I have wondered what the decline in home sales may mean for the economy.* It turns out there are other problems too.
"I know more than they do," Cramer said, urging Fed officials to "do more homework" and talk to more CEOs to get a better picture of the pockets of weakness in the economy. "I'm shaken here about what's happening because it's happening faster than the Fed seems to realize." He pointed to the recent sharp drop in oil prices as well as slowing in homebuilders, autos, and retailers as signs.**
Regarding agriculture:
Corn and soybean prices are hovering near decade lows, and this year's bumper harvest is further swelling U.S. farmers' massive stocks of unsold grain.***
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Overall, U.S. net farm income will fall to $65.7 billion this year, down 47 percent from just five years ago, according to U.S. Department of Agriculture forecasts.***
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In July, Trump slapped a 25 percent tariff on $34 billion of Chinese imports, prompting China to impose a 25 percent duty on American exports, including soybeans. The impact was swiftly felt among soybean farmers. Last year, China bought about 32 million tons, but now buys almost none.***
To some extent, the economic problem was covered up by companies buying back stock that had the effect of juicing the stock market making it look like we were entering a bubble, something that seems to be over. If we are in a bubble, it may be a debt bubble:
"From a 50,000-feet viewpoint, we're probably in a global debt bubble," [Paul Tudor] Jones said at the Greenwich Economic Forum in Connecticut. "Global debt to GDP is at an all-time high."****
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The hedge fund manager believes it is in the corporate bond market where the first signs of trouble will emerge. Data from SandP Global released earlier this year showed U.S. corporate debt hitting an all-time high, totaling $6.3 trillion. Global debt also hit a record high earlier in 2018, reaching $247 trillion.****
It is amazing that companies haven't used all this money from the tax cut to buy back debt. Since the tax cut generated money coming from the tax cut is borrowed by the Federal government, there may be a two-way debt crisis.
All the above is receiving supportive forecasts from financial organizations.
JP Morgan economists expect economic growth to slow down in 2019, to a pace of 1.9 percent for the year.
The economist say the slow down from a "boomy" 3.1 percent in year-over-year fourth quarter growth will come as fiscal, monetary and trade policy get less supportive or more restrictive.****
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The economists expect that growth will hold above 2 percent in the first and second quarter, at 2.2 and 2 percent respectively, before falling to 1.7 percent in the third quarter and 1.5 percent in the fourth quarter. The economy last grew at less than 2 percent in the first quarter of 2017.****
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Boosted by tax cuts and stimulus, the economy's growth picked up to a peak of 4.2 percent in the second quarter, 2018 and was growing at 2.5 percent in the fourth quarter, according to JP Morgan's forecast.****
* http://stopcontinentaldrift.blogspot.com/2018/10/home-sales-fall.html
** https://www.cnbc.com/2018/11/16/cramer-blasts-the-fed-i-know-more-than-they-do--do-more-homework-on-the-economy.html
*** https://www.cnbc.com/2018/11/15/soybean-farm-belt-sticks-with-gop-in-midterms-but-democrats-gain-ground-cnbc-analysis-shows.html
**** https://www.cnbc.com/2018/11/15/paul-tudor-jones-says-were-in-a-global-debt-bubble-and-maybe-tax-cut-wasnt-a-good-idea.html
https://www.cnbc.com/2018/11/21/theres-a-9-trillion-corporate-debt-bomb-bubbling-in-the-us-economy.html
https://www.cnbc.com/2018/11/20/jp-morgan-sees-a-slowdown-coming-with-economy-growing-at-less-than-2-percent-in-2019.html
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