On Friday, the yield curve inverted, often a warning sign of an impending recession. Many mainstream pundits say we shouldn’t be concerned about the inversion and that the US economy is still healthy. They say there are other underlying reasons for the inverted yield curve. But there are plenty of other economic data points that are flashing recession warnings. For instance, inventories are piling up in warehouses.
Wholesale inventories surged again in January, according to the latest Commerce Department data.
Peter Schiff has said a recession is a done deal. Since he made that comment, we’ve seen more and more signs of a looming economic downturn. On Friday, we got another. The yield curve inverted, historically a sign of a looming recession.
The yield on 10-year Treasurys fell below the yield on 3-year bonds for the first time since 2007 – the cusp of the Great Recession.
The US federal government ran an all-time record deficit of $234 billion in February, according to a Treasury Department report released on Friday.
According to Business Insider, the February 2019 deficit topped the previous high of 231.7 billion set in February 2012.
Russia continues to buy gold as it seeks to minimize exposure to the US dollar.
According to information released by the Central Bank of Russia last week, it purchased another 31.1 tons of gold in February, bringing its total reserves to 2,149 tons.
OK. I’m going to set up a scenario for you.
You’re in Hawaii. Yay! Right? Anyway, as you enjoy touring around the tropical paradise, you stop at a local gas station to fuel up the rental. As you’re pumping the gas, a guy saunters up covered in bling. He’s got gold chains, gold bracelets and several gold rings. Then comes the sob story. He’s down and out. He lost his wallet. He needs cash. But he’s willing to part with his expensive gold for a bargain basement price.
What do you do?
The Fed wrapped up another FOMC meeting this week and came out even more dovish than expected. Rate hikes are off the table in 2019 and the central bank now only expects one hike in 2020. In his episode of the Friday Gold Wrap, host Mike Maharrey talks about the meeting and the dirty little secret Reuters let slip out. The goal here is to get you to spend more money and keep the bubble full of air. As Mike put it, “The Fed is trying to feed the debt monster and it wants you to pick up the tab.” He also covered the meeting’s impact on the markets and the latest in political theater.
There’s that word again — patient.
Jerome Powell once again emphasized patience during the most recent FOMC meeting. The Federal Reserve left interest rates unchanged and took any hikes for 2019 off the table. It went a step further and projected just one rate hike in 2020.
During his most recent podcast, Peter Schiff said most people expected a dovish Fed, “But I don’t think they were expecting the Fed to be this dovish.”
Americans owe over $1 trillion in credit card debt and recent polling data indicates they aren’t paying off those balances anytime soon.
According to a CNBC article, nearly half of all Americans carry a balance on their credit cards. Of those, only 30% say they will be able to pay off that balance within the next year.
Is the world really running out of gold?
According to a report in Deutsche Welle, it just might be.
Historically, a Federal Reserve shift from interest rate tightening to a neutral stance has boosted the price of gold, although the effect has not always been immediate, according to a report released by the World Gold Council this week.
It wasn’t long ago that the Fed was talking about multiple rate hikes in 2019 and balance sheet reduction was on “autopilot.” But all of that changed when the stock market started tanking last December. Now we have the “Powell Pause,” and an apparent end to balance sheet reduction on the horizon.
