USA - Economy: 10 alarming things about the economy that politicians wont tell you

10 alarming things about the US economy that politicians won’t tell you -

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US ECONOMY: COULD RECORD US DEFICIT TRIGGER THE NEXT RECESSION: ? "As U.S. trade gap widens to unimaginable hights."

The U.S. trade deficit rose to a seven-month high in September as imports surged to a record high amid strong domestic demand, offsetting a rebound in exports.

The Commerce Department said on Friday the trade gap increased 1.3 percent to $54.0 billion, widening for a fourth straight month. Data for August was revised to show the trade deficit rising to $53.3 billion instead of the previously reported $53.2 billion.

Could the US Economy collapse?

But here's the bigger question that retail investors and Wall Street are currently asking: Is the current stock market correction over? Given the many headwinds facing stocks and the U.S. and/or global economy, the answer may not be what investors want to hear.

Here are 25 reasons and/or scenarios that could cause the stock market to head substantially lower than where it's currently valued.

1. The ongoing trade war with China escalates, raising material costs, curbing consumer spending, and hurting corporate profits.
2. Corporate share buybacks fail to boost per-share profits as much as expected.
3. Democrats win one or both houses of Congress, hurting the chance of Republicans to pass further fiscal stimulus legislation.
4. The federal budget deficit continues to soar, placing added emphasis on our growing national debt, currently at more than $21 trillion.
5. The U.S. dollar keeps strengthening, placing pressure on exports and worsening the U.S. trade deficit with foreign countries.
6. FANG stocks – that's Facebook, Amazon.com, Netflix, and Google (now Alphabet) -- continue to draw the ire of short-sellers.
7. The Federal Reserve gets overly aggressive with interest rate hikes, sapping lending demand.
8. The yield curve flattens, reducing the desire of banks to lend money.
9. Interest rates rise, providing incentive for investors to ditch volatile equities for the safety of bonds and bank CDs.
10. Britain falls into a "hard Brexit." With few or no trade deals in place, the U.K. falls into recession, taking the U.S. and other developed countries with it.
11. China's economy experiences its slowest growth in decades, placing pressure on its ability to import from the U.S. and other key players.
12. The U.S. housing market shows signs of weakening, with important markets like California seeing a steep drop-off in new home sales.
13. Credit-card delinquencies begin to trickle higher, demonstrating the inability of consumers to meet their payment obligations.
14. The subprime auto loan market bubble bursts.
15. The U.S. goes to war, regardless of the reason or the country in question.
16. An errant tweet from President Trump stirs Wall Street and investors.
17. A flash crash caused by computer algorithms results in substantially reduced liquidity and perpetuates a rapid move lower in the stock market.
18. Investor emotions (especially those of day traders) get out of hand and send traders running for the exit.
19. The unemployment rate, which is at a 49-year low, begins to rise, signaling peak employment and the possibility of a weakening economy.
20. Disruption in important oil-producing countries causes crude prices to skyrocket or plunge. Either way, it could create sticker shock or job losses and adversely impact the U.S. economy.
21. U.S. GDP data shows slowing growth, which, in turn, cools investor expectations for stocks, sending them lower.
22. Inflation comes in far lower than expected, signaling that businesses have little pricing power. The prospect of deflation could wreak havoc on corporate earnings, causing the market to fall.
23. The U.S. debt ceiling is hit (yet again), but the political divide in Congress becomes too great for lawmakers to overcome, allowing the shutdown to perpetuate for months.
24. European debt crisis 2.0 hits, with countries like Italy unable to dig their way out of years of loose borrowing.
25. A widely followed pundit, such as Warren Buffett, sounds the cry of the stock market being overvalued.

In other words, there is no shortage of reasons the stock market could tumble from its recent all-time highs.

Bottom-line, however -it does not look good for the US Economy as the deficit is coming close to a trillion US dollars.Impossible to pay it back, unless by slashing government spending, and increasing taxes.

Unlike the trillion dollar budget deficits that occurred during the Obama administration that were temporary and largely the result of the Great Recession, the Trump deficits that will soon reach and exceed $1 trillion are permanent and will only get worse in the years ahead.

