This is no time to be complacent. It’s time to think long and hard about how to brace for volatility in 2019 and, most likely, a recession by 2020.
Not only that, but it’s time to face the facts with the issue of permanent slow growth in America.
The economic machine will keep growing, but for the most part, Americans need to recalibrate their businesses, careers, and investment portfolios to gain exposure to the markets, where growth has yet to occur – Asia and emerging markets.
Domestic consumption in the U.S. is not going to continue to be the engine for the rest of the planet in the next 20 years, as it has been for the last 30.
This current economic boom, though many people don’t even refer to it in this sense, may be the last huge spurt of American growth for many years to come.
Worse yet, it could be just about over.
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CLEAR-CUT CAUTIONARY INDICATORS
- 2009 Trend Line Being Tested: This is big, and we’re right on top of it.
Drawing a classic support/resistance range, all the way back to March of 2009, shows that the S&P 500 is close to cracking the floor, after Friday’s closing. The NASDAQ 100 index is already touching the support bar.
Unless we see a rally to pull markets out of the brutal swirl we’re in at the moment, which is dragging all sectors along with it, it brings us to the second indicator.
- Federal Reserve Boxed-In: There has never been a 3-year tightening cycle in 105 years of the Federal Reserve’s existence. It’s lengthy, yet the FED Funds Rate is still not even tickling historical yields.
Bank stocks are already selling-off in a noticeable way. The problem that the FED has reached is that it looks like rates are going up, while the global economy is stagnating. The U.S. is, basically, doing what is good for them, without taking into effect the rest of the world in its calculations.
- FAANG Stocks: Tech stocks, but especially the FAANGs, have gone up on thin volume for years.
That’s not healthy and, while sellers are taking profits, these tech giants are taking the heat.
Since the indices are weight-adjusted, so that the largest companies are most dominant, the way these stocks move determines the fate of 494 other ones, when in one basket.
- The End of the Bond Bull Market: For 36 years, since 1982, the U.S. has masqueraded the fact that it is growing slowly, by going into debt.
What other reason in the world is viable, when an entity is taking on more and more debt?
Too many expenses, too few income sources, and an attitude of total and utter denial of the facts have birthed the existence of the world’s largest debtor.
Though the U.S. isn’t projected to grow any faster in the decades ahead than it did in recent ones, it will pay ever-increasing interest payments and will find it difficult to fund new debt, using foreign lenders without agreeing to pay higher yields.
This is a slow death sentence.
There’s no time to waste. Maximize your current surroundings. You can’t do more than lies right in front of you, so do it, and wait for opportunities to present themselves.
You must, as an individual, grow more rapidly than the economy is growing, since the economy is only barely beating inflation.
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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