surefire ways to protect yourself from the increasing chaos engulfing the globe:

• Physical precious metals
• Quality gold and silver mining stocks
• Short selling select overvalued stocks or using inverse ETFs
• Bitcoin and other cryptocurrencies that offer non-correlation to stocks
• Undervalued cannabis stocks experiencing triple-digit growth

These types of proven strategies can help investors protect and grow their wealth, even during a stock market decline.

The GSB portfolio is already outperforming in 2019, up double-digits with over 80% of our positions in the black year to date.

And just as mainstream headlines have begun validating what GSB has been saying for years, so too has one of the top performing hedge funds of 2018 profited by adopting similar strategies.

As Bloomberg reports:

“One of last year’s best-performing hedge funds says the “trade of the century” is to buy gold and sell stocks as risk assets are due for another meltdown.

It’s only a matter of time until the bearish bet pays off big, according to Crescat Capital LLC”

Subscribe to the GSB newsletter to get in-depth monthly market analyses, our real-time portfolio, top-rated newsletter, plus weekly trade alerts and updates. For a limited time, you can get instant access to our top picks starting at just $55.

[This post was originally published on GoldStockBull.com on March 25th, 2019.]

Will the Global Market Crash of 2018 Turn Out to Be the Beginning of the Greatest Financial Crisis the World Has Ever Seen?

The global selloff has erased $5 trillion from stock and bond markets in October alone! October is a historically bad month for stocks. Many of the most dramatic crashes have begun during this month. The global market crash of 2018 seems to be in line with this trend and the crash is indeed global.

This same trend has occurred prior to other major historical market crashes, whereby other countries were already crashing and in depression prior to the crash hitting the United States. Nothing happens in isolation. This holds true between markets and throughout time.

In February of this year, there was a huge stock market sell-off. What caused it?

In short, the “smart money” was taking profits. Huge profits. Trading whales sensed that the top was near and decided to withdraw major portions of their funds. And looking back, it appears they were right.

Over the next 8 months or so, “the little guy” began piling into stocks. This is a classic indicator of a true top being reached in equity markets. Falling victim to FOMO (fear of missing out), average retail investors pile into stocks when there has been such an epic bull run that everyone thinks the party will never end.

In other words, most of the stock market rally since February has been the result of retail investors entering the market. Everyone knows this is the final nail in the coffin for any long-term bull market.
So, the question becomes, why now?

Global Market Crash 2018 Explained

The causes of a crash like this are many and varied. While most media sources tend to report on things in terms of a simplistic dichotomy (this or that), reality tends to be more complex.

The recent trade war between America and China is only one recent event that seems to be precipitating this crash. And while mainstream media loves to point this out over and over again, they remain silent on the actions of central banks and governments that have put the world economy in such a vulnerable position in the first place.

In this case, flooding the market with trillions of new fiat currency units and pushing interest rates to zero for the greater part of a decade made a new crisis inevitable.

In February of this year, I wrote an article on Blasting News about the coming crash that would be blamed on Trump’s trade war. I asked the rhetorical question, “Will the next credit crisis and financial failure begin in 2018?” as it became more and more clear that the answer would be yes.

In the article, I describe the historical basis for central banks setting the stage for financial crises. By unilaterally manipulating interest rates and the money supply, central banks create the monetary conditions leading to economic booms that become economic busts. And they do a great job of concealing the fact that they usually initiate the bust through their own actions as well.

Of course, it’s not a coincidence that the timing of this crash happens to fall in line with The Federal Reserve raising interest rates. This action has caused the USD index to rise, which has weakened other fiat currencies.

Emerging market (EM) economies have tons of dollar-denominated debt that they must service with their own fiat money. A stronger dollar means they need more of their own currency to pay their debts. This is an oversimplification of the issue but is basically why we see economic turmoil fueled by currency collapse in countries like Argentina, Turkey, Iran, India, and so on, as we have previously covered at GSB.

As I mention in the Blasting News article, these financial conflicts almost always lead to military conflicts at some point, but that’s not our concern here. The question investors face at the moment is “how do I prepare for the deepening crisis ahead?”

