This week we take a look at examples across the U.S. of the deepening commercial real estate depression, inflation morphing into a long-term issue despite Fed efforts, and lower corporate earnings and lower P/E ratios ahead reflecting the long anticipated recession.

In 2008-2009 the U.S. and global economy was on life support due to failures in the home mortgage markets. Now, in 2023, the stage is set for what could be another U.S. and global financial crisis. This time the crisis is coming from the commercial real estate market and will likely expand to impair another 200 or more medium-sized banks and savings and loans. We also feature Emmanuel Probst as an additional example of the breadth and depth of UCLA Extension educational offerings (brand...

Part two of this two-part series. Since the beginning of 2023 the majority of the world’s population and countries (China, Russia, India, Saudi Arabia) are collaborating to create a new reserve currency. The impact of another reserve currency could be quite serious for the U.S. government in selling its Treasury Notes/Bonds as well as creating new shortages as well as new long-term inflation. Bottom line: if successful, we’ll no longer to be able to take debt refinancing or wealth...

Part one of a two-part series: This year is the first year of an actual decline in the S&P Index ‘top 10’ in terms of both revenues and free cash flows. Lower price/earning ratios as a function of both low/no growth and high interest rates will drive both stock and bond prices lower this year. Stay tuned for part two where we cover U.S. government spending and dollar substitution in global trade.

The Fed is only at the starting line in mitigating bank insolvency issues. Their additional money creation ( or “lending” ), new buying of government securities ( instead of selling them), making up for China’s sale of U.S. government securities, and making little or no progress on systemic inflation will pretty much guarantee a long Stagflation, if not severe recession, for the U.S.

January-February bounce in the stock and bond markets ending with inflation gaining more traction globally. Natural resources needs are escalating due in part to EV car and battery plant expansions but global oil and metals inventories are at multi-decade lows. Get ready for a take-off in oil and metals prices which will bring forth a new, possibly, violent uptrend in global inflation. Higher and longer interest rates are choking new investments in tandem with lower demand for future...

Rising wage costs and growing global energy demands both present continuing high inflation risks. Coupled with decreasing consumer demands and higher interest rates, the future earnings of companies are in the process of downward revisions. Lower earnings and decreasing P/E ratios both generate much lower stock price expectations this year.

Prior long-term periods of increasing interest rates by themselves have dropped stock prices as P/E ratios have declined. Present value analysis argues that high long term interest rates as we’ve been experiencing drives down the present value of long-term corporate earnings which, in turn, drops the P/E ratios across the stock market. Several periods are referred to in this podcast have witnessed P/E drops of approximately 50% during decades of interest rate increases. If the lower P/E is...

Credit card debt is at a new all-time high while personal and business bankruptcies are ramping up. With high inflation since last year consumer purchases mainly on the credit card as savings balances return to all-time lows. Meanwhile, the Federal Reserve with “only $42 billion of capital” is set to lose approximately $240 billion this year and next. These losses which have already started with have impact on Congressional regulation of the Fed and a significant potential impact on...

Many parts of the U.S. economy are crashing with inflation down but not heading to the 2% Fed target area. The U.S. government must sell approximately $6 Trillion (20% of all federal debt) of new and refinanced debt this calendar year but who will buy it? The Fed is facing the possibility of a depression or a return to higher inflation with the fall-out of either creating significant impacts on our lifestyles.

With a growing global influence of China, Russia, India, and Iran vs. the West, we close out the year considering the future role and power of the Shanghai Cooperation Organization in economic and military contexts. Energy prices and U.S. unemployment issues will return as significant “impactors” on the real estate, stock, and bond markets. Happy Holidays, everyone and we’ll be back next in January!

This week we discuss Russia building their own oil tanker fleet to bypass Western sanctions (the war in Ukraine continuing with additional “worst case” risks), U.S. unemployment becoming the key topic for 2023, and inflation remaining a multiple of Fed target but ‘easing’ in the cards to avoid a major recession.

