The division within the Dems has been evident since the first debates last summer, as a slew of candidates duked it out over how far the party should migrate to the left, to win back the White House. During the 2008-2009 global economic and financial market crisis, we painfully learned about a Minsky moment. Goods benefiting from weak currencies, representing each and every one of America’s trading partners, could be recipients of duties or countervailing duties, equal to the difference between the weaker currency and the US dollar - in other words, eliminating that country’s currency advantage. We have an unpredictable president in the White House that has already done much damage to the world economy, hurt the relationship between the US and China, and now appears heading towards a global currency/ trade war wherein everybody dukes it out over who can devalue and out-export the other. A “Minsky Moment” crisis follows a prolonged period of bullish speculation which is also associated with high amounts of debt taken on by both retail and institutional investors. – Chemicals and the Economy Will stock markets see a Minsky Moment in 2020? A Minsky Moment is coming for gold 2020.02.20 “Minsky Moment” refers to the idea that periods of bullish speculation will eventually lead to a crisis, wherein a sudden decline in optimism causes a spectacular market crash. The one thing you can say for sure about Minsky Moments is that they happen at the most inopportune times. So, what might be the hair trigger that causes the US stock market bubble to pop and gold to soar? These trading nations, and even their individual businesses that import goods into the US, are now vulnerable to being tariffed on targeted imports - an amount that will make imports sell for more than their US counterpart. Since then buybacks have been a popular tool for management to stuff cash back into the company, indirectly, by reducing the share float. Is the current US stock market, and global economy, approaching a Minsky Moment that pops it? Earlier this month, China’s copper buyers asked Chilean miners to delay shipments due to port shutdowns. If the coronavirus continues to be a problem, many are expecting the Fed will step into lower interest rates. Without the finance sector getting on board to help tackle the root causes of the climate and nature crisis, things will only get worse. As investors, the best way to protect ourselves against a global (or regional, depending on where you live) calamity that even a large cache of US dollars could fail to provide, is to own gold. BY Trey Reik | Tuesday, August 20, 2019 pdf version. About the only thing we can know is that The Elite are going to continue their primary role which is stealing everything not nailed down. Asset prices could be on the cusp of a sharp collapse known as a “Minsky moment,” and may retest lows last seen in March, according to Ron William, market strategist and founder of RW Advisory. They’re finding their answer in what they wear, in what they eat and in how they travel, but I think the big new revelation is they’re going to find it in where they invest their money.”. The world is about to face a 'Minsky moment' because of climate change, Mark Carney has warned. While business investment excluding housing is predicted by America’s biggest banks to double this year to 2.4%, that will be offset by an expected 0.5% slowdown in consumer spending. Yet you wouldn’t know there’s anything wrong, judging from the US economy. Although coronavirus is mostly confined to Hubei province and Wuhan, the city of 11 million people known to be the epicenter, medical experts are not ruling out the virus fanning out beyond the 24 countries currently affected. After the SEC changed the rules to allow buybacks, hundreds of companies starting using them. Each year another trillion dollars gets added to the national debt. Minsky, who was widely regarded as a fringe figure at the time, didn’t live to see his moment. Central banks, worried about economies cooling and low inflation, were buying gold by the truckload and pursuing monetary stimulus, in the form of interest rate cuts and/or massive bond-buying programs like we went through with quantitative easing in the US, Europe and Japan. These are solely personal thoughts and opinions about finance and/or investments – no information posted on this site is to be considered investment advice or a recommendation to do anything involving finance or money aside from performing your own due diligence and consulting with your personal registered broker/financial advisor. AOTH/Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. By Albert Pang-August 5, 2016. One of the most alarming sign of the world economy’s malaise is the Baltic Dry Index chart. In 1997 buybacks surpassed dividends as the main way companies redistribute funds to investors. What will it take to push it over the edge? According to the World Gold Council “Global gold-backed ETFs and similar products added 61 tonnes(t), or net inflows of US$3.1bn, in January across nearly all regions, boosting holdings to new, all-time highs of 2,947t.”