Free Republic

If energy powers the world, then whoever owns that energy must have power over the world. That’s certainly been the case for the last century or two. Ownership of our primary energy source, crude oil, is what made billionaires of John D. Rockefeller, H.L. Hunt, and assorted Middle Eastern kings, emirs, and sheikhs. Oil in the ground is wealth only on paper – you may own that oil, but it earns you nothing until you recover and sell it. Yet paper wealth is still wealth. It goes on your balance sheet as an asset that you can sell. You can...

A pernicious cycle of collapsing commodities, corporate defaults, and currency wars loom over the global economy. Can anything stop it from unravelling? A global recession is on the way. This truism of economics holds at any point in which the world is not in the grips of a contraction. The real question is always when and how deep the upcoming downturn will be. "The crash will come, but it would be nice if it came two years from now", Thomas Thygesen, head of economics at SEB told over 200 commodity investors and analysts in London last month. His audience was...

NEW YORK (Reuters/IFR) - U.S. bank stocks and bonds took a pounding on Monday as recession fears compounded concern about their exposure to the energy sector and expectations that global interest rates are unlikely to rise quickly.... Meanwhile, bonds issued by U.S. banks extended their decline, with the yield premium demanded by investors to hold these securities, rather than safer U.S. Treasury debt, climbing to the highest in three-and-a-half years, according to Bank of America Merrill Lynch Fixed Income Index data. "Investors' attitudes seem to be worsening relative to the likelihood of a global recession. I think that's what financials...

How would you react to the following news stories? Former Shoppers Fined $5,000 for No Longer Frequenting Nearby Mall Residents of Anytown, USA were surprised to receive invoices in the mail from their local county government Friday. The county identified people who used to shop in the local mall but, due to reports of muggings, rapes, and vehicle theft at the mall, switched to shopping at other, safer malls, or just doing it online. The thousand dollar a year fine was based on the estimated amount of revenue the mall says it lost due to their departure. Professional economists, when...

Signs of recession are intensifying. The global economy is near or in recession, and we’re seeing that pressure begin to appear here in the U.S. It’s important to be on “recession watch” because the stock market suffers significant declines during recessions. However, you can position your portfolio to mitigate downside risk when recession signals are flashing. A few of quick facts: 1.Recessions tend to occur one to two times each decade. 2.The last U.S. recession was in 2008, seven years ago. 3.Economies naturally cycle between growth and recession. 4.The stock market declines more than 40 percent on average during recessions....

Economic growth decelerated sharply in the second half of 2015 due to the usual suspects: global headwinds, destockpiling and a slumping energy sector. Gross domestic product expanded at a glacial 0.7% annual rate in the fourth quarter, down from gains of 2% in Q3 and 3.9% in Q2, the Commerce Department said Friday. But a recession is highly unlikely, according to most economists, saying consumers will keep the economy plodding along at the so-so pace the country has seen since the Great Recession ended in 2009. Despite some big swings over the past several quarter, GDP grew 2.4% for all...

Bob BryanJanuary 29, 2016 Based on today's GDP release, it appears that the US economy is slowing but not near any sort of massive collapse. Peter Schiff begs to differ. The CEO and chief global strategist for Euro Pacific Capital, and noted perma-bear, said that serious economic destruction is just a few months away. "I think the Fed is going to have negative interest rates before the election because we're going to be in a serious recession," Schiff told Business Insider on Friday. In fact, Schiff said that we may already be in recession and this one is going to...

The spread between the yield on corporate bonds and that on treasuries passed the 2% mark yesterday for the first time in over three years yesterday. In the chart above I’ve annotated with red vertical lines the prior two occasions when spreads widened to this degree for the first time in at least two years. Notice that each of the two prior occurrences led to painful bear markets and recessions. Now this indicator alone isn’t sufficient evidence that another painful bear market and concomitant recession are on their way. However, when you pair it with the all the other data...

Big stock market declines are often lead indicators for recession, and global markets are heading into their last week of trading for the month with the risk of seeing one of their biggest ever January declines.Despite a big bounce in markets Friday, which saw the S&P 500 rise two per cent, fear is in the air. Bank of America Merrill Lynch economists said in an update Friday that they now see a 20 per cent chance that the U.S. economy will slip into a recession this year, up from the 15 per cent chance they predicted in December.The rising chance...

successfully navigated, global growth could be derailed." Of the warning signs, the decline in U.S. industrial production has one of the best track records. The output from mines, factories and utilities has always begun to decline before recession strikes. "Manufacturing tends to lead the economic cycle and it tends to be an indicator of the swings," said Thomas Costerg, senior economist at Standard Chartered. "Manufacturing is struggling." A strong U.S. dollar and weak economies internationally are taking a toll. But unlike past declines in industrial production, today's decline has been driven primarily by the collapse in the oil industry. The...

