The DJIA, NASDAQ, and S&P 500 all hit new intra-day highs yesterday, as well as a new DJIA closing high today. President Trump tweeted about them saying, “Enjoy.” But what most Americans are failing to understand is that 84% of all stock market wealth is owned by the wealthiest 10% of all Americans. Further, that the wealthiest .1% of Americans possess as much wealth as the poorest 90%. This fact easily explains the increasing appreciation of socialism in our country. Particularly, since the gap between rich and poor continues to grow at an accelerating pace, while the Middle Class works more hours than ever before and still can’t seem to make ends meet. It’s a recipe for social disaster that’s getting worse with each passing year, as national debt, student debt, credit card debt and more, continue to set new record highs as well.
Meanwhile, global economies are slowing, the trade war with China has exacerbated the situation, and America’s commercialized Christmas crunch is gearing up to put more pressure than ever on an already over-extended and beleaguered Middle Class. The dieseling bull markets are giving everyone a false sense of well-being, because at the heart of this mechanism is the American government and Federal Reserve Board, who have successfully but artificially manipulated the economy to this point. However, they both now find themselves completely unequipped to deal with the growing inflation that naturally follows such an extended injection of artificial credit. The stock market bubble is almost sure to burst and we’re already in an earnings recession. Throughout our history, earnings recessions have been followed by a full-blown recession more than 75% of the time.
An earnings recession is defined as two quarters or more of consecutive year-over-year declines. Earnings for S&P 500 components dipped in the first two quarters of this year and with nearly 95% of calendar third-quarter posted, earnings have already tallied the biggest decline of the year at 2.34%. An equally poor fourth-quarter seems popular among analysts and CFRA Chief Investment Strategist, Sam Stoval, recently reported that he has been “scratching his head” trying to reconcile analyst pessimism around earnings, with continuing stock market rallies. At a time when the government should be warning of pending economic peril, Americans are instead fed “news” of other people’s problems.
A just released Nerd Wallet Survey, conducted by Harris Poll, tells us that 48 million Americans are still paying for last year’s holiday season. With credit card interest rates for the Middle Class at levels similar to days of old when the Fed rate was 14% to 16%, it’s easy to see how Americans can get into an economic death spiral, with government and retail encouragement all along the way. And the approaching economic difficulties will only add layers to the already cumbersome burden. Americans interested in surviving the coming economic storm should be considering a higher than usual savings allocation of physical precious metals, in order to offset the growing potential for dollar, stock market and bond collapses.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.