The bright red warning signs of a double-dip recession are flashing everywhere. And I do mean EVERYWHERE.
In just the past few days, we learned that …
• New home sales imploded 33 percent to a seasonally adjusted annual rate of 300,000 units. That’s the lowest ever recorded!
• Durable goods orders tanked 1.1 percent in May, while housing construction skidded 10 percent.
• Consumer confidence plunged to 52.9 in June, according to the Conference Board. That was a huge drop from 62.7 in May and well below the 62.5 that economists were expecting
• The Dallas Fed’s gauge of manufacturing activity dropped to -4 percent from 2.9 percent. The Chicago Fed’s activity index fell to 0.21 from 0.25. The Richmond Fed’s index fell to 23 from 26, while the Philadelphia Fed’s index plunged to 8 from 21.4, the worst reading in 10 months.
The message here? This isn’t some isolated, regional downturn. It’s one that’s spreading to every corner of the United States.
• The Economic Cycle Research Institute’s Weekly Leading Index is falling off a cliff. Its growth rate just fell to NEGATIVE 6.9 percent, the worst reading in a year and far below the high of POSITIVE 28.5 percent in October. The last time this index tanked this much, recession struck within a few months.
Talk about a laundry list of worrisome reports.
If it were just the “official” economic data that was getting worse, you might be inclined to discount it. But it’s not …
Market-Based Signals of Recession Risk
And Systemic Risk are Going Berserk, Too!
Take European sovereign interest rates. They continue to climb, despite the biggest European Central Bank bailout ever and an explicit pledge by policymakers to buy government debt to prop up prices.
Spanish 2-year note yields have more than doubled to 3.28 percent from 1.51 percent, for instance. Greek 10-year yields just breached the 10 percent level again. Investors have ALREADY lost more than 25 percent on the latest batch of 10s that Greece just sold in early March!
|Investors are fleeing the euro for safe havens, like the Swiss franc.|
At the same time, investors are dumping the euro hand over fist in favor of the Swiss franc — a typical safe haven currency in times of crisis. And they’re dumping the euro in favor of the Japanese yen, sending that exchange rate to its highest level in eight years.
That’s a market-based signal that global investors are unwinding so-called yen “carry trades” as they frantically slash risk.
Gold prices just exploded to $1,265 an ounce, the highest in history. Volatility gauges like the VIX are climbing fast. And the Standard & Poor’s 500 Index just closed below key technical support in the 1,040 area.
If You’re Not Taking Action,
I Believe You’re Making a Big Mistake!
These signals are clear and unambiguous.
What they are telling us is that despite the biggest economic stimulus package in U.S. history … despite near-zero percent interest rates from the Federal Reserve … despite the biggest bank bailouts on record and the government takeover of every company from Fannie Mae and Freddie Mac to General Motors and AIG … the economy is sinking yet again.
|Even the Federal Reserve, with all its resources, can’t keep the double-dip away.|
What was previously merely the RISK of a double-dip recession is fast on its way to becoming REALITY. Worse, it’s happening at the same time as the sovereign debt crisis is gathering steam.
That’s no recipe for a new bull market! Instead, it’s the kind of toxic brew that could send stocks back to the 2009 lows — all the way down to 6,470 on the Dow and 667 on the S&P 500.
Times like these present investors like you with a choice:
You can sit idly by, take the beating the markets are doling out, and lose a boatload of money. That doesn’t sound like a very sound strategy to me.
Or … you can go on the offense. You can turn lemons into lemonade. You can take the bear by his fur, and take aggressive action to protect yourself — and even profit!
How? By taking gains on winning trades and biting the bullet with losing ones. By raising cash across the board. And by purchasing investments that go UP in value when stocks go DOWN, such as inverse ETFs.
These are precisely the steps I’ve been recommending in my Safe Money Report. I’d love to have you on board so you can benefit from my specific instructions; if you’re interested, you can click here and join for only 26 cents a day.
But even if you’re not ready to take that step, I urge you to get more of your money to safety.
The bought-and-paid-for economic recovery is coming to a close. It’s time instead to deal with the very sobering new reality: That a double-dip is here, with all the attendant consequences for stocks, currencies, commodities, and more.
Until next time,
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Selene Ceballo, Amber Dakar, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
From time to time, Money and Markets may have information from select third-party advertisers known as “external sponsorships.” We cannot guarantee the accuracy of these ads. In addition, these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our terms and conditions.
© 2010 by Weiss Research, Inc. All rights reserved.
15430 Endeavour Drive, Jupiter, FL 33478