THE NEW GOLDEN AGE: THE AGE OF GOLD

If this is a GOLDEN AGE I would think that term should be taken most literally, the one asset everone should hold is gold:

A Trade War is bad news for  everyone in the global economy.  I know there a many who would wish that it were otherwise.  But trade wars slow global growth and raise global prices.  That is true for every economy.  Especially the United States because so many of our companies are multinational.  And so many of our products of choice are imported.

Every dollar raised by Tarrifs are raised from the American Consumer.  This makes everyone who is not a billionaire poorer.  Billionaires are excepted because it makes no difference to them if a car is 40 or 50 or 60 or 150,000 dollars.  It's just not an amount large enough to matter.

If you are not in that catagory, you need to protect yourself now.

If you don't believe me look at the data:

ISM: The new orders index fell to 48.6 from 55.1 in January. The prices index jumped to 62.4, up from 54.9 in January.

Atlanta Fed GDP revision; Last wednesday Atlanta Fed GDP estimate stood at %2.5.  Friday it was revised to NEGATIVE %1.5.  

Unit Sales for consumers have been decreasing for the last year.

Consumer sentiment has fallen sharply the last 2 months:

Bloomberg: Consumer Sentiment Plummets to 15-Month Low Amid Tariff, Inflation Worries

Inflation expectation has increased sharply the last 2 months.

Bloomberg: US Consumers Long-Run Inflation Views Rise to Highest Since 1995

US consumers' long-term inflation expectations rose to the highest level in almost three decades on concerns President Donald Trump's economic agenda.

Annualized CPI currently stands at 4.8 percent.  (not close to the 2 percent the Fed needs to start easing)

Credit spreads have started to widen noticeably:

Bloomberg: "Global corporate bond spreads have widened for eight trading sessions in a row, ending a period of remarkable tranquility, as investors start to turn defensive amid fears about the impact of tariffs."

And today the ADP employment report which is much more reliable than the BLS report showed 77,000 new jobs created in Feb.  That is against an estimate of 140,000.

It's early days in this Trade War.  The effects are only just beginning to be felt. Wait until the tax cuts blow a massive hole in the budget.  Then our debt requirements will blow out at the exact same time our economy is slowing and prices are rising.

That's when you'll really need gold.  But by then it may be difficult to find.

ISM GIVES FIRST CONFIRMATION OF STAGFLATION:

 

Institute for Supply Management’s Purchasing Mangers Index slipped to a reading of 50.3 in February, below economists' expectations at 50.5, according to FactSet. The new orders index fell to 48.6 from 55.1 in January. The prices index jumped to 62.4, up from 54.9 in January.

This if the first real confirmation that the regime of firing, deportations, and Tarrifs are creating an environment of slow growth and high prices.

Throw in an extra 5 trillion dollars of new debt from tax cuts for the top 1 percent and you get the perfect storm.

This is otherwise called STAGFLATION.

It is impossible for the Fed to combat stagfation.  If they attack the slow growth by loosening monetary conditions,  inflation carreens out of control

If they attack inflation by tightening monetary conditions, the economy could spin into a depression.

This wound is entirely self inflicted.

Yet once the geers are in motion it is very difficult to stop them from griding on into oblivion.

Of course, there seems to be no interest in turning things around.  According to the current administration there is no inflation except that which was caused by the previous administration, and growth is entering into a GOLDEN AGE.

Sounds good.  If you're holding a cellar full of gold.