Gold News

Day of Reckoning. Again

Subprime auto delinquencies in the US just topped the 2009 crisis...

The IDES of MARCH came...and yea, went...with poor Marco Rubio out of the race, writes Bill Bonner in his Diary of a Rogue Economist.

Yes, it was "Goodbye, Rubio Tuesday"...leaving Donald Trump and Hillary Clinton way ahead of the pack in the race to win their parties' nominations.

Meanwhile, a dear reader wrote in to complain that the Dow was up some 1,500 points since he acted on our gloomy view...and sold out of the market.

But we hold to our opinion: This ship is sinking.

As an investor, you face two kinds of risk: the risk of missing out on gains and the risk of taking losses.

It's up to you whether you continue to bet on rising US stocks. But our view is you will be glad you got out when you did.

We all live under a death sentence. Markets...societies...and our very lives must follow an unstoppable pattern.

We breathe in...and then we breathe out. We are born...and every mother's son ever born from the beginning of time until today is programmed for death. Every ship ever built is destined for the bottom of the sea...or the scrap yard.

Up,, out...expansion, contraction. Hey, don't blame us! We didn't invent it. That's just the way it is. And since that is the way it is: Vive la mort!

We don't necessarily want it. But since it is inevitable, we will look forward to it, like a pair of new boots yearning for mud.

There are times to go forward...and times to back up. There are times to buy. And there are times to refrain from embracing stocks.

This is one of those times.

The Fed has stood pat on rates since December. But the Japanese, the Chinese, and the Europeans have continued to try to goose up their economies with increasingly crackpot monetary policies.

Much of the money thus created has found its way into US markets...which probably explains the refusal of the Dow to go down.

It could be, of course, that we are totally wrong...and that some trend is in place we don't recognize.

Stock markets are said to "discount the future". Maybe they see something we don't.

Or maybe they are simply preparing for a more spectacular day of reckoning by drawing more mom-and-pop investors into deeper water; as always, we wait to find out.

Still, it looks as though the bull market that began in the US in March 2009 is over. And the contraction is not limited to the stock market.

Our economy, our society, and our body politic are all closing up...looking inward...turning their backs on the wider world.

Yes, we are connecting the dots. It is not just the world of money that contracts and expands. The economy breathes, too...and so does our political world.

Why is Donald J.Trump running so strongly in the Republican primaries?

Why is National Front leader Marine Le Pen doing so well in France?

How did Jeremy Corbyn – otherwise a nobody – become the leader of the second-largest party in Britain?

Why is world trade plunging?

Why are inflation expectations running at about 1% for the next decade...despite the biggest increase in central bank balance sheets – the monetary footings of the entire system – in history?

Why are growth rates in Europe, Japan, and the US at their lowest levels since World War II?

And why is $7 trillion of government debt – about one-third of all issuance – now trading at sub-zero yields?

"Economists fire warning shot on risks of negative interest rates," reported the Financial Times in a front-page story last week.

"Japan's negative interest backfire..." it added, again on the front page, two days later.


Because we are breathing out. Borders are tightening up. Barriers are erected. The "globalism" heralded by New York Times columnist Thomas Friedman and others as a solution to all the world's problems is giving way to "nationalism".

The expansive E-Z money world of the last 30 years is losing air.

Yesterday brought news that consumer savings from the lower price of oil is NOT leading to greater consumer spending...not even in autos. Bloomberg:

"US retail sales dropped in February and the prior month's gain was revised to a decline, calling into question the narrative that bigger gains in consumer spending would propel economic growth at the start of 2016.

"The decrease in purchases, which included auto dealers, department stores, and furniture outlets, showed Americans were salting away money saved at the gas pump amid volatile financial markets. 'We're seeing higher rents, higher healthcare expenses, so that may be offsetting a lot of the benefit of lower gasoline prices,' said Scott Brown, chief economist at Raymond James Financial Inc. in St.Petersburg, Florida."

While current spending slacks off, past spending continues to rattle its chains. Newsmax:

"Delinquencies on subprime auto debt packaged into securities reached a high not seen since October 1996, as late payments continued to worsen in February, according to Fitch Ratings.
The number of car borrowers who were more than 60 days late on their bills in February rose 11.6% from the same period a year ago, bringing the delinquency rate to 5.16%, Fitch wrote Monday in a report. During the financial crisis delinquencies peaked at 5.04%."

We have promised a look at a deeper malaise. This is it. It is not just the threat of a bear market on Wall Street. Not just a grumpy mood of the voters threatening the Establishment.

It is something bigger...deeper...something unstoppable...

More dots to come.

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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