Many of us thought 2023 was a horrible year, and we are glad to bid it good riddance. 2024 certainly has started off as a year of chaos with a massive Japanese earthquake and tsunami. That is not the kind of event one can predict, so I am not suggesting, in the least, that it provides evidence for my “Year of Chaos” prediction for 2024. Rather, it symbolically foreshadows what I believe this year will look like everywhere due to all the pressures that built up in 2023 that still have to play through beneath whatever new troubles swoop in on top of us in a US election year that is certain in nearly every view I come across to be the most politically tumultuous and divisive year we’ve seen in our lifetimes.
I’ll go into how bad the election and other things will be and why in a “Deeper Dive,” but I want to cover the gist of these things here today because today’s news is flooded with stories that demonstrate why I think this will be “The Year of Chaos.”
The building economic collapse
Longtime readers know that I have predicted a total collapse of the Everything Bubble AND said it will take years to play out. So, the fact that it didn’t all happen in 2022 or 2023 is in keeping with my prediction. What we saw in those past two years was continual degradation of our economic fundamentals in that direction; but it’s like a Jenga game where the structure becomes more and more imperiled toward eventual full catastrophe, but it happens one piece at a time, and then calamity hits when it just cannot take any more degrading. No one, even those pulling the pieces, knows for sure when the Jenga puzzle will come down. What you can know is that it certainly is getting closer and closer to toppling as you see it waver more and more while the deconstruction continues.
The economy is far more complex and resilient than a Jenga structure, so we know a lot of pieces have to be removed before the global economic structure collapses. AT the same time, we know the Fed plans to remove a lot more support via its quantitative tightening, which Fed Chair Powell says will continue long after the Fed eventually starts lowering interest rates, which the Fed has NOT said it will do this year. What we can see is that pieces are continually being removed and some of them are significant. Here is what we can see in today’s news, alone, which is endemic of serious trouble throughout the US and global economy:
New data indicates there is worse to come from the banking crisis that began in 2023:
Buckle up everyone, the banking crisis only looks to be in the eye of the storm, so to speak.
Following the crisis that saw several banking giants fail earlier this year, we have seen some relative calm when it comes to bank closures and forced mergers. However, the worst has yet to occur, sources claim….
Banks are closing down their local branches at alarming rates and have laid off more than 60,000 workers in 2023 alone—does this look like healthy behavior to you?…
Vivek Ramaswamy recently warned of another 2008-style financial crisis fomenting:
“Bank of America is now providing *loans without down payment* for home buyers in “black & Hispanic Communities.” Mark my words: This act of “anti-racism” today will be called “systemic racism” tomorrow – when minorities end up defaulting on these loans….”
Customers of banks are being alerted to the impending wave of branch closures that is expected to occur in 2024. In the UK, the closure of high street bank and building society branches has been made worse by …
All of this is actually part of a longterm decline and restructuring of banking, some of it due to conglomeration:
In all, the number of bank branches in the U.S. has shrunk by more than one-fifth to just 78,000 today from nearly 100,000 in 2009. Soft profits and aggressive cost cutting mean still more Americans will see their local bank branch close its doors in 2024.
This does not mean calamity is front and center. Some of it is normal due to endless conglomeration, but many people quoted in the article see calamity coming. So, while the article is soft on data that proves a banking collapse is imminent, it certainly shows many people are fearing it, while all the recent announcements of branch closures enhance that concern.
Perhaps more significant than the fears talked about in that article is the solitary warning last year by JPMorgan’s chief, Jamie Dimon, who said we would see more bank collapses due to the crash in commercial real estate.
Deflating the real-estate balloon
Part of my predictions for the Everything Bubble Bust from its beginnings were a real-estate bust, including particularly commercial real estate. So, how is that implosion of the CRE balloon coming?
US office buildings face $117BN debt time bomb: Mortgages due this year threaten to sink US economy as thousands of workplaces remain empty….
Billions of dollars in loans on office buildings that are about to come due could play havoc with the US economy after interest rates soared.
