A spate of bad economic data hit the newswires this past week portending an ominous view of the future. Clearly a slowdown is underway, and it is happening much more quickly than most predicted.
CHINA TRADE NUMBERS
World markets were jolted Thursday & Friday after China reported that exports plunged over 20%, when they were only expected to decline by 4.8%. https://www.cnbc.com/2019/03/08/movement-in-shanghai-stocks-following-chinese-trade-data-miss.html.
Following that news, the Shanghai stock index toppled nearly 5%.
FRIDAY’S JOBS NUMBERS
Yesterday, economists were expecting about 180,000 new jobs to have been created in February, a number already accounting for lowered expectations.
Instead, the Bureau of Labor Statistics reported that only 20,000 had been created…….a SIGNIFICANT MISS! https://www.cbsnews.com/news/february-jobs-report-shows-20000-jobs-added-below-forecasts/
RETAILERS CLOSE STORES & DECLARE BANKRUPTCY
Retailers are declaring bankruptcy and/or closing stores in record numbers this year, and these are NOT your small local brands. Instead, these are major companies that include Abercrombie & Fitch, Dollar Tree, Charlotte Russe, Payless ShoeSource, and several others. https://www.cnbc.com/2019/03/08/retail-store-closures-announced-this-year-climb-to-4810.html
There are several more likely bankruptcies and/or closures on the horizon from common names that include JC Penney, David’s Bridal, Guitar Center, J Crew, Academy Sports, Pier 1 Imports, and again, several others.
The retail closures are NOT due to Amazon competition. Instead, they are due to high debt levels, both at the consumer level and the retailer itself.
US HOUSEHOLDS SEE BIGGEST DECLINE IN NET WORTH
US households saw their net worth decline by $3.73 Trillion dollars last quarter, the largest decline (3.4%) since the Great Recession of 2008/2009. https://www.cnbc.com/2019/03/07/us-households-see-biggest-decline-in-net-worth-since-the-financial-crisis.html
STOCK MARKET DISCONNECTED FROM REALITY
Meanwhile, with all this bad news and a shrinking profit picture, stock markets around the world decided to rally off the December lows like an Eskimo suddenly stepping on red hot coals!
I’m not buying it! In my 45 years of following the markets, I believe this is the most dangerous stock market since at least the Great Depression, and maybe worse.
There is economic weakness, and growth is slowing worldwide. Bond and stock prices remain at historically, and extremely, high levels, making these markets highly susceptible to negative shocks. Real estate markets in the U.S. and around the world are again in bubble territory. Countries like Australia and Canada have already begun seeing a softening in the market that continues to accelerate. In other words, the world is in an EVERYTHING BUBBLE!
The best way to protect yourself when this bubble pops is to shift assets into physical gold and silver. And this might explain why the US Mint ran out of silver coins to sell in February!