Looming Economic Reset: Recession Indicators Are Flashing Red, Student and Auto Loan Bubble Finally Bursting, Japanese 10-Year Bond Yield Is BREAKING OUT!!!
Subprime 2.0 – Auto Loan Deliquency Balances Rise 24% YoY
As we warned six weeks ago, the Fed’s ZIRP side-effects have driven auto-lenders to scrape the bottom of the subprime-lending barrel once again (loans to subprime borrowers +18% YoY). It seems, based on the Fed’s latest data, that this over-exuberant lending is coming back to bite once again as delinquent balances surge 23.9% year-over-year (though optimistically Experian reflects “obviously, we never want to see a rise in delinquencies or repossessions, but… they are still lower than the recession-level rates,”). As Experian also notes today, repossessions rose 16.9% year-over-year.
The following are 12 recession indicators that are flashing red…
#1 The price of copper has traditionally been one of the very best indicators of the future performance of the U.S. economy. The fact that it is down nearly 20 percent so far this year has many analysts extremely concerned…
Copper’s downward trend foreshadows a stock market collapse, according to Societe Generale’s famously bearish strategist Albert Edwards, who said equity markets will riot “Japan-style.”
“Copper is acting exactly as it did when I wrote about the impotence of liquidity in the face of the (then imminent) 2007 recession. Once again it is giving us an early warning that liquidity will not save risk assets: time to get out of equities,” Edwards wrote in his latest research note, on Thursday.
#2 Home renovation spending has fallen back to depressingly-low 2010 levels.
#3 As Zero Hedge recently pointed out, U.S. retail spending is repeating a pattern that we have not seen since the last recession…
Retail sales of clothing is growing at the slowest pace since 2010; but while major store sales are about to drop negative YoY for the first time in over 3 years, the utter collapse in general merchandise sales is worse that at the peak of the last recession at -5%. It seems tough to see how a nation with an economy built on 70% consumption is not in a recessionary environment. And while this alone is a dismal signal for the discretionary upside of the US economy/consumer; as Gluskin Sheff’s David Rosenberg points out real personal income net of transfer receipts plunged at a stunning 5.8% annual rate in Q1. The other seven times we have seen such a collapse, the economy was either in recession of just coming out of one.
#4 Manufacturing activity all over the country is showing signs of slowing down. In fact, Chicago PMI has dipped below 50 (indicating contraction) for the first time since the last recession.
#5 In April, consumer confidence unexpectedly fell to a nine-month low…
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment declined to 72.3 in April from 78.6 a month earlier. This month’s reading was lower than all 69 estimates in a Bloomberg survey that called for no change from the March number.
#7 The S&P 500 usually mirrors the performance of Chinese stocks very closely. That is why it is so alarming that Chinese stocks peaked months ago. Will the S&P 500 soon follow?
#8 The economic data coming out of the Chinese economy lately has been mostly terrible…
This quality leading indicator is breaking down…correct message again?
CLICK ON CHART TO ENLARGE
Lumber has traded within a falling channel for the past 20-years. When lumber has hit the bottom of the channel, stocks have followed to the tune of 100% rallies twice.
The key to this pattern is when Lumber is at the top of the channel and turns down, it seems to pull the economy, stock market and economy lower with it.
The upper left chart reflects Lumber recently was at the top of the falling channel and the upper right chart reflects a breakdown in Lumber. Lumber as a leading indicator is usually a good bit ahead of the economy and stock market.
Copper Prices Are Tumbling
Here’s a look at what Copper futures are doing:
Is Lumber The New Baltic Dry?
JGB Futures Narrowly Avoid Third Halt In Three Days (By A Tick); 5Y Yields Jump To Highest In 22 Months
CHART: BOND CRASHING
JGBs Suffer Worst 4 Days In 10 Years As Nikkei Tops 15,000 First Time Since Jan 2008
Breakout in Japanese 10-Year Bond Yield
Curve Watchers Anonymous has its eye on global interest rates. For example, please consider this chart of 10-Year Japanese bonds.
click on chart for sharper image
Chart courtesy of Steen Jakobsen, chief economist at Saxo Bank in Denmark.
Gold And Silver Are In Liquidation Mode Again
Gold looks at risk of breaking below $1400/oz. again.
And silver is just plain ugly.
Flashback: Warning: “Watch The Metals, When They Dip. It Will Be A Good Indication That Things Are About To Happen.”
As of this print the price of gold is reaching fresh two year lows, down nearly 25% from its all time high just six months ago. Though uninformed onlookers and financial pundits may see this as the popping of the proverbial gold bubble, the velocity and scale of the take-down in precious metals suggests that there is a massive assault in the works. According to former Assistant Treasury Secretary Paul Craig Roberts, last Friday’s price drop was the result of some 500 tons of gold being dumped onto paper markets, an amount equal to about $25 Billion dollars worth of the metal. Likewise, silver saw a similar dump and price drop. Moreover, the very same thing is taking place this morning, suggesting that some very large and influential market makers are involved.
Who has that kind of money and can afford to lose it in naked short positions? According to Paul Craig Roberts, “only a central bank that can print it.”
Thus, one must assume that this is not a natural effect of the free market, but rather, a coordinated attack on the global precious metals exchange orchestrated by our very own Federal Reserve, an organization run by a board of directors that includes representatives from some of the world’s largest banking institutions.
What’s most alarming about the collapse of gold and silver is that it was predicted in December of 2012 by a Department of Homeland Security Insider. In an interview with Doug Hagmann at the Northeast Intelligence Network, the insider warned that life for the average America would change drastically, and soon, and that this change would be preceded by various events, one of which is a major dip in precious metals
Veteran commodities trader: Gold and silver could be headed much lower again
Another leg in the bear market is in progress. The charts speak for themselves…
The target in gold based on the weekly graph is in the mid-1200s. The correction rally ended on May 13, with the completion of a small H&S top pattern on the daily chart.
Silver has a swing target of…
Euro-zone GDP drops 0.2%, worse than expected
Bullying a Gold Bull, Bad Idea! (McAlvany audio)
Japan to inject 2.8 trillion yen in operations to cool bond market
Japan’s Bonds Halt Worst Drop in Decade After BOJ Adds Funding
PIMCO sees U.S. growth around 2 pct over next 3-5 years
China’s Total Debt: 200 Percent of GDP
Gold Premiums in India Jump as Central Bank Curbs May Cut Supply
California cities to remain ‘fiscally challenged’ -Moody’s
S&P says Cypriot deposit grab may set euro zone precedent
China’s Corporate Debt Market Set to Challenge US
Euro-Style Bail-In Plan Means Bondholder Wipe-Out: Brazil Credit
Reaching critical mass – what goes up will also crash…join “V, The Guerrilla Economist™” and Steve Quayle for a very special Tuesday edition of The Hagmann & Hagmann Report
Please join “V, The Guerrilla Economist™” and Steve Quayle for a very special Tuesday edition of The Hagmann & Hagmann Report (time moved to 9:00 p.m. ET). Days, weeks and even months before others were talking about Japan as the proverbial canary in the coal mine, it was “V, The Guerrilla Economist™” himself who told us to “watch Japan.” The news today from Japan is not good, but just as predicted by this economic insider. You can listen to next week’s and next month’s headlines during this show. There is a looming world-wide economic reset about to take place in the coming months, in tandem with a global conflict. The question is… are you prepared?