The volume of defaults that will come out of that is going to place some serious pressure on banks — the kind Jamie Dimon warned was all but inevitable, and it is already causing a wave of defaults:
A big chunk of it is at risk of defaulting and costing banks and developers huge sums, sending some into insolvency….
Economists last month found 40 per cent of office loans on bank balance sheets were underwater – owing more than the property is worth…. Moody’s Analytics estimates 224 of the 605 loans that will expire soon will be tough to repay or refinance because their owners have too much debt or the buildings aren’t making them enough money.
This is simply what we KNOW is coming. Of course, if they can all hold on until the Fed starts cutting rates, they might make it through, but many don’t have much holding power left. Many have already lost it and flushed away. How long until more banks just cannot absorb it all? We’ll find out, as in the past, some Monday morning after the Fed and Feds cobbled together another massive rescue package.
Of course, this has a broader impact on the real-estate industry outside of what it does to banks that finance these projects:
The prospect of a widespread default and subsequent dips in demand could stifle construction and development in major US cities – many of which are still struggling to recover in the aftermath of the pandemic.
So, it erodes out a path to further recession of the kind we are already seeing.
How’s that recession coming?
Recession has been slow to arrive in the numbers because it is based on “Real GDP.” The US typically declares recession when GDP, adjusted for inflation, falls for two consecutive quarters, though it refused to do that in 2022. Because GDP is measured in dollars, you have to fully factor out inflation in order to get down to a measure of “Real Gross Domestic Production.” Nominal GDP is not used because it includes inflation, and the goal is not to measure inflation at all, but to measure production. So, when we have the grossly distorted (to the down side) inflation numbers that I explained in detail earlier this year, it becomes much harder for GDP to tank so much that GDP growth will go negative because uncounted inflation remains baked into the numbers. So, a lot of what GDP shows is phantom inflation, meaning actual inflation that no one measured correctly, so it was never seen in reports and so never subtracted from prices in calculating “real GDP,” though it was certainly part of prices paid.
That said, I think we’ll get close to going negative in the final quarter of this year. If the inflation numbers were honest, we would actually go negative, putting us at the start of a second dip into recession in 2023; but I don’t count on the numbers getting honest enough to show that. I can only comment on why the numbers are hugely distorted and leave it to your judgement as to whether that commentary is right. I’m not likely to be vindicated by the number the Biden Admin puts out in an election year, any more than I would be by the pushed numbers Trump would want to put out if he were still in office; but here are the facts of what is happening in the economy right now in today’s headlines that sound like recession is already here:
From Yahoo! Finance we read:
More big companies set to collapse in 2024, industry experts warn
More big firms are likely to go bust next year amid the “double whammy” of high borrowing costs and pressure on consumer budgets, according to insolvency experts…. High-growth companies such as tech firms could be among those facing financial turbulence….
The bad news in corporate crashes is compounding:
It comes after another year of tough economic conditions resulted in increased business failures during the year. Official figures from the Insolvency Service earlier this month showed the total of company failures over the first 11 months of 2023 was more than reported during the entirety of 2022….
“We are expecting next year to be a big year for insolvency,” he said.
“That is likely to be across the board, both in terms of geographies and sectors.”
The article goes on to lay out which industries are getting clobbered the hardest, high-tech being one of them and likely to get pounded even harder due to expensive refinancing on companies whose incomes remain speculative. A lot of wild speculation on tech before and after the pandemic is likely to get rewound as higher interest makes refinancing non-profitable venture-funded firms less likely. That is true in the UK, probably other parts of Europe and certainly in the US where we saw some of that last year.
In the US, we see continued trouble still piling into the manufacturing realm where one story today shows the US manufacturing slump has accelerated its rate of descent:
Across the board it was ugly with:
- Renewed contraction in output as orders fall at sharper pace
- Rates of inflation pick up
- Joint-fastest drop in employment since June 2020
“US manufacturers ended the year on a sour note, according to S&P Global’s PMI survey. Output fell at the fastest rate for six months as the recent order book decline intensified.Manufacturing will therefore likely have acted as a drag on the economy in the fourth quarter…. The fourth quarter has consequently seen factories reduce employment at a pace not seen since 2009 barring only the early pandemic lockdown months.”
