GUALFIN, ARGENTINA – The Dow was down 118 points yesterday.

It should be down a lot more.

Of course, markets know more than we do. And maybe this market knows something that makes sense of these high prices.

What we see are reasons to sell, not reasons to buy.

Paycheck to Paycheck

Nearly half of all American families live “paycheck to paycheck,” say researchers.

Without borrowing, 46% couldn’t raise $400 to cover an emergency.

This is at least part of the reason why retail sales dropped for the second month in a row in March. Despite seven years of economic “recovery,” millions of Americans don’t have much money.

According to Census Bureau figures, 110 million Americans receive benefits from means-tested federal programs – food stamps, disability, and the like.

And according to the Bureau of Labor Statistics, about 125 million Americans have full-time work (with another roughly 112 million without jobs).

That means there are only 125 million people in full-time jobs supporting the whole kit and caboodle of the U.S. economy, with a total population of 323 million.

At that rate, each full-time worker supports about 2.6 people… including almost one person receiving money from the feds.

They are also supporting a government debt of $20 trillion and private debt of another $40 trillion or so. That puts the debt-to-full-time-worker ratio at $480,000.

The average salary for a full-time worker is just $48,000. At a modest 5% interest, his share of the debt cost would set him back $24,000 each year.

He’d have only the remaining $24,000 to support (1) his own family… and (2) all the malingerers, cronies, and zombies who are drawing government benefits.

Obviously, those numbers don’t work. But they explain much of the weakness in the U.S. economy.

The feds’ cheap credit keeps moving money (mostly in the form of asset price increases) to the wealthiest ZIP codes… while the average person’s budget gets tighter and tighter.

Crisis Level

Foot traffic in chain restaurants is dropping, too. It’s down 3.4% from last month year over year.

And all across the country, retail stores are closing their doors and shuttering their windows as though a hurricane were coming.

And maybe it is…

Household debt is once again at more than $14 trillion – the level that set off the crisis of 2008–’09. At that level, consumers have a hard time spending.

Despite these warnings, the Fed is still patting itself on the back. Bloomberg:

The economy continued to grow across the U.S. at a modest-to-moderate pace in recent weeks as a tight labor market helped broaden wage gains, though consumer spending was mixed, a Federal Reserve survey showed Wednesday.

Not only that, it is still talking about undoing the damage it has done over the past eight years… hoping to get down from its debt-mountain perch without breaking any bones. Bloomberg again:

After heading into the uncharted territory of quantitative easing [QE], the world’s central banks are starting to plan their course through the uncharted waters of quantitative tightening.

How the Federal Reserve, European Central Bank and – eventually – the Bank of Japan handle the transition could make the difference between a global rerun of the 2013 “taper tantrum,” or the near undetectable market response to China’s run-down of U.S. Treasuries in recent years.

Combined, the balance sheets of the three now total about $13 trillion, equating to greater than either China’s or the euro region’s economy.


Let’s see…

Central banks began buying debt eight years ago. Now they own $13 trillion of it.

Hey, it was fun, wasn’t it?

Nothing bad happened. So now they can get rid of the debt… and nothing bad is going to happen again, right?

The Fed bought the debt – adding money into the economy… especially the richest part of it. Now all they have to do is sell it. Easy-peasy.

A lot of people have a spare trillion dollars lying around. They’ll consider it an honor to help the Fed down off the ledge… and buy bonds just as the bond market turns south.

The hangover will be just as much fun as getting drunk.

The divorce will be just as exhilarating as the affair that caused it.

Getting hanged for murder will be just as satisfying as shooting the bastard.





Editor’s Note: Bill continues to send in pictures from the ranch in Argentina. Today, he shares one more with you.

Marta prepares dinner at the Gualfin ranch


Market Insight

By Nick Rokke, Editor, The Palm Beach Daily

bill bonner

A few weeks ago, I received a call about a development in gold from my colleague Teeka Tiwari.

Teeka is a former fund manager and was the youngest VP in the history of investment firm Shearson Lehman. Back in February, he correctly predicted that gold would climb higher in 2017.

So when Teeka calls in with another prediction on gold, I listen.

Here’s what he said…

“If gold breaks this level, it’s going to go higher… You’ve got to tell everyone.”

The level Teeka is talking about is the 200-day moving average (MA). The 200-day MA measures the average price of an asset over the past 200 days.

I’ve been watching this indicator closely along with him.

Here’s why…

The 200-day MA often acts as a line of resistance for asset prices. Generally, when prices approach this line, they retreat.

We saw this with gold over the past few months. It approached its 200-day MA four times and retreated each time before finally breaking through last Tuesday. Just take a look at today’s chart…

At The Palm Beach Daily, I typically recommend gold as a “chaos hedge.” In times of turmoil, gold will serve as a store of value for your wealth. And act as a ballast for your portfolio against any financial chaos.

But gold can also be a profitable investment. Now that gold is above its 200-day MA, Teeka believes the price will go higher from there.

If you’ve been looking to buy gold, now could be a great time.

The two most common ways to hold gold is through gold bullion (coins) and the SPDR Gold Shares ETF (GLD).

Either way, you’ve got a solid chaos hedge as well as a potentially lucrative investment. You can buy whichever one you’re most comfortable with… or a little of both.

Nick Rokke

P.S. My colleague, Palm Beach Confidential editor Teeka Tiwari, has spent the last year diving deep into the cryptocurrency markets. He’s traveled all over the world and met with the leading cryptocurrency experts to learn about the most profitable plays the sector has to offer.

And now he’s hosting a special training series to share what he’s learned. Tonight at 8 p.m. ET, Teeka’s free cryptocurrency training series starts. He’ll show readers how to get in on these once-in-a-lifetime opportunities. Get more information on what you’ll learn by clicking here.

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In today’s mailbag, readers debate America’s “forever war” in the Middle East.

Why did Bush move on Iraq and begin this cascade of disasters in the Middle East? So he could be re-elected and thus achieve the second term as president his father failed to obtain! Goodness knows where the current president will take us all – besides bankruptcy that is!

– D Johnson

You are way off on your comment on military activities in Mid-East. I am Retired UAF and I think bombing there is wonderful, because it is using weapons we have they do not have. But sending boots on the ground is horrible because it puts us on a 1 to 1 basis w/their fighting men.

Most ground and mountains in much of that area is “soft rock” where bombs can do lots of damage, so I think we need to do more of this kind of thing. We also need to use explosives placed in critical areas to expand narrow passages so cars/tanks can go where only horses can now go.

– C. Townsend

If you think the war on terrorism is a waste, what would you call the war on drugs? That has been going on almost longer than I can remember. If governments know anything it is how to waste, waste, and waste. And don’t forget Vietnam, the war of my time.

– P. Reese

Hear, hear. Your America’s “forever war” post is spot on. It’s so heinous it hurts my soul. America needs more Bill Bonners and fewer soldiers.

– A. Carlson

You could concentrate as you normally do on the reality that America has inflicted on other nations repeatedly. When Trump was rightly so indignant about chemical warfare and its effects on children I was moved and angered to remember the children of Vietnam that have suffered and will continue to suffer for another five generations to come the horrendous effects of Agent Orange.

– D. Ross

In Case You Missed It…

All this week, our colleague Teeka Tiwari has been releasing free training videos for new cryptocurrency investors.

So far, Teeka has revealed why cryptocurrencies are shooting up by triple digits and shown readers how to set up their own crypto accounts. He even revealed the name of one of his favorite cryptocurrency plays.

If you haven’t seen these free training videos yet, you can catch up on all of them by going right here.