The Trump deficits are the result of changes in federal spending and revenue that will continue to be in place until some president and Congress decide to reverse them, that is, to increase taxes and make cuts to popular programs.

EU-Digest

US Economy: might look good based on Wall Street figures, but certainly not good for "Joe Bloke" and the "Have Not"s

US economy might look good, but reports show collectively, Americans have more than $1 trillion in credit-card debt, according to the Federal Reserve.

They have another $1.5 trillion in student loans, up from $1.1 trillion in 2013. Motor vehicle loans are now topping $1.1 trillion, up from $878.5 billion in 2013. And they have another nearly $15 trillion in mortgage debt outstanding.

EU-Digest

Tariff Wars: EU goes on war footing in response to Trumps declaration "that trade wars are good and easy to win" - by RM

"The reincarnation of US Voodoo Economics"

First a look at the "big picture"  of trade between the EU and the US, which Mr. Trump is now ready to undermine with his recent nonsensical "tariffs" statement.

• Total US investment in the EU is three times higher than in all of Asia.
• EU investment in the US is around eight times the amount of EU investment in India and China together.
• EU and US investments are the real driver of the transatlantic relationship, contributing to growth and jobs on both sides of the Atlantic. It is estimated that a third of the trade across the Atlantic actually consists of intra-company transfers.
• The transatlantic relationship also defines the shape of the global economy as a whole. Either the EU or the US is the largest trade and investment partner for almost all other countries in the global economy.
• The EU and the US economies account together for about half the entire world GDP and for nearly a third of world trade flows.

 The EU response to the Trump Tarrifs announcement was swift and surgical .

The European Union’s top trade official mentioned cranberries, orange juice and peanut butter as possible targets Wednesday as the E.U. prepares to strike back if President Trump follows through with tariffs on imports of steel and aluminum.

European officials are also preparing to target $3.5 billion in American goods through a 25 percent "tit-for-tat" levy across consumer, agricultural and steel imports, Bloomberg reported, citing a list compiled by the European Commission.
 
This came after EC President Jean-Claude Junker on Friday mentioned targeted products like Harley-Davidson (HOG) motorcycles, Levi's jeans and bourbon if the U.S. tariffs are implemented. Canada President Justin Trudeau called Mr. Trump Monday evening to register his "serious concer".

"Retaliation against US  by trading partners is likely," Goldman Sachs (GS) economists wrote in a note. "In the past, retaliatory tariffs have focused on the product in dispute (in this case steel and/or aluminum), consumer goods with a particular focus on luxury items and agriculture. We expect a similar pattern this time."

While retaliation is likely to come in  tariff form, "more subtle changes to tax and regulatory policies targeting U.S. companies could also follow," the economists wrote.

Ford (F) and GM (GM) could feel a pinch of about $1 billion each, or 12 percent and 7 percent of each company's respective operating income for 2017, if the 25 percent steel tariff is implemented and prices rise at a similar rate, Goldman Sachs analysts estimated in a recentseparate report.

U.S.-based machinery companies would get squeezed as costs increase. Well-known brands with good distribution, like Deere (DE) and Caterpillar (CAT) might do better than Terex (TEX) and Oshkosh (OSK), Goldman said. Oshkosh is based in House Speaker Paul Ryan's home state of Wisconsin. 

 E.U. Trade Commissioner Cecilia Malmstrom also took aim at Trump’s assertion that U.S. national security justified plans to impose tariffs of 25 percent on steel and 10 percent on aluminum.

The U.S. measures “would mainly impact traditional allies of the United States,” she said.

E.U. officials had previously flagged Kentucky bourbon, Harley-Davidson motorcycles and Levi’s jeans among the products they have in their sights for retaliatory tariffs. A draft of European countermeasures published by Bloomberg News targets $3.5 billion in annual imports from the United States, including $1.1 billion in U.S. steel products, along with clothing, makeup, motorcycles, boats, corn, rice, beans and other agricultural products.

E.U. countries exported $6.2 billion worth of steel to the United States in 2016, according to E.U. figures. The E.U. is the top trading partner of the United States in goods, and it is the top U.S. export market.The European Union’s top trade official mentioned cranberries, orange juice and peanut butter as possible targets Wednesday as the E.U. prepares to strike back if President Trump follows through with tariffs on imports of steel and aluminum.

