Your Quick Guide to the "Perfect Storm" That Could Cause a January Recession

by

Over the past few weeks, I've written a number of articles about why stock prices are due to take a nosedive soon.

I've had my eye on January for some time because a confluence of factors are all coming together in Q1 2018, creating a "perfect storm."

The Fed is not known for its powers of early recognition. The next recession, whenever it comes, will be well under way before the Fed gets a clue. Officially it takes two quarters in a row of falling GDP for the NBER to call an official recession. By the time that second GDP report comes out, a recession will have already been under way for seven to nine months. The Fed wouldn't loosen policy until at least then. With no economic slowdown even in sight, it is virtually certain that tightening money will be with us at least through most if not all of this year.

That's plenty of time for tight monetary policy, which the Fed euphemistically calls "normalization," to cause considerable damage to stock prices. It hasn't started yet, but a series of red flags in the first quarter suggests that time is coming.

Why I'm Bearish on Trump's Tax Cuts

by

I recently enjoyed a holiday party with my colleagues at Money Map Press, one highlight of which was a vigorous conversation with Shah Gilani about the impact of Trump's tax cuts on the markets. I have deep respect for Shah's analysis (and his excellent track record). He actually has an uncanny knack for finding bearish trades in a bullish climate, which the contrarian in me appreciates, and his writing is always incisive and entertaining.

However, on this issue, he is a confirmed bull, while I am a confirmed bear.

We enjoyed our argument immensely.

Then – after taking a bit of a break for some eggnog – I visited my comments section on Sure Money.

The Tiny Little Straw That Could Break the Stock Market's Back This Month

by

Ultimately, all financial roads lead to Wall Street. The big investment banks and trading firms known as primary dealers all play in one worldwide money pool. When the ECB prints money, it's not just available to Europe, it is also instantly available to Wall Street.

Growing European bank deposits have always strongly correlated with U.S. Treasury note prices. However, that correlation has broken since mid-2016. Instead, European bank deposits have correlated strongly with U.S. stock prices. That suggests that capital flows from Europe have been a key support to the U.S. stock market rally.

European deposits have grown as the ECB has pumped trillions of euros into the banking system. Deposit growth has not kept pace with the growth of the ECB's balance sheet. This also suggests that money has been leaving the continent and heading to Wall Street.

Here's How I Know the Fed Is Lying Through Its Teeth About Inflation

by

Confusion about inflation abounds in mainstream media reporting. That confusion is a result of the fact that mainstream economists and the Fed solely focus on narrowly defined, arbitrarily constructed measures of the prices of consumer goods only. If you only look in places where there's little inflation, or use indexes that are not standardized to measure the same goods over time, you end up ignoring the things that are inflating and understating the inflation that does exist in consumer prices.

The Fed is largely to blame for the confusion. It has targeted a 2% inflation rate. But it uses a benchmark, the core PCE, that is the most understated of inflation measures. It ignores actual housing prices and only includes personal consumption goods. To make matters worse, when an index component is rising faster than cheaper substitutes, the index formula reduces the weighting of the goods that are rising fastest.

The thing is, the Fed is perfectly aware that it's underreporting inflation.

I've uncovered a smoking gun – well, anyway, a chart that proves it knows the real numbers.

The question is – why the cover-up?

Goodbye, Janet Yellen; Here's How We'll Deal with Your Bearish Legacy

by

Janet Yellen said "goodbye" to us last week.

After studying her moves over the past four years, beginning as a harsh critic, I say to her now, "Goodbye Janet, it's been good to know ya."

Here's what Yellen said at her last press conference, and what she has said and done before that caused me to change my opinion. More importantly, here's why it matters to you and your investments.

You need to understand this, and you need to take action to at least protect yourself, if not profit, from the course that Yellen has set.

The "Power Behind the Throne" Is About to Drop a $463 Billion Bomb on the Stock Market

by

If you're interested in secret societies and world domination, you're reading the right article.

Sort of.

"No one puts Baby in the corner," but someone tells the Treasury what to do.

To be precise, it's a small, powerful group comprised of some of the most powerful players among primary dealers and international banking. It is tasked with recommending to the Treasury how much new paper it will need to issue in the months ahead to cover its deficit and maintain a cash cushion. You don't hear much about this group – but they're the "power behind the throne."

Right now, they've just issued guidance for a nefarious $463 billion release – early next year – that could cut the stock market off at the knees.

The U.S. Is Entering a Recession Right Now; Here's Why

by

If this post didn't make you think I was crazy – or this one – today's likely will.

Despite the new highs and the great growth and yada yada yada… we are on the brink of a recession. I have the numbers to prove it.

And the numbers don't lie.

Data on federal tax collections comes to us in real time every day, courtesy of the U.S. Treasury. This is unmassaged real data, not the endlessly finagled economic data put out by various other U.S. government agencies. Tracking the tax data regularly enables us to see how the U.S. economy is actually behaving, versus how the government wants you to think it's behaving.

That's important because the current data tells us something really big about the U.S. economy that nobody knows yet. It won't show up in the official GDP data for months, but it could rock the markets and cause the Fed to change course.

Let Me Take You Behind the Scenes in My "SPX Prediction Machine"

by

In a recent post, the headline said "My S&P Target Is 2,800." You are probably wondering how I got there.

Well, I didn't quite get to 2,800, but round numbers are nice, and I got close enough that there's a reasonable rationale for expecting the S&P 500 to get there. The actual technical target range was a little lower.

Three Blatant Lies the Fed Just Told You

by

I told you I'd get you the rest of my Fed meeting notes soon, and (unlike the Fed) I always try to say what I mean.

Most of the little tidbits I gleaned from the latest meeting minutes are prevarications, obfuscations, or bald-faced lies.

My S&P Target Is 2,800, and I'm Predicting a Bear Market. Yes, I'm Sane.

by

Sometimes, my charts make me feel like Jekyll and Hyde.

The forces of macro liquidity tell us that the stock market (and the bond market too) are likely to top out and head into a bear market beginning in Q1 2018 or shortly thereafter. But this week the S&P 500 broke out above 2,600. Technical cyclical analysis suggests that prices could be headed much higher.

So which is it? Are stocks the next Bitcoin? Or are we staring the bear in the teeth?

How can we reconcile these apparently conflicting views that are coming from the two prongs of my analytical work? Maybe… there really is no conflict. (Cue suspenseful music.)