Wolf Richter

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Off The Cuff: The Real Emerging Market Danger Lies In Asia

The debt bubbles there can gut-punch the world economy
Wednesday, August 22, 2018, 11:38 PM

In this week's Off The Cuff podcast, Chris and Wolf Richter discuss:

  • Commodity Carnage
    • Not just due to a strong dollar
  • Argentina Is Faltering
    • Its currency is collapsing (yet again)
  • More Trouble In Turkey
    • Threatening the EU banks who loaned it billions
  • The Real Threat
    • Asia is where the real damage will occur

Recorded last week, Wolf Ricther explains why the real Emerging Market contagion risk lies not in Turkey, or Venezuela or Argentina or Brasil -- but in Asia.

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Off The Cuff: Yes, The Central Banks Really Are Starting To Tighten

Expect EVERYTHING you know about the markets to change
Tuesday, July 10, 2018, 10:40 AM

In this week's Off The Cuff podcast, Chris and Wolf Richter discuss:

  • Tesla As A Symbol Of Silicon Valley
    • Way more hype than substance right now
  • Are Central Banks Really Starting To Tighten?
    • It's looking like indeed so
  • How The Rising Dollar Is Killing Emerging Markets
    • It's just math. Really cruel math.
  • Popping Of The Global Housing Bubble?
    • Australia may be leading the way down

The Fed has reduced its balance sheet so far this year to the tune of $100 billion, and is hoping to be reducing at the rate of $50 billion per month by October. The ECB has announced it will stop making purchases by the end of the year. And, surpringly, even the profligate Bank of Japan is showing signs of reducing its balance sheet.

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Off The Cuff: Why Governments Prefer A Currency Crisis To A Debt Crisis

Nothing's as destructive as cascasding debt defaults
Friday, June 1, 2018, 6:09 PM

In this week's Off The Cuff podcast, Chris and Wolf Richter discuss:

  • Panic in Europe
    • Italy is threatening to destabilize the EU
  • Central Banks Have Wrecked The Market Mechanisms
    • And tapering will reveal the damage done
  • What's Better? A Debt Crisis Or A Currency Crisis?
    • It seems governments vastly prefer the latter
  • Is Deutche Bank Threatening To Start A Banking Crisis?
    • Maybe. And it would set the world aflame.

With the action happening in Europe this week, from the Italian debt panic, to the new Spain PM, to Deustche Bank's worsening prospects, Wolf Richter comes on the program to make sense of the developments in real-time.

Notably, Wolf explains why the world's central banks will work with their home governments to destroy their currencies rather than start defaulting on their debts. This is path he expects the future to take:

A debt crisis is devastating, and it's devastating selectively. A currency crisis is kind of more democratic. It hits everybody. But a debt crisis, it hits the people that are recipients of government aid the most. And that's the problem in Greece and other countries, they had to go on austerity. Little bitty pensions were cut and things like that happened to save a few pennies here and there. And when it's a currency crisis, everybody gets hit and it spreads across. And I think they understand that Japan is uniquely equipped to deal with a currency crisis because it has this large trade surplus and because it sits on a pile of foreign exchange reserves. So that won't really blow up the Japanese economy where as a debt crisis would completely implode the economy, and it would wreak havoc among the people from pensioners and aid recipients and the healthcare system and everything would just collapse. And they decided that's not going to happen.

So that's how I think we need to look at what's happening in Japan. They made a decision to prevent a debt crisis. and if they get a currency crisis, fine, they'll manage that. Italy doesn't have that option. Italy doesn't have its own currency, and it can't do that, so it can get a debt crisis. And that's what happened to Greece, and that's what happened to other countries. When they get a debt crisis it's really nasty. I hope Italy can avoid this thing, but debt crises are just the worst, absolutely the worst. But if a government needs to do anything, it's avoid a debt crisis.

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Wolf Richter: The Era Of The Fed "Put" Is Over

It now wants lower asset prices (just not too fast)
Monday, April 2, 2018, 3:39 PM

To all those investors expecting the Fed to step in to backstop the recent weakness seen in the stock market, Wolf Richter warns: The cavalry isn't coming.

After years of force-feeding too much liquidity into world markets, the central banking cartel is now aware of the Franken-markets it has created. And now with a new head at the US Federal Reserve, and soon at the ECB, central bankers have shifted their priority from supporting asset prices to now actively engineering lower prices. » Read more

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Off The Cuff: China's Warning Shot

The recent Treasury gambit is classic geopolitics
Thursday, January 11, 2018, 6:30 PM

In this week's Off The Cuff podcast, Chris and Wolf Richter discuss:

  • China's Warning Shot
    • The recent Treasury gambit is classic geopolitics
  • Downdraft Risk
    • Will it be possible to avoid a crash in 2018?
  • Real Estate Is Looking Vulnerable
    • Key markets are running out of buyers
  • Rising Oil Prices
    • A major candidate for the pin to pop this bubble

Wednesday, the markets lurched in fear as China announced it was thinking of slowing/stopping future purchases of US Treasurys. Later, a Chinese spokesman declared the story "fake news". But was it? Or was this a deliberate geopolitcal chess move meant to deliver a stern warning to America?