This is where I say that, if inflation were fully and accurately subtracted out of GDP, I am certain we’d see the last quarter of 2023 went negative, which would eventually mean the recession that is unfolding started in 2023 as I had forecast. However, I don’t expect such integrity from the numbers in an election year that promises to be extremely difficult for the incumbent president because America does not re-elect people as presidents when an ongoing recession starts on their watch. (More on that below.)
Thus, it is not surprising that stock investors decided to harvest their late-2023 gains today, taking stocks down a notch.
What about the “Big Bond Bust?”
That was another part of my predictions for the slowly unfolding Everything Bubble Bust. The slow implosion of the bond balloon would be the biggest and most central part of the whole thing—driving stocks down as government bonds began to compete by offering secure interest rates that are not artificially suppressed by massive Fed bond buying, lifting interest rates on just about everything else because almost all loans price off of bonds, directly or indirectly, thus making real estate unaffordable and guaranteeing a collapse in prices that will deflate the housing real-estate bubble and make refinancing the CRE bubble almost impossible. All of that has been slowly sliding downhill.
That was all going as I expected until the recent tilt to the wild side by bond investors who decided to go full Fedtard and assume that Fed “dot plots” for interest rates actually indicate what the Fed will do, even though those dot plots were notoriously overly dovish all through 2022 and 2023. Even though the stock and bond markets thought those plot dreams about where interest would go were “hawkish,” they actually wound up every time to be too dovish to where the Fed had to raise rates more than it thought it would for longer than it thought it would. They’ve all learned nothing from a year and a half of error.
The bond market returned to that fanciful framework of thought as soon as the Fed revised its dots downward from the previous meeting to the latest, after months of what had become the new norm or revising them higher. That was just too much red meat for the bond market to ignore, so bond investors went on a feeding frenzy in the last quarter.
As I always say, “There are no straight lines to anything in economics.” At least, it is very rare there are and, even then, only for short time spans. So, it is not surprising, in the least, that we read in today’s headlines that bonds have started giving some of that insanity up, pricing out some of the early interest-rate drops they had prematurely priced in from the Fed. The morning began like this:
Treasuries Start Year on Back Foot as Global Rate-Cut Bets Ease
US Treasury yields rose sharply, joining a global bond selloff as traders pared bets on deep interest-rate cuts from major central banks this year….
The benchmark 10-year yield rose as much as nine basis points to 3.97%, while similar-maturity German bund yields jumped nine basis points to 2.11%, the highest in more than two weeks. The equivalent UK rate rose 15 basis points. Shorter-dated Treasuries led the selling pressure, and the Bloomberg Dollar Spot Index posted its biggest gain in nearly three months.
So, a lot of misplaced bets getting a little bit unwound today.
The moves reflect doubts that policymakers will deliver the extent of monetary easing that’s priced by money markets. While central banks have indicated that they’ve likely delivered the final hikes of this cycle, they will also be reluctant to give up the fight against inflation too soon. The prospect of heavy new corporate debt issuance is also likely weighing on bonds, particularly after their strong performance ahead of year-end.
Ya think? All of that was market mania that will have to be backed out soon as those fantasy rates fail to materialize, which they certainly will fail to do.
“The market may be looking ahead to Fed rate cuts this year but with so many already priced in, it is very likely that there will be a moderation in market expectations,” said Jane Foley, head of FX strategy at Rabobank. “Assuming some of these rate-cut hopes are priced out, the USD is likely to strengthen first before potentially ending 2024 softer.”
Others in the gathered headlines today also see a reversal of bond yields back to rising as being highly likely. Says Zero Hedge:
One week ago we explained why the “most consensus trade” of 2024 – namely long Treasurys in expectation of lower yields – will blow up in the market’s face. The trouble with Treasuries after their humongous rally of the past two months is that they have priced in all the good news. That is especially so at the front end of the curve, which sets them up for a reality check as traders return to their desks this week to confront ISM manufacturing data….
