US Headed to Recession in 2015
ADS Securities Chief Market Strategist Nour Eldeen Al-Hammoury explained to Bloomberg why he’s betting on the United States sliding back into recession in 2015. Just like Peter Schiff, he finds the GDP, factory orders, trade deficit, and other economic data points to be much more indicative of the true health of the economy than the bogus jobs numbers.
Since the end of QE, until today, most of the numbers – more than 70% of the numbers – came in far away from the expectations. If you go back to the history, every single QE, when the QE stops, the economy slides back into a recession…”
Al-Hammoury urged investors to rethink their US investment strategy. Like Alan Greenspan, he believes the US cannot exit the zero-percent interest rate environment without falling into a recession or depression worse than 2007 and 2008. In fact, he suspects that not only will the Fed not raise rates in 2015, but they are likely to begin another round of quantitative easing near the end of the year.
Here are some highlights from his Bloomberg interview:
The situation in the US is getting even worse by the day, if you look at the numbers that we’ve seen for the past few weeks and since the end of QE3…
“One of things that I’m looking at also is that the Federal Reserve will not be able to raise rates in any way. This is what we’ve seen in the past meeting minutes. The factory orders fell 5 months in a row. If you go back to 2012… when factory orders and durable goods went down for 4 months in a row, they sparked QE3. Right now we have even worse numbers and for more than 5 months in a row. I think the Federal Reserve will back track again and keep the rates lower for longer… If the numbers came in even worse right now, they might start [talking about] further measures…
“Everybody should rethink about the whole strategy of the US… Continuing with the cheap money for more than 7 years now. So far, once QE stops, just as we said, ‘When the music stops, everybody stops dancing.’ So it might be the same issue all over again. The bond market could be a bubble at the same time… I think at some point everybody should rethink what is happening especially in the bonds market…
“I believe at some point we will enter that recession. If you listen to what Alan Greenspan said over the weekend, ‘We cannot get out of the zero interest rate era without a recession or even a depression worse than what happened in 2007 and 2008.’
“If you divide all the [GDP] numbers across [last] year, it’s below expectations… Look at the economic figures… Since the end of QE, until today, most of the numbers – more than 70% of the numbers – came in far away from the expectations. If you go back to the history, every single QE, when the QE stops, the economy slides back into a recession… At some point I believe the Federal Reserve will back track. They will start talking about QE4… How soon will the economy go into a recession? I think we need maybe 6 months to see a confirmation of that.”
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