. That worked pretty well after the financial crisis, when the world economy was more or less back on track, with no tit-for-tat tariffs impeding international trade, and the US dollar still carrying enough heft and respect to enjoy exorbitant privilege. This is the final stage before a blow-up. The world is about to face a 'Minsky moment' because of climate change, Mark Carney has warned. To these trade resolution obstacles, we can add the fact that the Trump administration has just granted its Commerce Department sweeping powers to slap tariffs on countries it decides are manipulating their currencies to the detriment of the United States and its exporting companies. – it did. The Minsky Moment touted by Mark Carney, seen here on Jan. 21, 2020, took a long time to come. Similarly, the four revisionists want to undercut American hard and soft power abroad by destabilizing the US from within through asymmetric warfare. Linkedin. In Japan, GDP has fallen a precipitous 6.3%, nearly twice as much as the predicted 3.7% - catalyzed by poor weather and a hike in the sales tax. Before long the recession in the US would spread like a cancer, to the rest of the world. That’s what we need to avoid, which is why we need to start moving today.”. After spending three years in a $250 trading range (between $1,121 and $1,375), spot gold has erupted since late May and is up 18.01% YTD as of last Friday's (8/15) close at $1,523.34. As Investopedia defines it, “A Minsky Moment crisis follows a prolonged period of bullish speculation, which is also associated with high amounts of debt taken on by both retail and institutional investors.”. In our recent article we said we believe the global economy has reached an inflection point. For example, spending on new equipment, offices, software etc. Some mining companies have had trouble delivering supplies due to transportation blockages and delays. FABRICE COFFRINI/AFP/Getty Images Notably, the coronavirus was not a factor in the dismal figure, meaning the outbreak could take an even worse toll on the world’s third-largest economy. Beijing is reportedly being urged to invoke “force majeure” - a clause allowing the two parties to consult one another if a natural disaster or force beyond its control delays either party from meeting its obligations under the agreement. The possibility of moving forward on a Phase 2 agreement also seems unlikely, in light of all the supply chain interruptions caused by the pandemic. Facebook. It’s not a stretch to envision a scenario whereby the world’s reserve currency, the US dollar, collapses under the weight of unmanageable debt, triggered say, by a mass offloading of US Treasuries by foreign countries, that currently own about $6 trillion of US debt. All eyes are on the coronavirus and its economic repercussions, particularly on the Chinese economy and the economies of China’s closest trading partners. Whenever governments are granted power to purchase their own debt, they never fail to do so, eventually destroying the value of the currency.”Ron Paul, The Case for Gold. www.aheadoftheherd.com, US companies are currently sitting on nearly $10 trillion in debt, China’s copper buyers asked Chilean miners to delay shipments, the IMF lowered its 2020 global growth forecast, the cost of shipping is one-sixth what it was 5 months ago, 21 trading partners should face scrutiny over their currencies, how this extreme polarization is killing America, evident since the first debates last summer, growing debt burden is not just a US phenomenon, Euphoria – extended credit to evermore dubious buyers, Profit taking – insider/ trader aka ‘smart money’ cashes out. White swans include the US rivalries with China, Russia, Iran and North Korea: These countries all have an interest in challenging the US-led global order, and 2020 could be a critical year for them, owing to the US presidential election and the potential change in US global policies that could follow. Worldwide Cloud Applications Market Forecast 2016-2020, A Minsky Moment Awaits. Information in AOTH/Richard Mills articles is not an offer to sell or a solicitation of an offer to buy any security. Last year Germany slipped into a manufacturing recession and the largest economy of the Eurozone area does not appear to be improving. Under President Donald Trump, the US is trying to contain or even trigger regime change in these four countries through economic sanctions and other means. January 23, 2020, 4:40 PM EST Updated on January 23, 2020, 4:42 PM EST Authers’ Notes: The Magic of Minsky Moments By ... That led to the Minsky moment to end all Minsky moments… There are times when we should expect the system to reach a tipping point – the “Minsky Moment” – when a boom and a bubble turn into a crash and a bust. “all the effort and planning imaginable cannot make paper money work. We predict that the Fed will lower interest rates another 50 basis degrees in an attempt to lessen the consequences of the the catastrophic selloff. In its January update, the IMF lowered its 2020 global growth forecast by one-tenth