Reuters announced today that the onset of a U.S. economic recession could take longer than usual, due to the altered dynamics of the Treasury market relative to the inverted yield curve just achieved. “As the Trump Administration ramps up debt sales to cover a budget deficit projected to hit $1 trillion next year, it has crowded the front of the yield curve with far more new bonds than the back end.” The problem is that banks, whose only consideration is profitability, have shown a much greater affinity for debt-guaranteed Freddie Mac and Fannie Mae mortgage-backed bonds over Treasuries.
The stock market is at the end of a ten-year bull market that only survived the past year due to foreign investors and company stock buyback programs, all of which amounts to nothing but smoke and mirrors. The artificial extension of this bull market is inevitably going to cause a market correction far greater than the one experienced in 2008. Stock market volatility will no doubt continue, but the trend will take on a much more consistent and negative downward direction, as 2019 progresses.
U.S. unemployment numbers hit a low this year, which won’t be seen again for a very long time. The China trade war has all but destroyed the American soybean industry, has dramatically dampened European economic growth, and may be the catalyst for the coming economic meltdown. Oil’s 20% November plunge may be good for gas prices, but has the entire commodity industry begging for a bottom. Fourth quarter numbers already show a slowing economy based on reduced business spending on equipment, a deterioration in the trade deficit, as well as continuing weakness in the housing market.
The “wait and see” attitude many investors took in 2018 could be very expensive to try and duplicate in 2019. Meanwhile, precious metals continue to hover at depressed price levels. ABN AMRO announced their expectations today that silver will achieve $16 per ounce by next March and close out the year around $18 per ounce. Bank of America announced today that they expect gold to close out 2019, at or above $1,500 per ounce. Gold IRA, can be a great solution to protect and grow your savings for your retirement. Procrastination can be expensive, so no matter what, don’t get caught without a seat when the music stops!