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Current projections of the GDP for the quarter ending 06/30/2019 are around 1.5%. If this turns out to be approximately right, the slowdown I have been looking for is underway. Of course, most analysts expect the third and fourth quarter to be a strong rebound. I cannot remember of a time when a second half rebound has not been predicted by Wall Street. They always need buyers to take their stocks on a cyclical basis. That’s the reason buy and hold is a strategy Wall Street vigorously promotes. It’s for you, not them.
Debt continues to build in all sectors of the economy. Income gains remain weak and corporate profits appear to be declining, after being flat for the last five years. Regardless of the happy news, we hear non-stop the undercover facts are weakening.
As mentioned in previous blogs, I suggested that one should spend time in studying both Austrian economics as well as the results of financialization. Michael Hudson is the modern disciple of this type of economy. To not know about the results of such as mentioned above simply means the future will escape you. President Trump likes to talk about fake news. What I believe is that most current economic and market theories are likewise fake. Keynesian economics and its bundle of charts do not take into effect the banking industry. Really, are banks not an important player in the economy and business cycle? Of course they are. Those who follow the Keynesian economic model are extremely bullish due to low interest rates. They believe they are artificially low (due to the Fed). The fact is, they are low because business is weak, inflation is turning into deflation, and the smart money is heading to the hills.
Please note chart #1 below from Morgan Stanley that tells us in no uncertain terms the economy is weak and getting weaker. Caution continues to be called for under these circumstances. Government bonds are the premier asset for now.
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