Dec. 4, 2018 - Steve Pieczenik
04:30
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| Time | Text |
|---|---|
| Hi, this is Dr. | |
| Pechenik. | |
| Today I want to talk about something that's quite serious in our markets and in our economy. | |
| We're approaching what is considered to be a recession. | |
| Now let me explain what I mean by that and what the markets mean. | |
| The past two days, we've had the markets go up about 400 or 500 points because everybody was optimistic as to the outcome of the dinner between President Xi of China and Donald Trump. | |
| However, yesterday and today, there occurred what was called the inversion of the yield curve, which is a fancy way of saying that the long-term bond yields, the T-bills, that go for 2.94% 10-year yield is is approaching the short-term bond rate of two years, which is at 2.82%, and that's basically a 0.12% differential. | |
| What that means in very simple languages, when the short-term yield of a T-bill approaches that yield of a 10-year bond rate, it's about 60% Predictive in saying that there will be a recession. | |
| In other words, since 1955, whenever the 10 year bond rate was equal to or lower than the 2 year or 5 year bond rate, we have had a recession. | |
| That lasted for quite a few months or a year. | |
| In this case, we're afraid that the economies in China are slowing down, the economies in Japan are slowing down, the economy in Europe is slowing down, the economy in England with Brexit is slowing down, certainly in Spain. | |
| But what we're very concerned about in America is that construction has decreased in volume, that the prices of houses are going down, and the net asset values of our companies are going down. | |
| And so what happens is the stock market says we do not have confidence now On top of that, we have President Trump, who was tweeting that he is Mr. | |
| Tariff. | |
| Now that is completely inappropriate. | |
| And the reason for that is that whatever he had accomplished in the past two days, which was quite admirable, In terms of an agreement to suspend the tariffs between China and the United States is now undone because at any point in time he can determine that he wants to come back with the tariffs and the markets don't like that type of uncertainty. | |
| So let me just explain again that what we have is an inverted yield curve, a technical way of saying that we're heading into a recession where the economy will slow down in the United States and around the world. | |
| We see that in China, we see that in Japan, we see that in Europe. | |
| Now in France what's been happening is that the French people have been rioting over the past three weeks because the economy in France has been slowing down And Macron, who is this entitled, effete leader who has never really developed a company of his own, never got a job on his own, and worked for the Rothschild family, really does not understand that you do not increase the taxes. | |
| On people whose tax rate, an ordinary tax rate in France, is 46% of your salary. | |
| So what happens is for the past three weeks, all the way from Bretagne in the north to Toulouse in the south, the French worker has been rioting, including the ambulance drivers, the firefighters, and the police. | |
| This is really kind of a state of emergency for France. | |
| And I do not think Macron is the leader of this country. | |
| He is not suited for it. | |
| He's too young. | |
| He's too effete. | |
| He's too ineffectual. | |
| And he's never had the experience of understanding how to run a government. | |
| Two of his ministers have already resigned. | |
| They refuse to come back. | |
| And Macron has lost the confidence of his people. | |
| The popularity rate is less than 26%. | |
| Let me quote Harry Truman, our great president, who said that in a recession, your neighbor loses a job. | |
| In a depression, you lose a job along with your neighbor. | |
| Good night, good luck. | |
| Dr. |
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