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Economic Outlook

Is U.S. Heading for Recession?

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Posted by Arkadiusz Sieron - Sunshine Profitsron - Sunshine Profits

on Thursday, 29 October 2015 05:37

nnU.S. corporate sales and profits decreased in the third quarter for the first time since 2009. Is a recession possible in the U.S.? How could it affect the gold market?

Profits and revenues are falling in tandem for the first time in six years. Sales are expected to fall 4 percent, while earnings per share are likely to decline 2.8 percent (so far, only a third of S&P 500 companies have reported). Although some companies – mainly in services and car sales – remain robust, the industrial environment’s (railroad, energy producers, manufacturers) looks really recessionary. Yesterday’s report on durable goods orders leaves no doubt. New orders for manufactured durable goods decreased in September 1.2 percent. On an annual basis, durable goods orders are down for the eighth consecutive month. Following this report, the GDPNow forecast for GDP growth in the third quarter decreased to 0.8 percent from 0.9 percent.

What is a bit surprising, given the low oil prices, is that transportation also looks weaker than expected, due to the manufacturers’ lower demand for cargo. So much for the idea that the industrial slowdown will not spill over to the whole economy. And, just as a reminder, transportation is typically a leading indicator.

The question is whether the U.S. economy as a whole is heading into recession. Well, we have a sales recession, earnings recessionindustrial recession and transportation recession. What’s left? Such developments typically accompany economic recessions. However, there were exceptions when the economy expanded but corporate profits temporarily fell, mainly due to a strong U.S. dollar or low oil prices – factors present also today.

To sum up, there is no recession yet, but investors should not ignore the growing weakness in the manufacturing sector. Financial markets often underestimate an economic slowdown, but it does not mean that the real economy is not on the threshold of a bust. A full-blown recession would certainly be positive for the gold market, especially that the Fed is running out of ammunition. So far, negative economic forces are too limited to qualify as an official NBER recession, but they may be enough for postponing or even abandoning the idea of monetary tightening. This is good news for the gold market.

If you enjoyed the above analysis, we invite you to check out our other services. We focus on the fundamental analysis in our monthly Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals.

Thank you.

Arkadiusz Sieron
Sunshine Profits‘ Gold News Monitor and Market Overview Editor



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Economic Outlook

U.S. Government Agencies Signal Recession Ahead!

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Posted by Martin D. Weiss Ph.D - Money and Marketsts

on Monday, 19 October 2015 06:30

When no-name naysayers opine that the U.S. economy is headed into a tailspin, you can often take it with a grain of salt.

But when credible, well-established government agencies issue hard data denoting a big decline, it’s a different story: You’ve got to stand up and pay attention. 

Consider, for example …

The U.S. Energy Information Administration (EIA), the primary government authority on energy stats and analysis. Unlike the Fed, it doesn’t make policy or even advocate policy. By law, no outside officer or employee of the government can interfere with what it concludes or says. 

And right now, the EIA says that …

Just from August to September, U.S. crude oil production declined by 120,000 barrels per day …

Production will continue to fall sharply next year, leading to a mass reduction in spending on major oil projects. And, to add insult to injury … 

U.S. crude oil supplies have just surged by 7.6 million barrels — over four times more than analysts expected. 

Meanwhile, executives attending the Oil and Money conference in London warn that a “dramatic decline” in U.S. production is now under way. 

Their reasons: world oil prices are now too low to support U.S. shale oil output, the biggest addition to world production over the last decade. And it’s not just because of declining oil prices; bank financing for shale projects has completely dried up. 

OPEC agrees. The oil cartel sees U.S. production falling for the first time since 2008. The big problem is that, despite falling global demand, OPEC members are not cutting production like they might have in prior years. They’re too afraid to lose an even bigger share of the global oil market. So they continue to pump oil at a feverish pace. 

Impact on global oil prices: No relief from record lows. 

Impact on U.S. economy: Huge. The U.S. energy industry is the third-largest industry in the U.S. And that excludes thousands of companies and millions of jobs that feed off the industry indirectly.

image1The U.S. Department of Agriculture (USDA), unlike the EIA, is responsible for policy. But ever since Abraham Lincoln started the agency during the U.S. Civil War, millions of players in the commodity markets have relied on its forecasts. 

And right now, U.S. agriculture is getting killed.

Take wheat, for example, one of the America’s largest field crops: According to the USDA’s Economic Research Service, U.S. wheat exports have plunged to their lowest level in guess how many years! 

Not 10. Not 20. But 44! 



