In case you missed it I want to highlight for you two key articles I had in my emails last week.
First is a post in which I explained why I am now doing nothing in the markets and being less active:
Here Is Why I Am Doing Nothing Now In The Stock Market – Mike Swanson
Second is an article in Business Insider that linked to a key new Federal Reserve study that says that over 37% of companies in the United States are so weak, with their balance sheets and revenue, that current interest rate levels (which are basically neutral now when you think about inflation) are putting them at risk of going under:
The Federal Reserve thinks catastrophe is coming for US businesses – Business Insider
This report WILL NOT be covered on CNBC where they know the audience wants to hear only about AI and told to buy NVDA over and over again now.
You can find the report this article is about here:
What is significant is that this is a huge number of what they term “distressed” firms BEFORE a recession has even hit.
Basically they are saying that the next recession, when it comes, is going to be a disaster.
Of course, that recession is not here yet, so all anyone cares about in the financial world is buying and trading NVDA.
Well, of course all people cared about in the first quarter of 2021 was trading AMC, Gamestop, and some silly crypto coin too.
This is all the cost of inflation and the past decade of zero interest rate policies, which we will never see again.
All of human history has demonstrated that when interest rates are taken below 2% that financial imbalances build up that lead to disaster.
The inflation that began two years ago is just the start of the cost of those years of zero rates.
Read the history of what this does in the book The Price Of Time by the great Edward Chancellor.
-Mike