Note EU-Digest  2017 :  See list below of U.S. trade in goods with European Union
 
Please note that: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding. Table reflects only those months for which there was trade.

Month	Exports	Imports	Balance
January 2017	21,290.3	32,828.8	-11,538.5
February 2017	22,994.8	32,386.5	-9,391.7
March 2017	25,691.5	36,881.1	-11,189.6
April 2017	22,960.2	35,498.7	-12,538.5
May 2017	23,732.0	36,488.1	-12,756.1
June 2017	23,768.1	36,237.8	-12,469.7
July 2017	21,438.3	34,892.7	-13,454.5
August 2017	23,383.6	35,772.4	-12,388.8
September 2017	24,277.9	35,702.6	-11,424.7
October 2017	25,689.3	39,411.6	-13,722.3
November 2017	23,528.5	38,256.8	-14,728.3
December 2017	24,762.9	40,575.7	-15,812.8
TOTAL 2017	283,517.4	434,933.1	-151,415.6

Given the low average tariffs (under 3%), the key to unlocking this potential lies in the tackling of non-tariff barriers. These consist mainly of customs procedures and behind the border regulatory restrictions
.
The non-tariff barriers come from diverging regulatory systems (standards definitions notably), but also other non-tariff measures, such as those related to certain aspects of security or consumer protection.

The tariffs statement  by President Trump, if he persists to follow through on his threat, could  eventually also turn into a total trade war between the EU and US, and mean the end of the Atlantic Alliance, which has brought stability, peace and prosperity to Europe and the US,  since the end of the second world war. 

It must not be allowed to happen.   

EU-Digest  The above article can be republished only if EU-Digest is referred to as its source

US Economy: Re-Energized Dollar Looms Over the Rest of the World - by Ira Iosebashvili

On Wall Street, the rising dollar has been one of the most visible signals of growing optimism in the U.S. economy. For many other countries, it spells trouble.

Most analysts expect the U.S. currency to strengthen in 2017, extending a gain  that has boosted the value of US Dollarby more than one third since the US credit downgrade in 2011.

Note EU-Digest: the strength of the US economy could also be a Wall Street Fata Morgana created by Wall Street and the corporate controlled press - time will tell.

Read more: Re-Energized Dollar Looms Over the Rest of the World - WSJ

Global Economy: US and Chinese Economies are in "lockstep" and this could spell major trouble for US

Let no one fool you - specially not the Wall Street "news makers.

Both the US and Chinese Economies are in lockstep and the US economy could get  in big trouble because of that.

The investment relationship that has blossomed between China and the U.S., even though it has benefited both countries, has also made both of their economies very dependent on each other, but the US more so than China.

Chinese companies have started  more companies or joint ventures in the U.S., thereby increasing the number of Americans working for Chinese firms.In a sense China has now also become a supplier of secondary capital to the USA, in addition to the regular  US debt they have been buying up..

Another alarming fact is that based on the present (June 2015 figures) US debt to China stands at $1.272 trillion,.

That's roughly one-fifth of the $6.175 trillion held by foreign countries. The rest of the $18 trillion debt is owned by either the American people, or by the U.S. government itself.

The United States has thus allowed China to become one of its biggest bankers, to provide the American people low consumer prices.

This selling of debt to China is mainly used by the US to help the US economy to grow by funding federal government programs. It has also kept  U.S. interests rates artificially low. However, what very people want to talk about, specially the financial world, is that China's increasing ownership of U.S. debt is shifting the economic balance of power in China's favor.

China's position as America's largest banker also gives it considerable political leverage. Consequently every now and then China threatens to sell part of its US debt holdings. It knows that, if it did so, U.S. interest rates would rise, which would slow U.S economic growth to a trickle.

As China grew economically stronger it has also been calling for a new global currency to replace the dollar, which is presently used in most international transactions. China usually makes this call whenever the U.S. lets the value of the US dollar drop, which makes the debt China holds less valuable.

China certainly is not so stupid to call in its US debt all at once. If it did so, the demand for the dollar would plummet like a rock. A dollar collapse would disrupt international markets worse than the 2008 financial crises and China's economy would suffer along with everyone else's.

