How & When Will The Next Financial Crisis Happen? 26 Experts Weigh In…

It is often stated that there is a major financial crisis every 10 years or so. Having said that, it’s been a little over a decade since the Lehman Brothers collapse sparked the last global financial crisis (GFC) and with global economic growth starting to show signs of petering out, some in the media and elsewhere in the public eye are forecasting another global financial crisis in the very near future.

There has been a variety of reports from prominent analysts lately with predictions as to when the next crisis will hit and what will spark it. Strategists at J.P. Morgan Chase recently made a splash with their announcement of a new predictive model that pencils in the next crisis to hit in 2020. Additionally, J.P. Morgan’s Global Head of Macro Quantitative and Derivatives Research, Marko Kolanovic, has highlighted a potential precipitous decline in stocks that could cause what has been termed “the Great Liquidity Crisis.” He identified the shift away from actively managed investing toward passive investing strategies such as exchange-traded funds, index funds and quantitative-based trading strategies, as well as computerized trading as the potential culprit, which could not only be the catalyst for the next crisis but could also exacerbate the fallout….

>>> continue reading: How & When Will The Next Financial Crisis Happen? 26 Experts Weigh In…

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The Stock Market Has Just Done Something That It Hasn’t Done Since 2009

We continue to see extremely wild swings on Wall Street.  On Monday, at one point the Dow Jones Industrial Average was up 352 points, and then later it was down 566 points.  At the closing bell the Dow had officially lost 245 points, and all of this extreme volatility is making investors very nervous.  Investors like markets that are predictable, because it is a whole lot easier to make money when things move in a predictable fashion.  When things get crazy, a lot of investors pull their money out and wait until things settle down in the marketplace, and that definitely makes a lot of sense.  Right now, there is a lot of uncertainty about where things are ultimately headed.  Some experts believe that the bull market will resume after this “correction” is over, but others believe that a bear market has now begun.  And as you will see below, the fact that the S&P 500 has now broken a major trendline that has not been broken since 2009 is strengthening the case of the latter group.

Many had anticipated that we may see a bounce on Monday, but instead we witnessed another very large decline.  According to Zero Hedge, all of the major stock indexes are now officially in correction territory….

>>> continue reading: The Stock Market Has Just Done Something That It Hasn’t Done Since 2009

The Fed Has Not “Gone Crazy” As Trump Claims

President Trump criticized the Federal Reserve again last week, singling out the central bank as the “biggest threat” to his administration’s success. Earlier, he accused the Fed of having “gone crazy” by raising interest rates too quickly. Many long-time Fed watchers were taken aback by these candid remarks, since previous Presidents have deliberately refrained from commenting on the Fed’s policy actions.

Still, President Trump has a legitimate concern. Federal Reserve officials see higher interest rates as necessary to prevent inflation from rising. But higher rates also make borrowing costlier for households who want to buy new homes and cars, and businesses who want to expand and create more jobs. Thus, the President’s remarks invite us to ask if there is any truth to the charge that the Fed is raising rates too quickly and thereby putting the economic expansion at risk. Fortunately, the latest data suggest that the Fed has not “gone crazy.” Recent interest rate increases are justified, given the renewed strength of the U.S. economy….

>>> continue reading: The Fed Has Not “Gone Crazy” As Trump Claims

Is The Market Predicting A Recession?

There has been lot’s of analysis lately on what message the recent gyrations in the market are sending.

Is this just a correction in an ongoing, and seemingly never-ending, bull market?

Maybe. Anything is possible.

Or, is the financial market starting to pick up on what we have been warning about for the last several months which is simply higher rates, slowing global growth, and trade wars are going to impact the economy…?

>>> continue reading: Is The Market Predicting A Recession?

Eight Reasons A Financial Crisis Is Coming

It’s been about 10 years since the last financial crisis. FocusEconomics wants to know if another one is due.

The short answer is yes.

In the last 10 years not a single fundamental economic flaw has been fixed in the US, Europe, Japan, or China.

The Fed was behind the curve for years contributing to the bubble. Massive rounds of QE in the US, EU, and Japan created extreme equity and junk bond bubbles.

Trump’s tariffs are ill-founded as is Congressional spending wasted on war.

>>> continue reading: Eight Reasons A Financial Crisis Is Coming

The Last Two Times The US Economy Was This Strong, A Recession Was Less Than A Year Away

Why read? Because headline data like GDP are historically poor indicators of cyclical risk.

There’s been an air of euphoria about the economy – a sense that the boom times will keep going – with GDP growth over 4% and the jobless rate under 4%. Yet, the last two times we saw this combination, in 2000 and way back in 1969, a recession was less than a year away. We don’t believe in forecasting by analogy, because much is different today. But while we aren’t predicting an imminent recession, for months ECRI has been making the case that the economy isn’t as strong as everyone believes.

Few realize how poorly the headline data function as recession predictors. Indeed, a decade after the financial crisis, nobody recalls how deceptively strong GDP growth was in the actual lead-up to that downturn.

Stock prices hit an all-time high in October 2007, when the latest GDP data showed nearly 4% second-quarter growth. Equally strong third-quarter GDP growth, released later that month, was revised up to almost 5% a month later. This was right on the verge of the Great Recession, which began in December 2007….

>>> continue reading: The Last Two Times The US Economy Was This Strong, A Recession Was Less Than A Year Away

The Coming Inflation Threat: The Worst Of Both Worlds

Inflation is a funny thing: we feel it virtually every day, but we’re told it doesn’t exist—the official inflation rate is around 2.5% over the past few years, a little higher when energy prices are going up and a little lower when energy prices are going down.

Historically, 2.5% is about as low as inflation gets in a mass-consumption economy like the U.S. that depends on the constant expansion of credit….

>>> continue reading: The Coming Inflation Threat: The Worst Of Both Worlds

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