The U.S. worker/consumer is in good shape with a high stock market and low interest rates, day to day. Underneath this calm surface is considerable turmoil and increasing risk due to long-term trend changes in the Federal Government constantly increasing debt supply with an apparent reluctance to buy this debt on the part of traditional large investors. An increasingly likely outcome is increasing interest rates having a negative impact on our economy and stock market. Join us as we assess these growing risks.

Due to continuing significant stresses in the REPO marketplace the adjustable rate mortgages, lines of credit, overdraft, and short-term government obligations are at risk for trend reversals (higher interest rates and lower short-term Treasury Note prices); if the 24 Primary Dealers of U.S. Government Debt are having problems re-selling this debt to investors we could face a spike in interest rates vs. a more gradual trend upward in 2020.

Put the stock market and official government reports aside and consider the $7 Trillion pool of investment dollars moving through our markets every business day. As we move into the Holiday period the Federal Reserve is supporting the global REPO (borrowing on government securities by the largest global banks) market by making at least $1/2 Trillion available with reported much more to come. There has been a growing instability in this key market since mid-year 2019 and it’s getting worse. BTW, it is totally out of character for the FED to prop up this market with one wondering if one or more global money center banks is in trouble since banks seem to have an aversion lending to each other via REPO’s (a strategic and large source of global liquidity).

U.S. manufacturing moved abroad over the past 70 or so years based, importantly, on buying sprees of U.S. businesses investing in M & A and new plant & equipment abroad. China became a global consolidator over the past 20 or so years and is now building out AI/Robotics/6G networks to protect and enhance their manufacturing leadership. Equally, or more important, is China’s growing significance in daily U.S. dollar movements adding dollar-warfare exposures.

Artificial Intelligence and robotics are presently impacting many jobs; expectations are that millions of salaried and commissioned positions will suffer in significant ways over the next several years. These pressures are creating a perfect storm as expected lifetimes climb above 100 years while social security and private savings plans move toward funding crises. This and more are highlighted in the next 15-20 minutes.

Is our economy really at “full employment” or do we systematically exclude millions of unemployed from the data?

The headline unemployment report shows “an under 4% unemployment” rate. The more inclusive survey rarely quoted shows over 7% and a long-standing comprehensive private research organization shows unemployment at more than 10%. What should I believe? Why should I care? Find out and better understand the health of our economy in this 20 minutes.

Links referenced in this episode:

AI/Robotics vs. Human Professionals

https://www.anderson.ucla.edu/centers/ucla-anderson-forecast/september-2019-economic-outlook

Economic Growth Requiring Smaller Growth in Work Hours

https://www.anderson.ucla.edu/centers/ucla-anderson-forecast/september-2019-economic-outlook

The highly publicized monthly press releases trumpeting low inflation, price stability, and high economic growth can mislead you. The underlying official data also supporting high inflation and low or no growth economy in which real price increases are suppressed intentionally. You’ll see how as well as who suffers in the next 20 or so minutes!

Links referenced in this episode:

www.shadowstats.com

Join Roger Torneden, Director of Business, Management, and Legal Programs at UCLA Extension as he gives an overview about preparing for the upcoming recession.

To learn more about the topics discussed, visit these links:

Federal Reserve Interest Rate Inversion Chart:

https://fred.stlouisfed.org/series/T10Y2Y

Anderson School Recession Presentation (2019):

https://www.anderson.ucla.edu/centers/ucla-anderson-forecast/june-2019-economic-outlook

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