Central themes supported with substantial data references continues: crypto currencies are not investments (since our initial Podcasts two years ago), a severe global recession is gathering momentum, and debt is swamping our economies. Unemployment is an emerging issue promising to hit 2023 in a major way starting with tens of thousands of recent layoff’s in hi-tech, spreading to our construction industries, and soon threatening substantially more retail and services jobs. Please be mindful...

Europe’s recession is all but locked due to upcoming energy shortages with much higher prices and another housing bubble already pricked. High inflation and interest rates in the U.S. with a downward trending global economy is likely to bring recession as a base case for next year. High interest rates, lower housing prices, and increasing energy prices will, in early 2023, cause the Fed to belatedly pause…although it may be too late to pause to avoid a severe recession.

Financial markets are high risk particularly with plunging real estate prices. What are the ingredients for an eventual return to up-trending markets?

U.S. is stronger than Europe and Asia but in a severe depression all will suffer. A cold winter will exhaust many European energy supplies further negatively impacting production including food processing. Energy prices to continue their uptrends after European inventories utilized and U.S. sales from the Strategic Oil Reserve are terminated (after mid-term elections). Inflation to remain high despite Fed interest rate hikes.

Europe’s energy issues threaten both businesses and households; the U.S. will be impacted by Europe’s growing economic and social instabilities. We are facing a Minsky Moment brought on by more than a decade of burgeoning debt and risk-taking (consider the Minsky Moment framework explained in this Podcast).

Natural gas supply shortages have already doubled to quadrupled related prices from home heating, electricity production, to fertilizer production throughout Europe. With Fall and Winter rapidly approaching their inflation rates are likely to reach new highs (in the 15-20% range but remaining out of control). The sanctions against Russia have not succeeded as expected given the pain throughout Europe and Russia’s ability to redirect much of their exports to the BRIC countries (importantly...

Major stock and bond market declines have occurred when low unemployment rates have been reported in conjunction with market rallies from 15-20+% declines. We’re in stagflation with prospects of a significant recession ahead so be careful about making new commitments in the stock and bond markets. The “why this warning” is covered in today’s Podcast. We include a link to the S&P 500 long-term chart that is referenced in this podcast:...

Recent data confirms the U.S. is in a deepening recession coupled with long-term inflation. China and Russia can be expected to act more and more as a bloc. Leaders of the prior U.S. stock market uptrend are, now, themselves having growth problems which doesn’t bode well for the balance of 2022’s financial markets.

The Fed is unable to contain inflation during 2022 but, instead, pins its hopes on oil price declines. Actually, the risks are high that oil prices will continue upward and cause new substantial impacts on the financial markets before the Holidays. Inflation is now a global issue with Central Banks not collaborating to fight it. China and Japan continue to inflate their economies causing more foreign money to flow into U.S. assets grabbing our higher interest rates. Prepare for a...

The real estate cycle is both an important precursor of inflation and a victim of Federal Reserve inflation-fighting. Our banking system is likely more important than the Federal Reserve in money creation through new mortgage funding. As housing transactions reflect less days on market and fewer offers per transaction the speed of price declines may well soften the Fed's quantitative tightening plans. Inflation is here to stay more many years albeit with weaker bond and stock prices this year...

No soft landing in sight with significant economic pain dead ahead. Prepare for a stock and bond market rally that will be a fake-out with lower bond, stock, and real estate prices continuing into year-end. Viewing this one-hour YouTube video of a top global hedge fund manager is a MUST to learn more of where we are and what's ahead: https://www.youtube.com/watch?v=-7sWLIybWnQ.

The Fed has no choice but to create a recession to lower demand to meet global supply issues; they must fight inflation and they will move in a quite different direction from that in Chairman Powell's first term. Russia's oil and natural gas supply issues go beyond Western sanctions as discussed here. Get prepared for more global issues including country defaults, more global money creation, and new stresses on our employment and financial systems.

We’d like to welcome Credit Today's 15,000+ subscribers to our channel. In today’s podcast, we’ll be discussing the movement toward a serious recession from "just" Stagflation with historical examples as well as the most recent economic data. Credit Today's website: www.credittoday.net