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Economic Outlook

And What’s Going to Happen at the Next Recession? by Larry Kummer • October 12, 2015

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Posted by Wolf Street

on Wednesday, 14 October 2015 12:46

UnknownThe Government’s strange and awesome powers

Six years after the recession ended, we are due for another recession. Many experts say that the government is “out of bullets” to fight the next severe downturn. That’s quite false because 2008 marked the start of a new era in which our leaders manage the business cycles using strange and awesome tools. We’ll learn the long-term effects of these tools slowly, probably only decades later.

“All is not lost until you run out of airspeed, altitude, and ideas.” — Pilots’ wisdom.

....continue reading this interesting article HERE - Money Talks Editor

 

 

 



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Economic Outlook

How these 12 TPP Nations Could Forever Change Global Growth

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Posted by Frank Holmes - US Global Investors

on Saturday, 10 October 2015 06:54

Historic. Landmark. Groundbreaking. Revolutionary.

These are among many of the words that have been used lately to describe the Trans-Pacific Partnership (TPP) trade pact, which was finally signed in Atlanta this Monday by 12 participating Pacific Rim nations.

The current members include Canada, the United States, Mexico, Peru, Chile, Japan, Vietnam, Malaysia, Brunei, Singapore, Australia and New Zealand.

COMM-the-12-apostles-of-the-historic-trans-pacific-partnership-10092015

After nearly seven years of negotiations, the TPP promises to deliver unprecedented free and fair global trade among the 12 participant nations.

Once ratified by each country’s congress or parliament—which is likely to happen in early 2016—the accord will become the most significant, most economically-impactful trade deal in history. As many as 18,000 tariffs are expected to be eliminated. It will remove barriers to foreign investment, streamline customs procedures and create an international investor-state dispute settlement (ISDS) system, among much more.

The Peterson Institute for International Economics, a Washington, D.C.-based think tank, predicts that the resultant savings could boost the world economy by an incredible $223 billion by 2025.

....read much more on TPP as well as SWOT analysis of Stocks, Bonds, Gold and Energy HERE



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Economic Outlook

A Growing Risk of Recession

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Posted by John P. Hussman, Ph.D.

on Tuesday, 06 October 2015 07:06

With the S&P 500 within about 8% of its highest level in history, with historically reliable valuation measures at obscene levels, implying near-zero 10-12 year S&P 500 nominal total returns; with an extended period of extreme overvalued, overbought, overbullish conditions replaced by deterioration in market internals that signal a clear shift toward risk-aversion among investors; with credit spreads on low-grade debt blowing out to multi-year highs; and with leading economic measures deteriorating rapidly, we continue to classify market conditions within the most hostile return/risk profile we identify – a classification that has been observed in only about 9% of history. 

The primary feature driving our current market return/risk classification is that market internals and credit spreads have clearly deteriorated, following an extended period of extremely overvalued, overbought, overbullish conditions. Essentially, this is equivalent to saying that investors have shifted toward risk aversion in an environment where valuations are rich and risk premiums are extremely thin.While the market has experienced both short-term gains and losses under similar conditions, the most dominant outcomes are abrupt air-pockets, panics and crashes, with annualized losses in the S&P 500 under this 9% of history averaging about -33% at an annual rate. As shown below, this small subset of historical conditions captures a cumulative market loss of about 94%. The corollary is that the remaining 91% of market conditions capture roughly 16 times the overall total return of the passive index since 1940.

wmc151005a

If market internals and credit spreads improve materially, the return/risk classification we identify will also change. Such



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Economic Outlook

Recession Watch

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Posted by John Mauldin - Thoughts From The Frontline

on Sunday, 04 October 2015 20:11

“Growth is never by mere chance; it is the result of forces working together.”

– J.C. Penney

“Strength and growth come only through continuous effort and struggle.”

– Napoleon Hill

“We’re lost, but we’re making good time.”

– Yogi Berra, 1925-2015, RIP (For a most moving and memory-laden tribute to Yogi, see The Lefsetz Letter.)

The Yogi Berra quote above, which was brought to my attention this week, seems an apt description of where the markets and the economy are today. Nobody is quite sure where we are or where we’re going, but we all seem to think we’re going to get there soon.

I think it’s pretty much a given that we’re in for a cyclical bear market in the coming quarters. The question is, will it be 1998 or



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Economic Outlook

It Gets Even Uglier In Canada

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Posted by Wolf Street

on Monday, 31 August 2015 10:32

The Province of Alberta, the epicenter of the Canadian oil bust, may be sliding into something much worse than a plain-vanilla recession. And it’s not exactly perking up the rest of Canada.

Canada-business-borometer-index-2008 2015-08

....read it all HERE

 

 



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