Preparing for the Next Phase of the Global Market Crash 2018

The crash that is coming will be unlike anything the world has ever seen. Put simply, there has never been this much debt in the system (hundreds of trillions worldwide), so there will be no historical precedence for the crash.

And that debt doesn’t even include the hundreds of trillions worth of derivatives held by big banks. If those go bad, it’s game over for the global economy.

So, while holding some cash is always good in uncertain times, you can’t depend on fractional reserve banks to provide access to your funds during a crisis.

As occurred during the last crisis, we are likely to see some traditional financial institutions and even national governments become insolvent. They can print money in an attempt to stop the bleeding, but this inevitably leads to high inflation or hyperinflation.

Stocks

While most stocks should be avoided during a crash, gold mining stocks tend to do well after the initial take down. They bounce back first and rise the fastest as investors start fleeing to safe-haven assets, which the mining companies own.

Cannabis stocks are not immune from a market crash, but could hold up better than other sectors, as those using it for medical purposes and unlikely to cut back. And like alcohol, we could see sales hold steady or even rise, as people seek relief from the economic strife that unfolds.

At Gold Stock Bull, we help our subscribers pick top-performing stocks no matter which direction the market is moving. You can also purchase shares of an ETF like GDAX (gold mining) or MJ (cannabis) to get exposure to these sectors.

Large market cap, high-dividend-yielding stocks and utility stocks in developed countries like China, Russia, and many European nations also tend to hold up relatively well during market crashes.

Fixed-Income

There are also fixed-income investments, which are among the most conservative options. Certificate of Deposit (CD) accounts will become more attractive as interest rates rise, although they don’t even beat inflation at present rates. The same goes for money market funds.

But while these assets are typically viewed as having no risk, we think that the next market crash could call into question the safety of assets that have long been viewed as having zero risk. This is especially true when they are backed by governments that are deep in debt themselves and rely on other nations buying their debt in order to pay the bills each year.

Gold and Bitcoin

Many experts believe the most significant hedge against this kind of uncertainty to be physical gold securely held in your possession or in vaults outside the USA.

A potential newcomer to the safe-haven assets is bitcoin, ideally held in a hardware wallet or cold storage. For those who choose to hold a crypto portfolio, it’s wise to keep a significant portion of those holdings in bitcoin, which is the gold standard of crypto, has a strictly limited supply, the highest encryption strength and a perfect track record of never being hacked.

The great thing about bitcoin (and other cryptocurrencies) is that you own it. With a hardware wallet, you own your private keys. A third-party doesn’t have to provide custody and can’t abscond with your funds due to fraud or a national emergency.

Goldmoney

Goldmoney provides custody and liquidity for those who want to own gold, silver, platinum, and palladium in tradeable form.

At a minimal premium and for small monthly storage fees, users can hold precious metals in Brinks vaults in countries like Canada, Switzerland, Singapore, and more. The metals can be sent to anyone else with a Goldmoney account or loaded onto a pre-paid debit Mastercard for daily transactions.

If you hold some gold and bitcoin as a safe haven bid in addition to mining stocks and cannabis stocks for considerable long-term gains, you will be shielding yourself against the harshest effects of the storm. More speculative assets like altcoins, junk bonds, penny stocks, etc. should be limited to single-digit percentages of a total portfolio at times like this.

Real Estate

The real estate market is currently overvalued in our view and due for a correction. As interest rates rise and economic growth slows, we could see a repeat of the last housing market crisis. Households are back to spending the same percentage of their income on housing as they were just prior to the last crash.

Governments are also back to pushing for more lenient loan requirements. These are both troubling signs, as we tend to see this happen at or near tops.

But real estate is a great long-term investment and inflation hedge. High net worth individuals should consider scooping up real estate bargains during crashes. People who bought property in 2009, for example, have profited quite handsomely since then.

Short Selling

Sophisticated, risk-tolerant investors might consider buying put options or selling call options to hedge their portfolios during major corrections.

