This is a tsunami. Don’t underestimate the gravity of the conditions we’re living through right now. These are far from normal times.
Here’s a recap of some of the most incredible facts about life in the western world at the end of 2018:
- Americans have elected a President with no prior political experience, something that they would have never considered doing before. The wealth gap had made people re-think how much bullshit the establishment has shoved-up their face for years.
This isn’t to say that President Trump isn’t doing a marvelous job, or vice versa. The message is that Hillary Clinton was a shoe-in for the oval office. This caught the world by surprise and many more surprises are in store, since the establishment clearly doesn’t understand the level of frustration there is on the surface.
- Tax cuts were introduced in the world’s largest economy, which already has a $21.6T national debt and $1T in annual deficits.
- The Federal Reserve has raised interest rates eight times in three years, yet the Fed Funds Rate is still below inflation!
- France is experiencing riots on a mass-scale, showing us that in Europe, we’re probably heading towards the end of austerity measures.
Next, we might see societal changes that will be ground-breaking, to say the least.
- China and Russia are aligning with other major countries to steer the world’s banking dominance away from U.S.-centric control, after close to 80 years.
- Two new industries have been introduced to the world in the past decade: blockchain technology and legalized cannabis, both of which hold huge promise.
- The rich elite have never been wealthier. Compared with the average person, the top 10% live on a completely different planet.
We will reach a breaking point. No society can remain stable, let alone marching in unison, when 10% of it owns 75% of the wealth.
Populism will force wages to go up; inflation will begin playing a bigger role in the economy and, with unemployment at full capacity, the first whiffs of layoffs will rattle the political sphere even further.
We’ve already seen the FAANG bubble bursting and the cryptocurrencies bubble imploding in the faces of HODLers. Now, real estate prices are taking a beating. In some areas of California, prices are already 30% lower than they were a year ago.
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The corporate credit markets are signaling panic will ensue as well. In fact, if I have to point to where the coming recession will originate from, it will be from corporate credit defaults.
So many imbalances of funds and misallocated capital are held by the wrong parties that once the house of cards starts toppling-down, you’ll see plenty of finger-pointing.
Whenever you see the mainstream media pointing at us, the general population, know that politicians are getting desperate.
Currently, recession odds stand at 15%, so investors are simply without risk-appetite at the moment, but they’re still very complacent, not fearing the worst at all.
What we have now, as it we did in the early months of 2007, is a collective state of denial, as to the gravity of the debt bubble.
Everyone was waiting for a comeback back then, for a continuation of the party, but it never happened. Heck, even the Fed Chair at the time, Ben Bernanke, came on national TV and said just months before the crash that they’re not showing any signs of problems in the housing industry.
Portfolio Wealth Global expects an excruciating period ahead for at least Q1 and Q2.
Personally, I intend to use the options market to generate returns, as the general indices trade sideways.
The NASDAQ trades inversely to precious metals, so if we see a white flag raised from FAANG investors, who cut their positions substantially, then we could also get a repeat of 2016’s beautiful 8-month junior mining mania wave.
It could even get rosier for us, if emerging markets steal the show, since their respective currencies will draw from the LONG dollar traders, which will really seal the deal on the USD’s 8-year run.
This mini-repeat of the late 1990s, when tech stocks, the dollar, and unemployment stats were all the rage is getting worn-out.
If you remember, after the Dot.Com bust came a sideways market for equities, a weak dollar, lower interest rates, and a commodities super-cycle.
Research Partner, PortfolioWealthGlobal.com
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.
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