It's more likely that China will slowly begin selling off its US Treasury holdings.

Bottom line the financial poker game between the two most powerful economic players in the world is certainly not over yet, but China is holding some very powerful cards in its hand.

The financial world better sit up and start smelling the roses.

EU-Digest

Global Economy: European economic figures far more accurate than those from the US - by RM

Transparency key to success Atlantic Alliance

When listening to or reading US financial reports there are some remarkably disturbing facts popping up.

One of these is the fact that it was actually the US which caused the 2007/2008 financial crash but this has been completely swept under the mat by the US.

Keep in mind though that all the media outlets in the US, except very few, which are "not for profit organizations" (who mainly get their income from public/private donations and grants) are mostly profit based multi-national corporations. This should immediately raise a red flag as to the impartiality and balance of the news/financial reports they release.

Possibly, this is also the reason that at the same time there is this constant barrage of attacks coming from those same US media circles bashing and critizicing the EU/ECB for not adopting the US QE financial policies (printing more money and pumping this" monopoly money" into the marketplace) in order to get the EU economy going again.

As to the US QE policies,  many economists believe this could eventually be a recipe for future US economic disaster.

Also, looking at some of the official figures put out by the US Government and reading between the lines, the attentive reader will quickly find a lot of nebulous statistics on a variety of issues and items, including employment, trade, debt, infrastructure, military and security expenditures.

In this volatile scenario Wall Street is a special "Chapter" by itself.  Some critics call Wall Street a financial "fairyland" where words and phrases as versatility, headwinds, optimize, boldness, performance, choices, transparency, bubbles, wealth, growth, state of the art, profitable, opportunity are used in different ways as shares go up and down and traders turn out the big winners in dividing up the spoils.

Obviously without any doubt there are also "forces" in Europe ( Britain) who are following and would love to have the EU adapt this "flawed" US financial model.

Fortunately, and maybe unfortunately for some,  the EU is a Union of 28 countries with 28 central banks.  Of these 28 countries 18 belong to the so called European Economic Zone (Eurozone) that have adopted the euro (€) as their common currency.and sole legal tender.

The ECB is the central bank for the euro and administers monetary policy for the whole Eurozone.

Any report or statistic on or about the state of the EU economy issued by the ECB  is scrutinized very carefully by all 18 members of the ECB before they become public.Canada which is a Federated country also applies similar rules.

Official EU financial reports and statement are therefore without any doubt far  more accurate and reliable than those coming from US government agencies.

Isn't it time for the EU to get to the point with our friends across the other side of the pond on this issue? And what better venue to do it than during the ongoing EU-US trade negotiations?

EU-Digest

Global Economy: The Stark Facts of Global Greed, a Disease as Challenging as Climate Change

Global inequality, like global warming, is a disease that may be too far along to ever be cured.

We seem helpless, both in the U.S. and around the world, to stop the incessant flow of wealth to an elitist group of people who are simply building on their existing riches. The increasing rate of their takeaway is the message derived from the  Credit Suisse Global Wealth Databook (GWD).

It's already been  made clear that the richest Americans have taken almost all the gains in U.S. wealth since the recession. But the unrelenting money grab is a global phenomenon. The GWD confirms just how bad it's getting for the great majority of us. 

Read more: The Stark Facts of Global Greed, a Disease as Challenging as Climate Change | Alternet

Economic Indicators: The Zombie Numbers That Rule the U.S. and Global Economy - by Zachary Karabell

Economic Indicators have outlived their time

This Thursday ( February 21) the Conference Board, a global business association, released its monthly index of “leading economic indicators.”

Like the unemployment and inflation, housing starts, G.D.P. changes and other figures, these numbers arrive in metronomic waves. Financial services like Bloomberg, Dow Jones and Reuters blast them out the moment they’re released. Stock markets will often respond within seconds. Commentators and policy makers attribute to them a near-cosmic significance.

We act as if they are markers from time immemorial, but in fact they were invented for modern industrial nations after the Depression and World War II and are now seriously outdated.

Take gross domestic product. Derived from formulas set down by the economist Simon Kuznets and others in the 1930s, its limitations have long been recognized, none more eloquently than by Robert F. Kennedy in a famous speech in 1968 when he declared that it measured everything except that which is worth measuring.

