KW: What is clearly apparent is that the U.S. war (killing) machine and the U.S. economy are intrinsically the same thing. Trump is to wind both sides up. This is David Stockmans last news letter reproduced
Dear Reader,
It is alleged that Walt Disney doctored his famous film of the Norwegian lemmings leaping to their death by the thousands. But there is no falsification of the madness of the crowds leaping to their demise over the S&P 500 cliff.
Yes, the latter index is still up an unaccountable 12% from Nov. 8, but this century’s third great bubble’s days are surely numbered. The evidence that the U.S. economy is grinding to a halt keeps pouring in almost daily.
As to the U.S. economy’s slide toward the flat line or below, there can be little doubt.
Business lending is down, core retail sales and industrial production is down. On that last score, factory production fell 0.4% in March — it’s largest drop since February 2015.
March job figures revealed a nonfarm payroll increase of just 98,000. The average expectations among the smart set projected a gain of 180,000.
Meanwhile, on Friday the Atlanta Fed’s GDPNow indicator weighed in with a growth figure of just 0.5% for the first quarter of the year — stall speed, essentially.
And after 94 months of the most tepid recovery in modern history, there is no other way to describe it.
Moreover, what is happening is not merely cyclical in the traditional sense. Debt-encumbered American consumers are dropping, not shopping, because this entire so-called recovery has been wasted. That is, consumers can’t spend energetically, because there has been no significant deleveraging since the 2008 crisis.
In fact, notwithstanding a 5X gain in the Fed’s balance sheet — from $900 billion on the eve of the Lehman meltdown to $4.5 trillion today — our Keynesian central bankers simply could not cause consumers to borrow and spend their way to prosperity.
They are impaled on Peak Debt.
So the residual bullishness and buy-the-dips robo-trading that temporarily sustained the dot-com bubble through March 2000 and the housing/credit bubble through September 2008 will finally give way. And soon.
That’s especially true because the Fed is out of dry powder, and the Keynesian money printers who run it are already marching against the tide — raising interest rates and preparing to shrink its bloated balance sheets — in order to prepare for the next recession.
Indeed, given this backdrop and a global economy that is freighted down under $225 trillion of debt and massive excess capacity, the stock market is surely in the midst of the “Everything Bubble.”
In fact, the median stock is now trading at the highest multiple of earnings in history — including 2000 and 1929.
If that doesn’t scream “Get out of the casino now!” I’m not sure what does.
And it has by now also become crystal clear that there will be no great Trump Stimulus, either. Instead, what lies ahead is an unprecedented outbreak of dysfunction, paralysis and unmitigated mayhem in the Imperial City, as I have been documenting day after day in my Contra Corner posts.
The fact that The Donald has now flip-flopped on five core issues — China’s currency manipulation, the Fed, the Export-Import bank, NATO’s obsolescence and intervention in the Syrian civil war — all in less than a week is merely indicative of the chaos to come.
The senile war hawk John McCain appeared on Meet the Press this weekend.
When the host questioned whether the Washington establishment has “sucked” Trump in, McCain replied, “I hope so.”
McCain hopes so. I fear so.
Below, I show you why recession is ahead and why Trump will almost certainly respond in the wrong way. Read on.
Regards,
David Stockman
for The Daily Reckoning