Ready, Aim, Print
By Todd Strandberg
It has become so difficult in predicting the movement of the financial markets that several financial newsletters have recently decided to call it quits. Dennis Gartman, the creator of the Gartman Letter, will end publication at the end of January 2020. While Dennis claims that he’s throwing in the towel in order to work on his golf game, the true reason is a number of bad calls made by him in recent years. Someone put together a spreadsheet of his calls, and the success rate with equities was less than 23%. Perhaps Dennis’ most famous call was when he declared crude oil will never be above $44 again in his lifetime.
It is a good thing that I operate a prophecy site that just happens to occasionally overlap into the financial world. People like Peter Schiff, Greg Hunter, and David Morgan are correct in sounding the alarm bells over the likelihood of a coming monetary crash. I think Bible prophecy is the only possible explanation for how global debt has been able to reach such insanely high levels. The financial problems constantly increase but they don’t explode because the rapture is predicted to occur at a time of general tranquility.
“For this reason you be ready too; for the Son of Man is coming at an hour when you do not think He will” (Matthew 24:44).
We are entering into the 11th year of the longest period of GDP growth in American history. A decade of record-low interest rates has allowed companies to sell seemingly impossible amounts of bonds to investors, sending total U.S. corporate debt to nearly $10 trillion, or a record 47% of the overall economy.
Some of America’s best-known companies, including AT&T, IBM, Ford Motor and CVS Health, have splurged on borrowed cash. This year, the weakest firms have accounted for most of the growth and are increasingly using debt for “financial risk-taking,” such as investor payouts and Wall Street dealmaking, rather than new plants and equipment, according to the IMF.
Amid the avalanche of debt, the sharp growth in lower-quality corporate bonds, just one notch above junk, represents a special concern. Investors hold nearly $4 trillion in these bonds, including $2.5 trillion from U.S. companies, according to the credit-rating agency Standard & Poor’s.
The Great American Shale Boom could have only occurred with funding from cheap bonds. The shale industry has been built on mountains of debt, and the day of reckoning is drawing near. A total of 32 oil and gas drillers have filed for bankruptcy through the third quarter, with the total number of bankruptcy filings since 2015 now clocking in at more than 200.
The promise of future earning has allowed the surviving drillers to stay in business. As many company executives who hoped to drill their way out of debt are belatedly discovering, trying to squeeze a profit from shale-fracking operations is akin to trying to draw blood from stone with the industry having racked up cumulative losses estimated at more than a quarter of a trillion dollars.
During the month of October, the repro-market suffered a total collapse in liquidity, and the Federal Reserve stepped in with what has quickly become an endless river of money. The total dollar amount is now in the trillions, and the Fed’s balance sheet has risen by $300 billion in just two months. It is absolutely stunning to have a nation’s red ink suddenly doubling overnight, and the stock market has had no reaction.
China has had a record year for corporate bond defaults. Normally, the Chinese government would not allow for state-owned enterprises to go into default. The default rate in China must be so high that Beijing is forced to allow some bondholders to get burned in order to restore discipline. The reported Yuan default amount is up sixfold in the past two years, so the actual quantity of bad loans must be very high.
Several countries have created their own version of a Cryptocurrency in order to escape their national debt. With the value of bitcoin remaining under $200 billion, these electric coins will never work. They are just too easy to create to generate enough trust. The Antichrist will come along and create a financial system that will work because he will use the military to force people to take his mark.
“He causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads: And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name….” (Rev 13:16-18).