Like many other market observers, I recently mentioned that tech stocks were overvalued. While they have since corrected, there might still be an opportunity to short stocks like Tesla, Netflix, Amazon, and many others in the tech sector if the current correction continues.

But again, acquiring gold and bitcoin should be your first priority. In fact, for the average person with limited resources and little appetite for risk, it may be the only thing that really matters.

The only thing that really has value in a big #stockmarketcrash is successfully programmed #blockchains with huge application possibilities. An example among a few? #DYOR $IOC pic.twitter.com/81AFNKworf

— Swiss IOC-Forever (@SwissIOCForever) October 25, 2018

Global Market Crash 2018: How Bad is it, And Will it Continue?

It’s tough to measure the severity of this global market crash in 2018 as it may only have just begun.

With that in mind, Wednesday was definitely a terrible day for markets and the major indices are dropping again on Friday. It’s shocking to see an exchange like the Nasdaq (the second-largest stock exchange in the world) down over 4% in a single trading session. This marked the worst day for the NASDAQ since 2011. While stocks in the US rallied on Thursday, they still didn’t quite erase the previous days’ losses.

Several variables are pointing toward further volatility and declines, though. Here are just a few…

VIX Has Been Climbing

A good indicator to look at is the volatility index (VIX). VIX has been skyrocketing the last few weeks. This measure of overall volatility in the market has peaked at 25. Four weeks ago it was barely above 10. In other words, volatility has increased by almost 150%.

Extreme Fear Plaguing the Markets

Another indicator is the global fear/greed index. It has turned toward “extreme fear,” whereas just two months ago it was at “extreme greed.”

USD Index Rising

Brian Kelly of CNBC wrote an op-ed piece for Forbes this week in which he talked about the US Dollar as the new VIX. His main point was that a rising dollar creates greater global risks than the VIX can account for.

Kelly also mentions that although many countries are making moves away from the dollar, it still makes up 62% of all foreign currency reserves. So, while no fiat currency is safe in the long-term, it does make sense to hold some cash for now.

After all, the USD index has been strengthening. And while this may be the final top ever for the dollar, it will stay strong in the near-term. As long as you have gold and bitcoin to hedge against it, you’re okay holding some fiat.

In addition, on Thursday, financial advisor Mitch Goldberg said in a guest post for CNBC:

“With bonds also in negative territory year-to-date, as measured by the benchmark 10-year Treasury, it’s important to remember that cash offers both a stabilizing force within your portfolio and a source of funds for new opportunities that come along… As a financial advisor who likes to assort my clients’ accounts based on time horizons and the timing of cash needs — as opposed to the old way of just based on client age or account value — I can tell you that cash and cash equivalents play a critical role in portfolio composition.”

As Goldberg mentions, a big benefit of holding cash is that it provides the liquidity needed to jump into a new investment the moment it becomes most appealing. Because we are likely in the early stages of this decline, cash is king in a limited sense.

When you look at the above factors, it seems this crash is more likely to continue than not. There are also many other factors at play that are beyond the scope of this article and paint an even more convincing picture that leads to the same conclusion.

Stock Valuations Remain High

While P/E ratios have come down a bit in the past few months, the Shiller PE remains historically high. It is currently at 30, higher than the peak just before the financial crisis and the same level just prior to Black Tuesday. In fact, it has only been higher at one point in history, just prior to the dotcom bubble bursting in the year 2000.

Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10.

Don’t Panic During This Global Market Crash in 2018

All things considered, October 2018 could very well be the start of something big. The global crisis that everyone has been warning about for the greater part of a decade appears to be materializing.

One thing is for sure, though. In recent weeks, mainstream sources like CNBC, Forbes, and Business Insider have begun to mimic what sources like Gold Stock Bull have been saying for years with regard to a global market crash. We have reduced risk in our model portfolio, entered a short position against an overvalued biotech company and hold a large position in gold mining stocks and cryptocurrencies.

Sign up to be a GSB subscriber today and put yourself in a position to protect your assets and profit from the challenges and opportunities ahead.

[Originally posted on GoldStockBull.com on October 26h, 2018.]

