Today!
March 24, 2023
Good morning.
While the past two weeks have brought uncertainty and crisis to the financial sector, things appeared to have calmed down. After the winddown of Silvergate, and the regulatory closure of Silicon Valley Bank and Signature Bank, we haven’t had a new failure in over a week.
However, smaller banks are losing depositors hand over fist, as that money is moving to the big banks, which have the perception of being too big to fail. While it’s true that these banks could fail, the view is that the government would step in with any necessary taxpayer money to avoid that outcome. The smaller banks, however, aren’t a systemic risk… so there may be more failures in the months ahead.
That’s a sign that the dust hasn’t settled yet for the community and regional banks. And that investors may be enticed by the big daily moves… but there could be more downside ahead, and even a few banks that go totally under. For now, investors should stick with the bigger banks.
Now here’s the rest of the news:
We Are In Uncharted Territory
Fear is in the air. In recent days we have seen a level of panic that we have not witnessed since 2008, and in such an environment people just want to make sure that their money is safe. But there are very few places in our financial system that are… [Read Here]
Bloomberg Reveals JPMorgan Chase’s One Trillion Dollar Secret Is The Work From Home Trend Dangerous To The Economy? Overlooked Risks Threaten To Blow Up The Whole Economy Are you shifting your allocation against this value/growth shift? Or are you standing firm with your existing stock allocations? Hit reply and share your thoughts. What the Fed Really Said –Jerry Bowyer, Yahoo News COVID-19 Mitigation Fallout: Retirement Savers and the Challenging Road Ahead I Love Free… to a point. Here’s a get way to take a logo and make it transparent. Look at me now! 🙂
Jamie Dimon is the Chairman and CEO of JPMorgan Chase, the largest bank in the U.S., which is also ranked the riskiest global bank by its regulators. But instead of getting his own house in order in the midst of a banking crisis, Dimon has been… [Read Here]
March 24, 2022
Good morning.
Today will mark the first day that stocks will be able to trade on the Moscow Exchange since February 25th. A ban on short-selling is in place, but most traders are expecting a major slump, given how Russian stocks have fared on international exchanges over the past few weeks.
With many investors expecting a further free fall in Russian shares, the market activity of the past few years means that anything could happen — even a surprise rally as Russian oligarchs looks to buy the proverbial dip. But chances are Russian stocks, already a value play on international markets, will continue to trade at a steep discount to peers in other countries for years after the war ends.Now here’s the rest of the news:
Thanks to the shift to working from home, governments are reducing their office footprint. And by the end of 2021, the total privately owned office space that state and local governments leased dropped by nearly 10%. And this is just the start… [Read Here]
The funny thing about risk is the risk that everyone sees isn’t the risk that blows up the system. The mere fact that everyone is paying attention to the risk tends to defang it as everyone rushes to hedge or reduce the risk. It’s the risk that… [Read Here]
March 24, 2021
Good morning.
As the economy ebbs and flows, different sectors of the market tend to fare better than others. Over the past few years, however, tech has had a persistently strong performance. Value stocks, defined by those as relatively cheap compared to their earnings and sales, haven’t fared as well.
This is often the case. Tech stocks tend to be far more volatile and story-driven. Sometimes the story doesn’t have a happy ending. With tech stocks under stress from rising interest rates, value has fared slightly better. It also doesn’t hurt that many value names pay dividends at a time when rates are still incredibly low. This may not be a secular rotation to value stocks over growth names, but it is a strong trend that can’t be ignored.Now here’s the rest of the news:
This week the Fed signaled something different: In essence, the party looks like it will be warming up more than we thought, but that we’re not changing our schedule… [Read Here]
The economic consequences of COVID-19 stimulus are taking shape, and the fallout may become just as endemic as the virus. Here’s what a post-pandemic retirement plan should must account for… [Read Here]
March 24, 2020
Good morning. “Could be more than a paper-cut.”
