by Chris Black
This is the end of quantitative easing and returning to more normal interest rates.
Are you prepared for what’s coming?
Markets are beginning to suspect that there’s not going to be an America thirty years from now.
The banking cabal is intentionally creating a global economic crisis in order to kill China.
There will be significant collateral damage to the West, including US itself.
When the FED paused its rate hike, it had, at the time, data which stated that inflation was falling.
But since then, recent data has shown that inflation has gone up AND there is now more oil price gouging initiated by Russia.
This means the FED will have to hike rates again.
The bond market is now selling bonds which decreases the price of bonds and increases their yield.
This is because the bond market is predicting the FED will increase interest rates and the Treasury will have to start issuing new bonds at higher interest rates, making the old bonds less valuable.
BUT there is two other wrinkles in all this:
1) The yield curve is showing that long term bonds are becoming more valuable than short term bonds. This is normal. But it’s doing so at a very rapid pace, a pace of change that hasn’t been seen for a while. This means the bond market is predicting significant deflation in the future, a level of deflation that is NOT predicted by a soft landing.
2) The next rate hike may push new long term bond yield into the 5% territory. This is the DANGER territory. 5% is considered the prime income rate for income from dividend baring equities.
This means the equity market will suddenly become much much less valuable. Because now the super wealthy can guarantee a 5% annual return risk free. Of course, there is the issue of inflation which means it’s not totally game over, but if this rate reaches up to 7% then we’re in game over.
A few other points that should be made:
1) Copper and other industrial metals have crashed in price.
2) Oil prices have spiked.
3) Purchasing managers index has collapsed and is currently doing a minor bounce. The minor bounce feature of the PMI is typically just before the full crash begins.
4) Unemployment is too low, wages are increasing, and wages are sticky which makes inflation sticky.
This means the FED must raise rates to cause unemployment, i.e. a sure fire recession.