KINGSTON, NY, 31 OCTOBER 2018—Back in February, when the U.S. Federal Reserve signaled it would aggressively raise interest rates, foreign currencies started to fall against the dollar and equity markets across the globe began their dive into bear and correction territory.
And, as we had long noted, with some $250 trillion in global debt, much of it dollar based, as the dollar grows stronger and global currencies get weaker, the cost burden of servicing that debt grows heavier. Subsequently, as forecast, economies worldwide are slowing, stagnating and/or falling into recession.
However, with U.S. equities hitting new highs until recently, America's Gross Domestic Product strongly growing and unemployment levels falling to 50-year lows, Wall Street proclaimed that the economy would continue to expand despite higher interest rates.
Wall Street was wrong. We were right. Clearly, as evidenced by slumping real estate sales. With the benchmark 30-year fixed mortgage rate now at 5.04 percent, it hit the unaffordable break point for most Americans whose wages have not kept up with inflation.
Part 3 of my talk with On Target with Larry Sparano: What should you have in place before the big financial crash that Trends Forecaster Gerald Celente is predicting? And what happens in the aftermath? How can a better future be engineered? Hear Gerald’s blueprint for peace and prosperity in the years ahead.
Rising U.S. interest rates, higher oil prices, lower earnings and geo-political unrest are merging to form an economic tsunami.
When the Dow dropped 830 points on 10 October, and fell 1,300 points for the week, $1.7 trillion was wiped off the S&P 500 and nearly $3 trillion off global stocks. Since that turning point moment worldwide equities have been sinking deeper into bear and/or correction territory.
While technically, President Donald Trump has no day-to-day management authority over the Federal Reserve, he can with “cause” fire Fed Chairman Jerome Powell, who he appointed, and the U.S. Senate would have sign off on any replacements he recommends.
The Federal Reserve and its board of five governors, also appointed by the president, serve as an independent body to the executive branch of government.
With 30-year residential fixed mortgage rates now at 5 percent in the U.S., higher interest rates are hitting the real estate market.
On the heels of the September 0.25 percent rate hike, mortgage applications fell 32 percent lower than last year, when rates were a full percent lower. And new home sales plunged 5.5 percent in September.
Applications to refinance existing mortgages, which are a strong indicator of how the market responds to rate increases, sunk 9 percent, a more than 33 percent drop over last year.
Over the past decade, while wages have shown modest spikes, mostly benefitting higher-pay categories, the increases have barely kept pace with inflation, essentially wiping out any net gains in workers’ take-home pay.
In fact, when factoring inflation, real average wages have about the same purchasing power today as they did 40 years ago,