Market Signals Flash Warning Signs as Collapse Looms

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Recent market indicators are flashing ominous signals, suggesting an impending collapse that demands attention. The rapid decline of the 10-year yield from 5% to 3.7% in just two months is more than a mere adjustment; it serves as a warning of slower growth. The bond market’s unusual behavior further intensifies concerns, indicating that significant challenges may be on the horizon. This isn’t solely about rate cuts; it reflects a broader sentiment of economic slowdown.

Adding to the apprehension is the record overbought streak in stocks, dating back to 1970—the longest in the data’s history. Investors face heightened unease as historical patterns are shattered, bringing into question the sustainability of the current market momentum. Alarming debt statistics among those aged 35 to 44, with a median debt of about $140,400, contribute to the growing sense of financial vulnerability.

The negative Real GDI, a scenario observed only before the Global Financial Crisis, deepens worries about the economic landscape. Real GDI has only been negative once without the U.S. being in a recession, and that was just before the GFC. The recurrence of this scenario raises red flags about the current state of the economy.

In an unprecedented development, the U.S. M2 Money Supply has experienced 12 consecutive months of decline on a year-over-year basis—the first time in the nation’s history since the Great Depression. This stark statistic adds weight to the prevailing concerns, signaling potential economic distress that could lead to a collapse.

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As these multifaceted indicators align, the market seems increasingly vulnerable, with the specter of a collapse looming on the horizon.

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