With all the talk of what we need to do to be good citizens and practice social distancing, it is discon-certing to see a stimulus package get shelved by Congress. When you find out that the last-minute breakdown was over stuff that has nothing to do with providing relief, it makes it even more apparent that they have bigger political objectives than lessening the burden of coronavirus restrictions.
The market didn’t like the news either, which places even more pressure to get something done, and soon.
This the time to suspend all pork and focus on what the economy really needs right now.March 24, 2019
March 24, 2018
From Birch Gold Group
The U.S. national debt is quickly losing control. According to the Treasury Department’s official reports, on March 16th it reached $21.03 trillion dollars after skyrocketing $72.8 billion in only 24 hours. This astronomical number is greater than the debts of every other country in the world combined — no other nation in history has ever accumulated this much debt.
This is an increase of $1.186 trillion since Congress suspended the debt ceiling back in September last year, when it was at $19.84 trillion. This amounts to a troubling 6% increase, which means the gross national debt now stands at 106.4% of GDP. And it doesn’t look like this debt accumulation will be slowing down anytime soon.
More Debt on the Way
The U.S. government is under pressure to close the gap. Earlier this month, the Department of Treasury announced plans to borrow nearly $1 trillion this fiscal year — an 84% increase from last year. And if that wasn’t enough, this number is expected to increase to $1.1 trillion the next fiscal year, and up to $1.3 trillion the following year.
The following chart from Wolf Street shows the troubling trend that has resulted from the federal government’s borrowing. The U.S. Treasury is continuously raising the debt ceiling to meet the federal government’s borrowing needs with no apparent cap in sight.
The Largest Increase Since the Financial Crisis
Not since the last financial crisis have we witnessed a spike of this magnitude.
As shown in the chart below, this is the largest increase in the gross national debt (over a period of 132 reporting days) since the financial crisis in 2011 when the economy was in a state of pandemonium with millions out of work and tax receipts collapsed.
However, this is in stark contrast to the situation we find ourselves in today. The current U.S. economy is booming, unemployment is low, and tax revenue is at record levels.
But despite these factors, the budget deficit is still growing by trillions of dollars. In fact, the national debt is expected to exceed $25 trillion by September 30, 2020. As a result, the government will have to borrow trillions of more dollars.
No One’s Coming to the Rescue
Since the end of the financial crisis, the Federal Reserve and the Chinese and Japanese governments have loaned trillions of dollars to the U.S. governments.
However, we can’t rely on them to keep us above water anymore.
With the Federal Reserve putting an end to its Quantitative Easing program, they will no longer be printing money to buy U.S. debt.
And the Chinese and Japanese governments, who both own more than $1 trillion of U.S. debt, are looking less dependable. China said last month they’re not sure if they will continue to buy our debt, and Japan is dealing with their own tough times. In fact, according to official data from the U.S. Treasury Department, both countries have already been reducing their holdings of U.S. debt.
Interest Rates Will Have to Rise
With demand falling and the supply of debt rising, the U.S. govern-ment’s only option will be to raise interest rates to attract new lenders.
This is expected to put enormous pressure on the markets. Over the last few years, record low interest rates have inflated the prices of stocks, bonds, and real estate. So an increase in interest rates would see a plunge in major asset prices.
Stock prices will likely fall as companies will have to borrow and refinance at a higher rate. It could also seriously jeopardize people’s abilities to get mortgages for buying property at current prices, which could cause property prices to fall and the real estate market to suffer.
The federal government will have to pay more money on its loans too, meaning they’ll have to borrow more just to pay them back.
With this downward spiral, interest rates can only go one way: up.
With things hanging in the balance despite the economy being strong, any unforeseen crisis would be catastrophic. What would happen if a major bank went bankrupt, or some other financial contagion spread throughout the system?
The volatile nature of the stock, bonds, and real estate markets mean they’re at risk of losing billions overnight. The only sure way to protect your wealth in times like these is to hold an asset that has shown a lack of volatility such as precious metals. The stable nature of precious metals such as physical gold is a reassurance that your wealth will be protected in times of economic uncertainty.
REW
