In this video of Daily Market Insights, Coy Wells talks about treasury bonds, raising interest rates, inflation, pension plans and others trends affecting the U.S. economy.
More Turbulence for the U.S. Economy- Video Transcription
Coy Wells: 00:00
Speaker 1: 00:00 Good morning and thank you for watching Daily market insights. Today we're gonna talk about Treasury bonds again. Today, two major news sources are talking about Treasury bonds. Reuters is talking about how the U.S. Treasury bonds are being supported and that the yields look like they are getting higher. But the flip side of that is Fox Business News says that they are flatter than normal and that they most likely that we're headed for a recession. So the question now becomes which one is it. This is a big topic that we've been talking about folks for over a year now. U.S. Treasury bonds are being liquidated by foreign countries headed back to United States. And going back to March 16th of 2017, we saw the Treasury Department suspend the sale of U.S. Treasury bonds due to the lack of money coming into the United States and the interest being eligible for new Treasury bonds being sold. Not being lifted,
Coy Wells: 00:44
Speaker 1: 00:44 But it was a clear signal to the world that Treasury bonds were in trouble. Several weeks ago, actually about a month and a half ago, Jerome Powell the new Fed chairman stated that we were going to have to raise interest rates. Interest rates were going to be raised in the interest of salvaging, balancing the Federal Reserve's balance sheet. meaning taking these treasury bonds that have come back to the United States and raising the interest rate, making them more appealing and clearing the Federal Reserve's balancing sheet. Being sold, enticing someone to get them off the balance sheet. If interest rates are not going to be raised which they're now stating today on multiple news sources that they're going to stay status quo. What that means is we're going to see more volatility in the stock market, means the stock market is probably going to come down.
Coy Wells: 01:25
Speaker 1: 01:25 It's probably going to stabilize and then we're going to see the stock market come back up again because it means that money will continue to stay cheap and it is one of the ways that we're going to continue to stimulate the economy. Think about what we've done in beginning of the year we've talked about these items: one we repeal the Dodd-Frank Act. Number two, we increased the amount of money that we're going get in form of tax reform and three, we started doing tariffs. Now instead of raising interest rates to try to stabilize the economy we're going to continue to support low levels of interest rates while allowing the banks, the mid-level banks under the repeal of the Dodd-Frank Act, to open up the floodgates to giving loans to those who normally would not be eligible to apply for those loans and would be eligible for them.
Coy Wells: 02:08
Speaker 1: 02:08 This is a big deal folks. This means that we're in a lot of turbulence and a lot of trouble here and they're scrambling and they're grasping at straws to be able to come up with a decision on what they need to do. When you start seeing the miscommunication from multiple news sources such as Fox and then Reuters both saying two opposite ends of the spectrum here, It means they're confused as well. Not that they're confused, it means they've got viewpoints from analysts that are different opinions or opinionated in regards to what's going to happen to the economy. When that starts happening and you start seeing a variance between major news sources like that and the common ground of the news in regards to the economy is not in alignment there's a problem there. And if you've watched the stock market over the course of the last 90 day,s we've seen the stock market make some huge moves up down up down.
Coy Wells: 02:56
Speaker 1: 02:56 We've seen three of the largest days- one day drops that we've seen- top 12 in the last 50 years. So we're starting to see some turbulence. And we've talked about it time and time again. One of the other things too this morning on CNN news and on CNBC news, they're now talking about the pension plans inside the United States. This is something that we talked about in regards to the fiscal states of America. This is a report that we put out over a year ago and this specifically talks about every state inside of the United States and how the states are borrowing against the employee pension plans. This is becoming a bigger issue and now it's being talked about on mainstream media. This is something we talked about for over a year now. This is a great article. It's about 25 to 30 pages it talks about every single state inside the United States and how the pension plans have been borrowed against and how much has been borrowed against with inside
Coy Wells: 03:45
Speaker 1: 03:45 Each state. Each municipality has also borrowed against those pension plans, which even deepens the wound and makes it much harder for those if we become under a major recession or a deep seated recession for those states to get out of those debt levels and putting those employees or former employees in jeopardy of losing their retirement accounts. This is a big deal. What the other thing we've talked about is inflation so start looking at the goods and services that you're buying around the country in regards to groceries primarily and you're going to see that inflation is already starting to set in. That means that the economy the United States is not as robust as it should be. It means that the value of the U.S. dollar is declining and for that, vendors will increase the price of their goods to make up on the loss of the dollar that they would normally look at.
Coy Wells: 04:29
Speaker 1: 04:29 This is something that we normally do not look at from a consumer. You and I use the dollar every single day and when we talk to consumers on a daily basis, they can talk about everything under the sun. But when you start talking about the dollar that they use on a daily basis, the one thing that they state is if I ask the question “how much has the dollar lost in the last six months?” they can't tell you how much the dollar has lost in last three months. They can't tell you how much it has lost in the last 30 days. They can't tell you, it's something that you're using on a daily basis and you need to be aware of what's going on with the dollar. The dollar has lost a significant amount of money. Roughly 24 cents since Donald Trump has taken office. Each new president that comes into office sees a parabolic rise in the value of the currency. New stability,
Coy Wells: 05:11
Speaker 1: 05:11 New change typically means an increase in the value of the dollar. The dollar is sitting at about eighty nine cents. We've lost a significant amount of value on the US dollar in a very very short period of time. To put that into perspective is that the U.S. dollar in the course of a 08 to 2011 lost 33 percent under that recession. In two thousand, the dollar lost roughly 27 cents on the dollar over a six year recession. We've lost 24 cents in a year and a half. That's a big big loss. And that is what is contributing to the instability inside the United States and also over the past couple of weeks, this is something we can talk about this week- is the G 20 financial summit that is now taking place. The top financial leaders around the world including the International Monetary Fund are talking about the United States and the overall debt that it is holding.
Coy Wells: 06:02
Speaker 1: 06:02 That's not a group you want to be messing with and most of them are not in support of the United States and some of the measures that are being taken place and our allies are at the forefront of that with some of the decisions that are being made here in the United States. We don't really want the International Monetary Fund or the G 20 financial summit making implications towards the United States. It could be crippling to the United States with more of that information coming on our next show. As always thank you all for watching daily market insights. Again, Call in or click on the link and get your free copy of Fiscal States of America. This will give you some more information regarding the pension plans inside the United States. And as always thank you for watching daily market insights.