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Trends This Week – Behind and beyond the Brexit vote – 06.29.16

Although stocks bounced back on “Turnaround Tuesday” on the belief that contagion has been contained following the rout that wiped out $3.6 trillion from equity markets following Great Britain’s referendum last Thursday to “Brexit” the European Union… we disagree. It’s bigger than Brexit. Despite many of the world’s largest hedge funds betting billions on a “Remain” victory and British bookies putting the chances of “Leave” at barely 10 percent, in our June 15 Trend Alert, we wrote, “Should the ‘Leave’ vote win, we forecast the US dollar and gold prices will spike while equity markets, particularly those currently under downward pressure, will sink deeply lower.” Since then, gold hit two-year highs, the British pound fell to 31-year lows and currencies around the world hit new lows against the US dollar – or tested old ones – as investors sought safe-haven assets such as the dollar and Japanese yen.
The criticism in the “investor” world has long been that gold yields no interest. However, as interest rates around the world keep trending lower and holding cash yields nothing, in a climate of ongoing market volatility, for many, holding gold is considered the ultimate safe-haven commodity.

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Alternative Visions – Brexit Revisited: The Economic and Political Fallout From the Vote – 06.24.16

Jack discusses the consequences and likely developments from the historic vote yesterday for the UK to leave the European Union. The deep origins of the Brexit vote are first discussed, including rising discontent with neoliberal policies of free trade by working classes, small businesses, and local producers everywhere, the overlay of fiscal austerity policies compressing incomes, and the almost total reliance in advanced economies on central bank monetary policies that boost financial asset incomes and corporate profits (and capital gains of investors and the rich) since 2009. How UK prime minister Cameron struck a ‘Faustian’ bargain in 2015 to win the election and now had to repay the ‘devil’ with the Brexit vote he thought he could control, but did not. The consequences of the vote for UK politics in the near term, and for forces—political and economic—behind the potential break up of the EU itself. Political party realignments underway everywhere, including EU and US. Implications for US November elections. Jack concludes with an assessment and economic predictions for the UK and EU economies, for currency volatility worldwide, stock and bond markets, real estate prices, and global commodity prices. Impact on the US dollar, interest rates, FED policies, and US recession for 2017. Severe results for emerging markets, especially Latin America (markets, capital flight, recessions) and for China’s Yuan eventual currency devaluation.

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Alternative Visions – US Jobs Growth Plummets & Global Economy Slows – 06.03.16

Jack reviews today’s just released jobs numbers confirming his prior prediction jobs growth would slow in wake of US GDP slowdown last quarter. Plus an overview of US economy and a prediction of recession in early 2017. In the second half of the show, a review of latest developments in global economy–with commentary on how the IMF outmaneuvered the Syriza government in Greece again, the likelihood of UK ‘Brexit’ from the EU, $10 trillion in negative interest rates and more than $10 trillion in global non-performing bank loans, the recent G7 meeting in Japan and prime minister Abe’s warning of another ‘Lehman event’ on the horizon, the European Central Bank’s recent decision to now buy corporation bonds, like Japan, China’s rotating financial asset bubbles, eventual currency devaluation, capital flight, corporate bankruptcies, and out of control private sector debt acceleration. (see jackrasmus.com blog for recent articles, ‘Is US Economy Heading for Another Recession?’ and ‘How the IMF outmaneuvered Syriza—Again’)

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Bill Holter – Weapons of Mass Financial Destruction (WMFD)

Every once in a while it is a good thing to review something we already know and have known for quite a while.  What we’re talking about are derivatives and the very basics of how they work… or not.  We have seen massive volatility since the Fed raised rates last month.  The humor (tragedy), admitted to yesterday by the Fed, the …

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BofA: The Oil Crash Is Kicking Off One of the Largest Wealth Transfers In Human History

 Economists are still hotly debating whether the oil crash has been a net positive for advanced economies. Optimists argue that cheap oil is a good thing for consumers and commodity-sensitive businesses, while pessimists point to the hit to energy-related investment and possible spillover into the financial system. A new note from Francisco Blanch at Bank of America Merrill Lynch, however, …

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Pam Martens and Russ Martens – Big Bank Stocks Have Been Crushed: Here’s Why

The conventional wisdom was that the Fed’s rate hike on December 16 of last year was going to help big bank stocks by boosting their ability to charge heftier interest rates on loans. That theory has pretty much been relegated to the dust bin of financial fairy tales along with the Fed’s prediction that the slump in oil prices would …