The world's financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, according to a leading global banker. William White, chairman of the OECD's review committee and former chief economist of the Bank for International Settlements, suggests the stresses in the financial system are "worse than it was in 2007." Speaking with the UK Telegraph's Ambrose Evans-Pritchard before the start of the World Economic Forum in Davos, Switzerland, White warned that macroeconomic ammunition to fight further economic downturns was essentially "all used up."

There has been increasing focus on the US economy's probability of heading into a recession. According to John Hussman of Hussman Funds, it's not just probable; it's nearly guaranteed. "Since October, the economic evidence has shifted from supporting a growing risk of recession, to a guarded expectation of recession, to the present conclusion that a US recession is not only a risk but an imminent likelihood, awaiting confirmation that typically only emerges after a recession is actually in progress," Hussman said in a post Monday. His key piece of evidence stems from Friday's US report on industrial production. The data...

There will be a recession in the United States and much of the rest of the world in 2016. After reading the above sentence, you should be thinking, what possibly could the writer know that the International Monetary Fund, the Federal Reserve and the Obama administration do not know given all their resources and all of their professional economic forecasters? If one looks at the forecast record of the IMF and the Fed over the past several decades, one will not find any case in which a year of positive growth was followed by a year of contraction in which...

Despite recent gloomy private sector and regional Fed surveys, the Federal Reserve's new December industrial production figures revealed that real manufacturing output dropped a bare 0.05 percent on month, and revisions barely worsened the picture. Yet the weak year-end number left such output down on net for five months - one short of a technical recession. And the automotive sector, which has led industry's post-Great Recession comeback, sank into technical recession. Full-year 2015 manufacturing after-inflation growth of 0.74 percent was the lowest such figure since the last recession began, and less than 20 percent as strong as 2014's 4.16 percent...

CSX Corp. executives said on Wednesday that current pressures on rail cargo volumes are at levels not seen outside a recession. “You have multiple aspects working against you: the low [natural] gas prices, the low commodity prices, the strength of the dollar,” Chief Executive Michael Ward said during an earnings call with analysts. “Except for markets like automotive and housing related, you’re seeing pressure on most of the markets.”

Reflections on the last State of the Union Address from Barack Hussein Obama… The modern Democratic Party has made no secret of the fact that they detest the free market. No, not dislike, not disrespect, not even misunderstand... they detest the free market. From Secretary Hillary Clinton haughtily declaring to Senator Bernie Sanders famously declaring that 23 brands of deodorant are … the leading lights of the modern Democratic Party are dim bulbs indeed, when it comes to economics. They proudly refuse to understand the subject, and they set themselves up as superior to its realities. It has long been...

It's hard not to wonder: Is the stock market telling us something? True, the market's record in forecasting recessions is horrendous. Stocks often move according to whim or fad. But just because the market is wrong much of the time doesn't mean it's wrong all the time. Could last week's turbulent trading be one of the times it's right? By Friday's close, stocks had dropped 6% for the week, a paper loss of $1.5 trillion, says Wilshire Associates. Are we staring at the next recession? The selloff originated in China with a weaker-than-expected report on manufacturing activity. This triggered a...

Last week, I received news from a contact who is friends with one of the biggest billionaire shipping families in the world. He told me they had no ships at sea right now, because operating them meant running at a loss. This weekend, reports are circulating saying much the same thing: The North Atlantic has little or no cargo ships traveling in its waters. Instead, they are anchored. Unmoving. Empty.

It's hard not to wonder: Is the stock market telling us something? True, the market's record in forecasting recessions is horrendous. Stocks often move according to whim or fad. But just because the market is wrong much of the time doesn't mean it's wrong all the time. Could last week's turbulent trading be one of the times it's right?... Behind this chain reaction is a huge transfer of economic power from advanced countries (mainly North America, Europe and Japan) to "emerging-market"... The trouble is that their growth is slowing... One is high debt levels... The other problem is the legacy...

US factory orders have never dropped this far for so long without the US economy overall being in recession. November's 4.2% YoY drop is the 13th consecutive monthly drop. Revisions to durable goods data shows a 1% drop in new orders ex-defense in November after rising 1.4% in October.. and as a reminder, this data was buoyed by a 46.9% surge in defense aircraft and parts orders to all-time highs. Factory Orders are flashing deep red recessionary indicators...