If the street’s forecasts of what is to come this week are right, we will see an improvement in the ISM manufacturing numbers for December, continued expansion in the ADP as well as non-farm payrolls data and a jobless rate still well below 4%. None of them spells like an imminent rate cut to me, which makes it more likely that the next 25-basis point move in front-end Treasuries will be higher rather than lower.
Already, we saw the manufacturing numbers come in notably worse. So, the stock market drooped with the NASDAQ going down hard. Those other numbers get reported later this week.
Raw election presents a lot more red meat to fight over
Now, we come to the US election since it will dominate the news now that we have entered the presidential election year. I’m just going to gloss over it here because there are a lot of articles on that subject in the news today, and I want to touch on the all. I plan to cover the deeper impact of the election during “The Year of Chaos” in one of my upcoming “Deeper Dives” with its predictions of where this is going.
In today’s headlines, though, we see the following:
“Doom dominates 2024 messaging as Trump and Biden trade dire warnings,” says the headline. Each major candidate is predicting that, if the other major candidate gets elected it will be all-out doom for the nation. Well, that certainly promises to be appropriate to my theme on this site. I’ll look deeper into what their campaign threats really have behind them.
“Mutiny Erupts in a Michigan G.O.P. Overtaken by Chaos,” says another headline. Also, that certainly fits my theme for this particular year. Right after I called 2024 “The Year of Chaos” I see people using that word all over the place, so I think it was a pregnant idea in the minds of many. That is how these truths often emerge—collective awareness. The GOP is not only in chaos, fighting with itself in Michigan, it has been in chaos since Trump was deposed in Washington, DC, with Margery Taylor Green in the news today as the architect of GOP chaos.
Another article claims that “Large numbers of Americans want a strong, rough, anti-democratic leader.” That is regardless of whether they are Dems or Repubs. I have NO doubt it’s going to be very rough during the election and even rougher after with rough leadership in the White House, no matter who wins. Many on both sides think of it as a battle for the soul of American, and it’s bound to become very destructive.
Of course, the heat in this election year will be greatly intensified by this:
“‘Republicans’ Narrow Control of House Sets Up Barnburner in 2024.” No doubt. That one fact promises this will be a feverish election since the other side can so easily gain full control of the government. It will be especially intense this year, given the lead presidential candidates who are both as intentionally divisive as you will likely ever find.
Bidens’ situation is made much more desperate by this: “A fraying coalition: Black, Hispanic, young voters abandon Biden as election year begins.” Trump is peeling away some of those voters that historically have leaned to Dems. RFK is taking others. Biden is going to have to build back his campaign harder. So, the desperation that comes from seeing you are losing those you normally can count on will press him to fight more intensely … if he can keep from falling asleep and avoid shaking hands with curtains.
You can also expect Covid to become more divisive because it appears the government has a new big lie in store. I immediately jumped to that conclusion (well, actually just to wondering about it) when I first read that the newest strain of Covid coming out is especially feared to cause heart attacks — in fact heart attacks that look exactly like the ones we’ve seen throughout the period of vaccine use. Now I see several writers inclined to run the same way that I am inclined to go with this story:
First, we have this starting point, “Study Finds COVID Vaccination Independently Associated With Long COVID Syndrome.” With a study suddenly finding that the Covid vax may be the cause of long Covid, you know the medical establishment needs an alternative cause for all the suffering. Simultaneous with the release of this study, the CDC has discovered a new emergent kind of Covid that they BELIEVE will have the same effects if it spreads. Therefore, you can be sure it will spread … or, at least, tests that are highly likely to indicate it will spread.
So, the stories today go right where I thought this would go:
‘Experts’ Say New COVID Strain Will Cause Global ‘Heart Failure Pandemic.’
Who could have seen that discovery suddenly emerging once a major study also emerges that says the vaccine caused these outcomes?
A new strain known as JN.1 will cause many people to suffer from “reduced cardiac function,” according to the report.
“Japan’s top research institute Riken has now issued a warning in the new report, which states that the ACE2 receptors, which the coronavirus clings to within human cells, are ‘very common’ in the heart,” reports GB News.
