“What’s Coming Is Going to Be a Mess”

Source: Daily Reckoning/Jim Rogers

“I see the worst stock market correction of your lifetime coming…These things always start small and nobody notices at first…Who knows what will be the major catalyst? Rising interest rates, trade wars, real wars — many things could cause it. The worst collapse we could see in our lifetimes doesn’t happen in a day. Why do I think the next downturn will be so extreme? In 2008, we had a problem because of too much debt worldwide. Since then, the amount of debt has skyrocketed everywhere in the world…Plus, there are dramatic changes taking place. Retail shops are liquidating all over the U.S., for example. Somebody is going to be left holding a very big bag eventually as those stores go out of business. Many pension plans are underwater. Illinois, Connecticut and several other states are heading for bankruptcy. There are many things that will be very, very serious problems going forward.”

 

America’s Illusions of Growth

Source: Project Syndicate

“National politics in the United States has become enslaved to macroeconomic indicators that have little bearing on true wellbeing. For many commentators, the snapshot growth rate of 3.2% for the first quarter of 2019, coupled with a decline in the unemployment rate to 3.6% in April, implies that President Trump’s economic policies have been vindicated…But this interpretation overlooks what these indicators fail to measure. And what they fail to measure happens to be what really counts for the public….Macroeconomic indicators hide much about the quality of life. For example, even while the US economy has expanded during recent years, America’s public health crisis has continued to mount. The US has experienced two consecutive years of declining life expectancy, in 2016 and 2017 – the longest consecutive decline since World War I and the subsequent flu epidemic. Yet the current decline is caused by despair, not by illness. Suicide rates and opioid overdoses are soaring. Another alarming epidemic not captured by GDP or unemployment rates is the sharp rise in anxiety among Americans….It’s time that economists, pundits, and politicians start looking holistically at life in our times, and take seriously the long-term structural changes needed to address the multiple crises of health care, despair, inequality, and stress in the US and many other countries.”

 

Atlanta Fed forecast for GDP growth sliding, rate cut chances surging

Source: CNBC

“A Federal Reserve projection on economic growth just weakened substantially, and expectations for a rate cut over the next eight months got a lot stronger. The Atlanta Fed’s closely watched GDPNow tracker is pointing to a 1.1% gain for the economy in the second quarter, according to a revision posted Wednesday. Disappointing retail sales in April fueled the latest leg down in the Atlanta Fed outlook. The Commerce Department reported Wednesday that sales declined 0.2% for the month against expectations of a 0.2% gain. Along with the retail letdown, industrial production fell 0.5% against Wall Street estimates of a 0.1% gain. The drop in the GDP forecast coincided with market expectations that the Fed will be lowering interest rates in the months ahead.”

 

Gold steadies as trade optimism dims on Huawei sanctions

Source: Reuters

“Gold steadied on Thursday, consolidating in a tight range below the key $1,300 pivot, as Washington slapped sanctions on Chinese telecoms giant Huawei, souring optimism for a thaw in U.S-China trade tensions. ‘There are still a lot of underlying tensions (surrounding U.S.-China trade relations) so that might be supportive for gold,’ said John Sharma, economist at National Australia Bank….Asian equities slipped after the United States hit Huawei with severe sanctions, threatening to further strain trade ties, and erasing limited gains triggered by news that U.S. President Donald Trump planned to delay implementing tariffs on auto imports….Escalations in trade tensions or economic uncertainty would make a case for gold, which is considered a safe-haven asset.”

 

We’re Stumbling Into a Surveillance State

Source: New York Times

“Cameras are the defining technological advance of our age. They are the keys to our smartphones, the eyes of tomorrow’s autonomous drones and the FOMO engines that drive Facebook, Instagram, TikTok, Snapchat and Pornhub…And cameras aren’t done. They keep getting cheaper and – in ways both amazing and alarming – they are getting smarter. Advances in computer vision are giving machines the ability to distinguish and track faces, to make guesses about people’s behaviors and intentions, and to comprehend and navigate threats in the physical environment. In China, smart cameras sit at the foundation of an all-encompassing surveillance totalitarianism unprecedented in human history. That’s why I worry that we’re stumbling dumbly into a surveillance state. And it’s why I think the only reasonable thing to do about smart cameras now is to put a stop to them. This week, San Francisco’s board of supervisors voted to ban the use of facial-recognition technology by the city’s police and other agencies. Oakland and Berkeley are also considering bans, as is the city of Somerville, Mass. I’m hoping for a cascade. States, cities and the federal government should impose an immediate moratorium on facial recognition, especially its use by law-enforcement agencies….Georgetown Law’s Center on Privacy & Technology…uncovered municipal contracts indicating that law enforcement agencies in Chicago, Detroit and several other cities are moving quickly, and with little public notice, to install Chinese-style ‘real time’ facial recognition systems…..It has chilling implications for speech and assembly protected by the First Amendment; it means that the police can watch who participates in protests against the police and keep tabs on them afterward….None of this is to say that facial recognition should be banned forever. The technology may have some legitimate uses. But it also poses profound legal and ethical quandaries.”

 

Prepare for Trench Warfare

Source: Daily Reckoning

“What if China isn’t half so desperate for a deal as the president believes? Are we in for an extended siege of economic trench warfare? With Monday’s 617-point battering — piling atop last week’s losses — three months of stock market gains have vanished into the ether…But the Earth held [the following day]…Markets were encouraged by President Trump’s comments that he will strike a deal with China “when the time is right.”…But is China sweating dreadfully for a trade deal as Trump assumes? China does — after all — ship some $500 billion of products to these shores each year. It cannot afford to sit on them like a broody hen. But you might have another guess, says the director of monetary policy at the People’s Bank of China: As for the change in the domestic and external economic environment, China has sufficient leeway and a deep monetary policy toolkit, and so has full ability to deal with [economic] uncertainties…If you believe the Federal Reserve is a gargantuan spigot of credit, the People’s Bank of China brings it to shame. ING estimates China has pledged 8 trillion yuan in economic support — twice as much “stimulus” as it offered during the global financial crisis…Meantime, Chinese domestic consumption has been on the increase…Is most of this stimulus woefully wasteful? Does it finance vastly unproductive economic activity? Yes and yes. Is the way to wealth through consumption — rather than production? No, it is not. But if Chinese authorities believe they can offset lost exports by bellowing credit and vomiting money… they may choose to dig in for the long haul.”

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