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Off The Cuff: The Central Banks Are Starting To Really Worry

About the Frankenmarkets they've created
Friday, December 1, 2017, 12:29 AM

In this week's Off The Cuff podcast, Chris and Wolf Richter discusses:

  • Worried Central Banks
    • The risks of financial instability are mounting
  • The Cryptocurrency Conundrum
    • Can the central banks afford not to contain it?
  • Too Much Leverage
    • When credit tightens, the system will crash
  • Housing Harm
    • Many regional real estate markets are poised to burst

Wolf watches the minutes of the Fed and ECB closely, and concludes they are (finally!) becoming very concerned about the market imbalances that years of central bank liquidity and intervention have resulted in. They desperately want to cool things off, but have no idea how to do so without pricking the massive asset bubbles they have created. Whether they figure out a graceful way to do it or not (and he and Chris bet "not" is much more likely), he sees a fast-approaching sudden end to the era of ever-rising asset prices.

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Off The Cuff: Toxic Policies Are Killing The Economy

Ruining our tomorrow to benefit an elite few today
Wednesday, October 11, 2017, 1:56 AM

In this week's Off The Cuff podcast, Chris and Wolf Richter discuss:

  • The Pricing Of Risk Is Kaput
    • Today's assets are priced at truly insane levels
  • As A Result, Safe Yields Are Non-Existent
    • Which is killing savers
  • The Masses Are Being Betrayed
    • Sacrificed for the benefit of a rarified few
  • The Housing Bubble 2.0 Appears Set To Pop
    • More data is showing a topping out

Wolf returns this week to discuss the toxic repercussions of today's gross mis-pricing of risk. It leads to increasingly dangerous mal-investment, elevating the heights from which prices will fall during a correction. The worst part about this is that this current Mother Of All Bubbles is a deliberate act of policy by the central planners, who are sacrificing the future of the many to benefit the today of an elite few:

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Off The Cuff: The End Of The Easy Money Era

Its legacy?: Too many over-leveraged victims
Thursday, August 17, 2017, 6:29 PM

In this week's Off The Cuff podcast, Chris and Wolf Richter discuss:

  • Growing Signs Of Recession
    • Autos, retail, restaurants...
  • Dark Times For Commercial Real Estate
    • Bad enough that the Fed is worried
  • The Retail Hosing Market Is Popping
    • Toronto as a case study
  • The End Of The Easy Money Era
    • It's legacy: way too many over-leveraged victims

Suddenly, the tranquil seas long enjoyed by the markets have turned turbulent. Chris and Wolf react to the sudden volatility returning to stocks, the growing flood of recessionary indicators, the recent Fed statement, and the signs that the real estate market may have finally indeed topped out.

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Off The Cuff: Signs Of An Approaching Downturn

We're seeing more & more of them
Thursday, June 8, 2017, 12:00 AM

In this week's Off The Cuff podcast, Chris and Wolf Richter discuss:

  • The Late-Stage Housing Bubble
    • From the US, to Canada, to China
  • Signs Of The Approaching Downturn
    • Data everywhere is flat-lining
  • Soaring Debt Levels
    • At levels that make 2008 look tame
  • Canary In The Coal Mine
    • The bullet-proof Bay Area showing weakness?

The diverse data sets that Wolf tracks are showing increasing signs of building weakness across the global economy:

We see weakness all over the place now in the United States. In terms of the corporate credit cycle, we have commercial and industrial loans flat-lining since November, meaning they have grown very strongly from the financial crisis and they peaked in October. Since then, it’s all just flat-lining.

And the only time this ever happened in the past, it’s been affiliated with a recession because these are loans that companies take out to fund equipment purchases and for expansion purposes and for the things that are useful to an economy. These are not loans that are used to buy back stocks. This is not for financial engineering. These are actual productive funds. And when you see companies putting a lid on this, they’re not expanding anymore. They’ve borrowed as much as they’re going to borrow, and at some point, these commercial industrial loans will turn down. And this has happened in every recession before.

Plus, we have now a surge in bankruptcies in the United States in terms of commercial bankruptcies. I just did a report on that earlier in May. The prior peak in bankruptcies was during the financial crisis.

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Wolf Richter: The Economy Is Cracking Under Too Much Debt

Housing, restaurants & retail are suffering
Sunday, October 16, 2016, 1:25 PM

Wolf Richter joins the podcast this week to discuss the deterioration of the global macro situation, and how he is seeing growing signs of recession breaking out across the economy. » Read more