December 25, 2019 | A Macro Forecast from Kingdom Economics for 2020!

Big events are likely in 2020. The eleven year record of up financial markets is likely to change in 2020. I am now forecasting a recession in early 2020. The evidence is becoming clear. What leading indices point to this recession:

1. The Baltic Dry Index is a leading indicator of economic change. This index has been heading down for the past three months. It is now at 1103. This is down some 900 points in three months. This points to a slowing economy for raw materials and durable goods. As a leading indicator this points to recession in early 2020.
2. The auto sector is heading down and production is down from 2018. This points to a slowing economy and the end of a cycle.
3. The ISM manufacturing index is at 48.1% and this now points to a slowing economy for the past year. The index was at 54.3 in December 2018. As manufacturing goes so goes the general economy.
4. The real estate sector has peaked and affordability is now a problem for first time buyers. This points to a slowing real estate sector and a decline in values for 2020.
5. Exports are declining and this points to a lack of demand from foreign buyers. China is buying less. India is buying less. Germany is buying less. This points to a slowing economy and a recession on the horizon.
6. The demand for safe haven investments are growing and this indicates an end to the prior business cycle. I would expect the business cycle to start its decline in early 2020.
7. The growing deficit is now nearly $1.3 trillion. Our national debt is now nearly $23.1 trillion and the total debt bubble is 74.4 trillion. That just for Americans, This degree of debt slows the general economy and becomes unbearable when a recession arrives.

Our stock markets are melting up even as our general economy is slowing and heading for recession. This is possible as these virtual markets can be manipulated up by our central planners (using trading algorithms). We may witness up markets for stocks even as the general economy heads for recession. Manipulated markets can be forced up by traders operating as our Plunge Protection Team for a season. But at some point investors will reject the manipulation and start buying safe haven investments (such as gold).

When the general market decides to purchase safe haven investments (gold primarily) then a recession will follow quickly. Gold is the ultimate safe haven commodity which investors choose as a ‘store as value’ when the general economy declines and crashes. Watch the price of gold into 2020 and when it surpasses $2000/ounce then a recession will not be far behind. Gold is currently at $1488 and I expect this metal to reach $2000/ounce in early 2020.

The macro picture is now clear. Our global economy is slowing rapidly and the U.S. economy is starting to slow significantly. The Baltic Dry Index is my best indicator as it leads most other indicators. This index has mostly crashed these past three months. I doubt that our central planners can reverse the trend which has now developed. Prepare for a general global recession in 2020. My job is to report what I sense as coming.

Have a great Holiday season and watch the manipulated markets as they change to a BEAR in 2020. The BULL is soon over. We had a great ride for nearly eleven years (2009 – 2020). A business cycle does eventually arrive to change a prior trend. I sense this result as I watch our markets daily. I am: https://kingdomecon.wordpress.com.

Don Swenson December 25th, 2019

Posted In: Kingdom Economics

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