GDP treats all output as a positive. When you buy LED lights that obviate the need to spend on incandescent bulbs and reduce energy consumption, GDP goes down and what should be an unmitigated good becomes a statistical negative. If a coal company pollutes a river, the cleanup costs are positive for GDP, as are any health care costs for those harmed.

What’s more, we have also come to assume that with output comes more spending and employment, but factories today are powered by robotics and software, and robots don’t buy more lattes and shoes.

GDP is a good number for a nation that produces lots of stuff made by lots of workers, but for an information economy grounded in services and intellectual property and awash in apps that cost nothing yet enable commerce, it is not up to the task. Nor are many of our indicators. Our trade figures treat an iPhone made—more accurately, assembled—in China with no reference to the intellectual property created by Apple in California.

Yes, large corporations have economists who attempt to draw correlations between macro-indicators and business trends, and companies decide on how to much to spend based in part on a read of future interest rates, growth trends, and inflation. But even here, the connection between big numbers and business realities has broken down. If national retail sales that measure big stores in malls are weak, that says nothing about how much e-commerce might be up. If consumer spending writ large sags, that says nothing about higher end spending at mass luxury stores like Michael Kors or lower-end retailers such as Dollar Tree. Making decisions based on what the indicators say is almost certainly a recipe for making the wrong decisions.

Weaning ourselves from our obsession with economic indicators is a vital step to grappling with the world as it is and making decisions that yield positive results. Individuals, companies, and governments will find their interests best served by creative approaches that craft indicators that draw on the wealth of big data information rather than cramming all reality into a few simple averages. The indicators of the 20th did yeoman service in taming the worst extremes of economic cycles. We should thank them, and move on.

Read more: The Zombie Numbers That Rule the U.S. Economy - Zachary Karabell - The Atlantic

Stock Markets Warning: Stocks Will Plunge by 50% this year

t is only a matter of time before the stock market plunges by 50% or more, according to several reputable experts.

“We have no right to be surprised by a severe and imminent stock market crash,” explains Mark Spitznagel, a hedge fund manager who is notorious for his hugely profitable billion-dollar bet on the 2008 crisis. “In fact, we must absolutely expect it."

Unfortunately Spitznagel isn’t alone.

“We are in a gigantic financial asset bubble,” warns Swiss adviser and fund manager Marc Faber. “It could burst any day.”

Faber doesn’t hesitate to put the blame squarely on President Obama’s big government policies and the Federal Reserve’s risky low-rate policies, which, he says, “penalize the income earners, the savers who save, your parents — why should your parents be forced to speculate in stocks and in real estate and everything under the sun?”

Billion-dollar investor Warren Buffett is rumored to be preparing for a crash as well. The “Warren Buffett Indicator,” also known as the “Total-Market-Cap to GDP Ratio,” is breaching sell-alert status and a collapse may happen at any moment.

So with an inevitable crash looming, what are Main Street investors to do?

One option is to sell all your stocks and stuff your money under the mattress, and another option is to risk everything and ride out the storm.

But according to Sean Hyman, founder of Absolute Profits, there is a third option.

“There are specific sectors of the market that are all but guaranteed to perform well during the next few months,” Hyman explains. “Getting out of stocks now could be costly.”

Read more: Warning: Stocks Will Collapse by 50

US Economy: The Super Bowl, one of America’s greatest pop-culture sports phenomena - by Michelle Flor Cruz

Stadium beer: $9. Last-minute ticket to the game: $3,000. Super Bowl XLVIII T-shirt: $25. The Super Bowl experience in New York/New Jersey: $600 million?

There’s no doubt the public will be paying inflated prices if you have any plans of attending the Super Bowl this year, but do the numbers really add up to as much as the NFL claims?

The Super Bowl, one of America’s greatest pop-culturesport phenomena, has transformed from just a football game into a major economic event. This year’s Super Bowl XLVII -- to be held this evening February 2 at the MetLife Stadium in East Rutherford, N.J., will be no different, drawing attention and dollars from all corners of the country. 

Read more: Show Me The Money: What Super Bowl Economics Means From Coast To Coast By International Business Times