of a percentage point to 3.3% - following last year’s 2.9%, the lowest in a decade. “The impact of the virus on the global economy is going to be significantly more than what people are expecting, and when the global economy goes south, the Fed steps in,” BNN Bloomberg quoted Tony Farren, managing director at broker-dealer Mischler Financial in Stamford, Connecticut. If the US election descends into partisan rancor, chaos, disputed vote tallies, and accusations of “rigged” elections, so much the better for America’s rivals. Paul Krugman once uttered the phrase “We are all Minskyites now” on the basis of the Great Recession of 2008–9 appearing to have been caused by occurrences in the financial sector. But that all changed in 1982 when the SEC legalized them. Other potential catalysts, aka Minsky moment, for gold are geopolitical. Screenwriter Richard Curtis, who has backed green pension fund Make My Money Matter, argued that Generation Z are unlikely to invest their money in companies which destroy the habitat. China’s promise to purchase an additional $200 billion worth of US goods including agricultural products is now in considerable doubt. William Rhodes. Email. There are still eight candidates vying for their party’s nomination as they head into the Texas primary. The former Bank of England governor has made an intervention on climate change, Secondary schools to extend Christmas holidays by a week to enable rollout of mass testing, 'We would have finished the job': Putin denies Russia involvement in Navalny poisoning, Have you had a treatment or operation cancelled due to Covid? Things aren’t much better with the Democratic Party, though. Additionally, I’ve included articles on the origins and development of ratings agencies. Some industries, and us at AOTH, believe this aggressively protectionist stance will lead to currency wars and turn the $6 trillion per day global currency market into a new battleground for Trump’s trade wars. fiat currencies - fails. In a new film by the World Wildlife Foundation (WWF), the former Bank of England governor has warned that the finance sector is not doing enough to combat the mounting problem and that we need to take swift action. Richard (Rick) Mills LinkedIn. A dysfunctional polarity of views that has become the norm in US politics. But if this diversification strategy accelerates, as is likely, it could trigger a shock in the US Treasuries market, possibly leading to a sharp economic slowdown in the US. Alternatively, they could be canceled by legislation should the Democrats gain power in November’s elections. “Piling on debt like this is especially unwise and unnecessary in a strong economy,” he added. That, combined with persistent trade barriers that are keeping the Chinese economy weak, could result in China dumping US Treasuries. Roubini thinks conflict between the US and Russia, China, Iran or North Korea could occur through some form of cyberwarfare. Although US stocks dropped Tuesday and Apple’s shares took a 2% hit owing to coronavirus-related production problems, the Dow, S&P 500 and Nasdaq are all up significantly, year to date. You agree that by reading AOTH/Richard Mills articles, you are acting at your OWN RISK. – it did. The late American economist, whose theories experienced a revival following the GFC, was considered post-Keynesian and was critical of much of the deregulation of financial markets in the eighties. Tech Stocks Once Again Driving Gains. There is no way paper can be "improved" as money. A “Minsky Moment” crisis follows a prolonged period of bullish speculation which is also associated with high amounts of debt taken on by both retail and institutional investors. High US stock market performance is masking another economic indicator, that has fallen to its lowest level since 2016 - the purchasing managers index. Riding on one of the biggest technology shifts in decades, the Cloud applications market is expected to post a 10% growth rate annually over … From Lance Roberts at realinvestmentadvice.com:. Notify of . This essay will primarily attack Minsky’s Financial Instability Hypothesis and the so-called Minsky moment. Two years ago, Zhou Xiaochuan, then China’s central bank governor, told a press conference at the 19th Communist party Congress in Beijing that too many procyclical factors in the economy and excessive optimism risked generating “accumulating contradictions that … Turns out much of this is “fake news”. Firms noted a slower improvement in operating conditions and slack domestic and foreign demand from clients. This article has presented some of the “Minsky Moment” scenarios that could set the gold price on a tear the likes of which we’ve never seen. Private equity is undergoing what the great theorist Hyman Minsky pointed out is the Ponzi stage of the credit cycle in capitalist financial systems. Possibly minsky moment 2020 China as retribution for the extraordinary rise in the s P. P 500 since 2009 % YTD piling into hedges if the coronavirus continues to be reliable but which has been... 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