End of US Dollar bull market?

As the above chart shows, the US Dollar Index has broken key technical support.  This indicates that the topping process illustrated by the horizontal purple line may be coming to an end.  Indeed, this explanation jives with what we have witnessed the past weeks and months in financial markets.

Stocks and commodities have been rebounding from their depths back in February.  As one trader on CNBC noted, "Everything made sense back then [two months ago] - oil was down, stocks were down, gold was up....now nothing makes sense".

Nothing makes sense from any fundamental or technical perspective, yes.  Yet from a currency perspective, it's all very simple.

A sharp decline in the dollar's value (which means its value relative to other fiat currencies, because fiat currencies have no intrinsic value by nature and as such their value remains a matter of pure subjectivity) would lead to a levitation of all dollar-denominated assets.  So while it appears everything has been rising....the dollar has been falling, causing asset prices to be denominated in higher nominal terms.

Dr. Paul Craig Roberts has often referred to the three massive bubbles of our time: the dollar, the stock market, and the bond bubble.  If the dollar bubble bursts first, they all go.  And as this very early phase of what may turn into a longer-term trend continues....that outcome becomes more and more a real possibility.

No matter what, it appears that central banks remain determined to prop up asset prices at all costs, and to prevent any sort of financial losses from happening on paper.  Keep the %1 happy by showing them large numbers in their asset valuations, and throw the masses populist puppet candidates in politics to occupy themselves with.  That appears to be the strategy here.

It only works until it doesn't.  With every prolonging of the inevitable, the final fall from grace only ensures itself to be more epic.

Speaking of epic, Janet Yellen's recent meeting with the President was historic.  The last time that happened?  Just before the housing crisis of 2008.  Imagine that.

Central banks intend to own everything

[This post will be re-posted to my other website, MeaningOfFreedom.com.  It's almost ready to become my primary blog]

Renowned investor and trends forecaster Marc Faber has issued a warning regarding central banks and socialism.  View the entire article on Zerohedge here.

What he warns of involves central banks buying all financial assets the world-over: all corporate bonds, all government bonds, all mortgages and mortgage-backed securities.

Central banks have been doing this to some extent for many years now.  Yet given that their policies never work, and only do additional harm to the global economy, one can assume they will begun to purchase MOAR of everything in the years to come.  As things fall apart, the central banks rejoice, for they can "come to the rescue" and own everything.  

"The central banks aren't interested in what works, they're interested in their own prestige. And they are so deep into it already and it didn't work. They will increase the medicine," said Faber, the publisher of The Gloom, Boom & Doom Report.

"Eventually, they'll buy all the government bonds; they'll buy all the corporate bonds, all the shares outstanding. Afterwards the housing market goes down, they'll buy all the homes and then the government will own everything."

That's the road to socialism, he ominously concludes.

As one comment on Zerohedge notes, the term "socialism" fails to describe this situation.  Something like Global Feudalism more accurately describes what the world faces.  

For those unfamiliar, feudalism involves a system of slavery whereby peasants tend to the land in exchange for shelter and safety.  It was the system used when Kings ruled all the land.  Our current model of society today has often been referred to as "neo-feudalistic", even in formal academic circles involving anthropology, sociology, communication.  

We will never live to see the day when central banks own everything.  Even though they already own much of the world, their system depends far too heavily on the illusion of faith.    

And this year in particular appears to be one in which the public has begun to lose faith, en masse.

Evidence for that fact lies all around, but most notably in Gold's historic, meteoric rise this financial quarter.  It has already been the best financial quarter for gold in USD terms in over thirty years, as I have written about previously.  This indicates a widespread loss of faith in the dollar, in turn pointing to a loss of faith in the entire system itself.  

People will always look out for their best interests.  And millions have begun awakening to the fact that the central banks' very existence can never be in their best interest.  So, the flight out of fiat currencies has begun.  Let the rebellion against fiat debt slavery commence.  Allow their castle walls to fall and crumble.  No bankers shall be spared the wrath of a vengeful public.  

Do not fear global feudalism.  Resist it.