Thursday , 13 June 2024

Get Your Head Out Of the Sand – the Red Flags Are Starting to Flap!!

Just because something has happened in the past does not mean that itpillars of sand will happen in the future but the fact that so many red flags are appearing all at once has got to give any rational person reason for concern. What red flags, you ask? Read on!

By Michael Snyder ( The following is an abbreviated version of the article* as originally posted under the title Two More Harbingers Of Financial Doom That Mirror The Crisis Of 2008.

It may not seem like it to most people, but we are right on track for a major financial catastrophe.  It is playing out right in front of our eyes in textbook fashion.  It is going to take a little while to unfold but when it finally bursts, the consequences could be quite horrifying.

[Below are some of the red flags that are now fluttering in a breeze that is about to become a howling gale:]

Wholesale Inventories-to-Sales Ratio Rising  

When economic activity starts to slow down, inventory tends to get backed up and that is precisely what is happening right now…The wholesale inventories to sales ratio has now hit a level that we have not seen since the last recession.

As Wolf Richter recently said: “In December, the wholesale inventory/sales ratio reached 1.22, after rising consistently since July last year, when it was 1.17. It is now at the highest – and worst – level since September 2009, as the financial crisis was winding down:

Wolf Richter

Rising sales gives merchants the optimism to stock more but because sales are rising in that rosy scenario, the inventory/sales ratio, depicting rising inventories and rising sales, would not suddenly jump. In the current scenario, however, sales are not keeping up with inventory growth.”

10 year U.S. Treasury Note Yield Rising

We usually see a spike in the 10 year Treasury yield about the time the market is peaking before a crash and, as Jeff Clark recently explained,

The 10-year Treasury note yield bottomed on January 30 at 1.65%. Today, it’s at 2%. That’s a 35-basis-point spike – a jump of 21% – in less than two weeks and it’s the first sign of an impending stock market crash.

10 Year Yield - Stansberry

The 10-year Treasury note yield has ALWAYS spiked higher prior to an important top in the stock market. For example,

  • the 10-year yield was just 4.5% in January 1999. One year later, it was 6.75% – a spike of 50%. The dot-com bubble popped two months later.
  • In 2007, rates bottomed in March at 4.5%. By July, they had risen to 5.5% – a 22% increase. The stock market peaked in September.

Let’s be clear… not every spike in Treasury rates leads to an important top in the stock market but there has always been a sharp spike in rates a few months before the top.

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In addition:

Retail Sales Falling

Retail sales in the U.S. dropped again in January (-0.8%)…[making it] the worst two month drop (-1.7%) since 2009.

Chinese Imports & Exports Falling

Economic activity is rapidly slowing down on the other side of the planet as well exemplified by the dramatic decline in January in:

Chinese imports (-19.9% YOY):

and exports (-3.3% YOY):

(The above 2 charts were sourced from**.)

In light of so much bad economic data, it boggles my mind that stocks have been doing so well, but this is typical bubble behavior.

Long Term Trends Being Ignored

Unfortunately, most people these days do not have the patience to watch long-term trends develop.  Instead, we have been trained by the mainstream media to have the attention spans of toddlers, bouncing from one 48-hour news cycle to the next eagerly looking forward to the next “scandal” that is going to break, and when the next financial crash does strike, the mainstream media is going to talk about what a “surprise” it is.

For those of us who are watching the long-term trends, however, it is not going to be a surprise at all.  We will have seen it coming a mile away.

[The above article is presented by  Lorimer Wilson, editor of and and the FREE Market Intelligence Report newsletter (sample hereregister here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. This paragraph must be included in any article re-posting to avoid copyright infringement.]

*Original Source: (Copyright © 2015 The Economic Collapse); ** (Content copyright 2009-2015. All rights reserved.)

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