is gold set to lift off post fed and is the fed preparing for a recession? - rose gold necklace and earring set
The Fed will raise interest rates on Wednesday and most people agree they will. 25 basis points.
Some even think the Fed could raise interest rates. 50 points. Why not?
Today, everyone seems to believe in the Fed and what they do and ignore things like valuations.
Stock market analysts have admired the Fed and its monetary policy since CNBC commentators looked at the size of Alan Greenspan's briefcase, although we are now sitting again in the stock market and in the real estate market, some say this will be a callback.
Let's take a look at some details.
The default rate of credit cards and car loans began to rise in January 20.
Weak job growth, as well as falling data in April and, should be of concern to the Fed.
Interestingly, the stock market rose on that day, as did gold.
The consumer is the story here.
Consumer spending accounts for 70% of GDP, and easy funding to less qualified individuals via credit cards and loans may end immediately when banks start to see some trouble.
The failure of consumer loans has also put banks in trouble on their balance sheets.
The bank charges $11.
Total loans in the first quarter of 5 billion, an increase of 13. 4%.
Net credit card charges-offs rose 22.
Car loan charges 1%
Off has increased by nearly 28%.
"There have been failures, layoffs and potential bankruptcies in retail stores.
Restaurant sales also continued to decline.
Without productivity, you cannot achieve the 3% growth expected by the Trump administration.
Many people think the times since the 2008/2009 recession are the best.
But this is only found in the pockets of those who have benefited from the unprecedented stock market rally driven by the Fed's easing of interest rates to historic lows.
The stock market has reached a record high, but if you look at productivity, you will find that growth is based on a pile of sand, not real growth.
The rise in the stock market is just an illusion because productivity is at its worst performance in 70 years, but who cares when you make money?
What about family debt?
What have consumers learned since the last crisis?
Did they control the debt?
The answer is No.
Not all housing debt this time.
Housing debt accounts for more than 2008/2009 of total debt.
Total household liabilities are $12.
As at March 31, 2017 for 73 trillion.
This increase has led to a total household debt of $50 billion higher than the peak set in 2008.
"There is no discipline for consumers.
We saw this before the 2009 crisis.
They spent a lot of money until they could no longer borrow that much from the house, thinking that real estate would never fall.
Some are turning over the house again, as long as interest rates remain low, which can last for some time, but what is the Fed doing, based on the downward-sloping lending trend shown in the figure below?
Will higher interest rates bring more loans? Hardly.
The 1967 songs at the grassroots level still apply today, especially in the stock market and the real estate market, when you listen to the Federal Reserve;
Live for today, don't worry about tomorrow, heySha La
The ten-year low of non-agricultural enterprises and manufacturing industry must not prove that the interest rate hike is reasonable at this time.
Is the Fed raising interest rates just to have more power to cope with the recession?
The Fed itself pointed out that one reason for raising interest rates now is, "so when the economy is hit, the restriction of low-trend interest rates on monetary policy may lead to a longer, deeper recession negative impact.
"In the slow growth of GDP growth of only 1, the Fed is raising interest rates. 6%.
Trump's tax cuts, infrastructure spending, and regulatory cuts were supposed to increase the U. S. economy by 3%, but many economists did not see that growth potential until 2018.
These economists think the recession will not come.
Of course, economists and the Federal Reserve have not seen the outbreak of the 2009 crisis.
Nor do most financial advisers.
On the other hand, the stock market will do what it does before there is data.
The same is true of real estate, although I am a seller now, not a buyer.
If you fight it by betting on the stock market, then you may have lost some money in the past few years.
But last Friday, we saw the first sign that dot com stocks like APPL and AMZN were really weak, and that move was as fast as it happened, could be the beginning of something worse after the Fed.
But I haven't said it yet.
However, the Dow is a beneficiary of online sales and closed up on Friday.
The same happened in 2009, but we are not fully ready to sell everything in the market.
The deflation credit crunch I have written about has not yet fully arrived, but will come at some point.
Gold demand in China and India will increase mainly through investment barriers in China. While we are bottoming out in the gold market, we have a lot of reasons to think that the next step in the rise should be somewhat less short-term popularity and decline than we have seen so many times.
Gold, silver and miners rebounded.
By next week we have bought and sold on and off (NYSEARCA:JDST)and (NYSEARCA:DUST)
Although it is very late, the trend should be reversed soon.
I can say with great confidence (NYSEARCA:JNUG)and (NYSEARCA:NUGT)
It could be a deal for the next few months.
As optimistic as I have been for quite some time.
The two ETFs will be different this time.
I 'd like to take a little longer than normal and even deal with some of the deterioration that might occur with the stock.
You tell me where you can get 30% in the coming months, in addition to options and futures, and lose a few percent due to deterioration (
I don't trade)
I will buy it.
At this point, the dot com certainly doesn't, and for me, it makes the goldminers flock to it by next week, and we'll see a nice uptick.
Until then, I reserve the right to still trade JDST and DUST.
Disclosure: I/we don't have a position in any of the stocks mentioned, but may post long positions in JNUG, NUGT, JDST, DUS within the next 72 hours.
This article was written by myself and expressed my views.
I received no compensation (
In addition to Seeking Alpha).
I have no business relationship with any stock company mentioned in this article.