For a long time, some have said that the spike proteins that the Covid vaxxes cause your body to create cling to and accumulate very commonly in the heart and that some people’s bodies just keep on creating those spike proteins once that DNA demand gets planted. It will be handy for the CDC and other government entities to have a novel form of the novel Covid virus to blame for the sudden discovery being found about the vaccines as an alternative explanation.
A video in the the headlines today, hits the point harder:
“Here’s How They’re Excusing Away the Rising Jab-Induced Deaths Coming in 2024.”
This new Big Lie and all the censorship that is certain to occur around people like me that point out likely alternative explanations is certain to cause many to trust the government even less and get everyone heated up and divided again over the continued lies that have existed since the Trump Vaccine, with all of its legal protections for vaccine manufacturers, will continue to tear up the US populace. (Note that I’ve been directly censored many times on this subject.) As the speaker says, “This is about how to take people who are already fed up with being deceived and continue to deceive them” with a new planted narrative. It will now be “cardio Covid” that is doing all the damage and that mandates more mask use, more vaccination, more separation, etc.
Of course, this is just a conspiracy theory but one that my mind leaped to on its own the second I heard they had just discovered a new strain of Covid that does the same things people have been saying the vaccines do. It’s hard not to resist. True or not, I’m sure it means there is more Covidchaos in store for all of us from governments near you. The proof that I’m wrong will if they don’t play it that way. If they do play it that way, it doesn’t prove I’m right, but it sure fits the picture.
Finally, there are two stories about prophets of different kinds that I’d put little stock in, but they do support my chaos theory.
One is about an almanac that yearly shares the views of an astrologer, who says that 2024 will be a “tumultuous” year. Sounds like chaos to me, so I’m down with that, though it may not mean much that an astrological guru agrees with me. I do find it interesting, however, that “chaos” and words that mean about the same thing are suddenly popping up all over in people’s predictions for 2024. What it does say to me is that a great many of us feel it coming … like one feels a storm coming when their arthritic joints ache due to the change in atmospheric pressure.
Another story of seers says “MAGA ‘Prophet’ Predicts ‘Overthrow’ of US Government.” Sounds chaotic to me. Whether Trump wins, as the MAGA prophet says God has revealed, or loses, I’m sure we’ll see total chaos. If he loses, the large MAGA group will become incensed that they have clearly been cheated again, and Trump can be counted on to do everything he can to fuel that rage because his narcissistic ego cannot tolerate being a loser. If he wins, you can count on him to seek revenge wherever he can against those whom he believes stole away the last four years from him because Trump always hits back. You can also count on Biden supporters to go maniacal if the Trump, whom they entirely hate with a vengeance, wins. So, it will be year of great chaos.
I will note, however, that the MAGA prophet doesn’t have a good track record:
Her past predictions range from the death of Democratic Representative Nancy Pelosi before the 2022 midterms to the collapse of legal indictments against former President Donald Trump.
I am not inclined to give any credibility to people who speak blatant errors in the name of God as the “message of the Lord.” I think they are driven by their own spiritual pride. I don’t think God needs faulty messengers raising their own thoughts to claims of divine accuracy and authority. I think they are an enormous distraction and they make their own belief system look foolish, especially when I can predict things more accurately by just projecting trends, not by divine guidance.
(I once copied all of Pat Robertson’s prophecies for a particular year and put beside them my own predictions on those same matters based on where I thought the trends would take us. At the end of the year, I scored something like 70%, and he scored 30%, largely on just the matters where his predictions aligned with mine.) Since I make no claims of being a prophet of God at all, I decided I would allow Robertson none either when he was alive as I am sure God can do better than I can to a level of absolute perfection. I merely project the trends based on what I see as reasonable cause and effect and historic pattern.
However, people with a following like the “MAGA prophet” who have the ear of a president like she had can persuade others to believe in the path they believe is divinely approved. (There is a long history in the Bible of Jewish religious zealots prophesying Israel’s successes with good intentions, yet being wrong; yet, the people readily believed them because those prophets said what the people wanted to hear and they were often people with strong Jewish religious credentials. The Bible said they did nothing but speak their own imaginations and dreams and condemned them for doing so. The true prophets were correct 100% of the time.) We’ll get a lot of feverish prophesying in apocalyptic times like this.