For over 15 years we have been publishing The Trend Letter, and in that time span we have made hundreds of recommendation to subscribers, and many of those recommendations have made subscribes huge gains.

In the past few weeks, our models have triggered 4 new Buy signals, all designed to position our subscribers to be prepared for the changes ahead. In addition to the new Buy signals over the last few weeks, we anticipate that many new Buy & Sell signals will be triggered soon.

For years we have talked about and warned how we were approaching a global Sovereign Debt Crisis. As we near 2018, we are getting much closer to this crisis kicking in.

We have seen yields on Sovereign bonds from as high as 20% in the mid 1980’s, to just a year ago seeing over $12 trillion invested in government bonds yielding less than 0%. Instead of receiving 20% per year for lending the government their money as they would have received in the 1980’s, these investors were willing to pay the government each year to take their money. And many of these bond holders were willing to give the government their money for periods of 7 years or longer, and pay the government for the privilege.

The reality in all this is that every government has been following the same plan, run up massive deficits, promise lots of free things to the poor and middle class, and then issue huge amounts of debt to pay for these promises. But the deficits keep growing, so governments then raise every tax and fee they can find. But even that isn’t enough to cover the massive debt loads.

The reality is that most governments have borrowed much more than they will ever be able to pay back, and the result will be a global wide Sovereign Debt Default, and it will financially destroy most of the citizens.

Even those who think they are immune because they do not invest in bonds or much else. will be affected. If you have a pension plan, you will be affected. If you expect Social Security, you will be affected. The global bond markets are huge, and when investors realize how at risk those government bonds are, and all try to head for the exits at the same time, many will be crushed.

Socialism is the art of spending other people’s money. All we hear from politicians today is that the “rich” are not paying their fair share. They keep blaming anyone who has been successful, calling them tax cheaters. In Canada, during the last election, the Liberal party promised to cut taxes for small business. Now that they have been in power for two years, they are going after small businesses, saying they are cheating the system. They say they are doing this to protect the middle class, even though most small business owners are middle class.

Those in power never look in the mirror and realize  that borrowing and spending far more money than you can ever possibly pay back is a very bad strategy. Instead they look for a scapegoat, and the scapegoats today are anyone with a reasonable income.

In 2009, we warned that we were heading for a class war, where those retired and collecting a pension would be attacked by those younger people having to pay for those pension plans. It is neither the fault of the retired seniors, or the younger workers. The real culprits are the politicians and bureaucrats who led us down this unsustainable path.

Today we hear calls for “free” education and “free” guaranteed income to all. We wonder where that money will come from. For years these policy makers knew what was coming, but instead of tackling the situation when it was manageable, they simply “kicked the can” down the road, leaving it for the next administration to deal with it. And of course, the next administration did the exact same thing.

It didn’t matter which political party was in power in the US, as both the Republicans and Democrats did the same thing. The pace of overspending  ramped up with Bush and Obama. In fact, Obama racked up more debt than all other presidents combined. With Trump’s promises of massive spending, this trend is not likely to end anytime soon.

Here is a chart showing how the ‘official” US federal debt has grown dramatically over the past 16 years.  The total ‘official’ US debt today is $20.17 trillion! To put that number into perspective, it equates to $61,913 per citizen, or $167,309 per taxpayer.

This situation is not going to be solved without a lot of pain for a lot of people. Governments are now getting very desperate for cash, and the mantra they are all now chanting is “tax the rich.” It is going to get violent and very ugly. It will not be limited to one country or one continent…it will be global.

Those who understand what is happening and how to follow the global flow of capital will be able to position themselves to not only survive this global financial crisis, but to actually prosper from it.

We are following these developments very closely and have a plan to get our subscribers through this crisis, so that they remain in good financial shape once the worst is over. New Buy and sell signals will be issued soon.

If you would like to join our growing list of subscribers, and receive all of our Buy and Sell signals. at a 38% discount, click here. Note that all subscriptions come with a 90-day, money-back guarantee.

Stay tuned!

As expected, the US Fed announced on Wednesday that it would start slowly reducing its massive $4.47 trillion balance sheet.

Starting in October, the Fed will end its practice of fully reinvesting the principal payments of maturing bonds into new bonds, and instead allow $10 billion in holdings to roll off, meaning they will not re-invest that money into new bond purchases.  Those amounts will increase by another $10 billion each quarter, until they reach their maximum target of $50 billion per month.

The Fed has gone to great pains to plot out its moves so that it doesn’t unnerve markets. It has emphasized that the reversal of its controversial bond-buying program is supposed to be a boring, gradual process. Fed chair Janet Yellen has expressed hope that it will “just run quietly in the background” in the coming years. Philadelphia Fed President Patrick Harker has gone so far to compare the process to watching paint dry.

Given the large size of the Fed’s debt holdings, in the absence of Fed bond buying for reinvestment, the market will need to find private sector investors to fill the void. Consequently, there should be some upward pressure on yields, especially since the Fed will also likely continue to raise short-term interest rates as long as we continue to see improving economic growth.

If inflation actually gets past the targeted 2%, then growth and inflation, combined with the Fed balance sheet reduction, should give interest rates a boost.

Geopolitical events, such as North Korea tensions, can certainly send ‘safe-haven’ capital into bonds temporarily, but longer-term we should see pressure on bonds, which will push yields higher.

Mortgage rates may feel the impact more than the Treasury market. The Fed holds about $1.75 trillion in Mortgage Backed Securities (MBS), which is almost 40% of the outstanding securities issued by Fannie Mae and Freddie Mac. Until the Fed began hinting at reducing its balance sheet, MBS yields were only about 1% above Treasury yields of similar maturity. The yield difference has begun to widen recently, and as the Fed pulls back from the market, mortgage rates should move higher.

Stay tuned!

Note: We sent out a trade recommendation on Tuesday to subscribers of The Trend Letter to take advantage of rising bond yields.

If you would like to  subscribe to The Trend Letter to receive all of our BUY & SELL signals, and receive a 38% discount off the regular rate, CLICK HERE

Toys ‘R’ Us has filed for bankruptcy protection in the US and Canada as it attempts to restructure its debts.

We have been highlighting for over a year now how big box retailers are on a death watch as online monsters such Amazon continue to wipe out the competition. While loss of market share is certainly a part of the problem for Toys “R” Us, it is their massive debt load that was the final nail in the coffin.

Investors need to be very wary of heavily indebted companies who will need to re-finance over the next few years. Toys “R” Us had more than $1.5 billion of debt scheduled to mature over the next two years. But they are not alone, as we can see on the following chart, the amount of junk rated debt maturing is rising dramatically. From 2016 to 2020, the total junk rated debt maturing is over $1.3 trillion.

If you have bought a new car in the last couple of years, you may be shocked at how much data it is collecting about you. Of course it is not just cars that are collecting personal data, but any device that is connected to the internet has the potential to become a spy, even if its original purpose was harmless.

Most people who purchase the Google Home or Amazon’s Echo devices are aware that these devices are tracking and recording what is being said in their home. But do owners of new cars understand how much of their personal data is being tracked and recorded? Users typically agree to be tracked and monitored by checking off a box on one of the user agreement forms needed to register a car’s in-dash system or a navigation app. In most cases, the driver must agree to such terms to use the app or service.

Newer cars can now track phone calls and texts, log queries to websites, record what radio stations you listen to — even record when you are breaking the law by exceeding the speed limit. While most consumers appreciate how these abilities can enhance their lives and driving experiences, most are likely unaware of how all this data is being used, and by who.

Police, automakers, insurance companies, retailers, and many other groups  are eager to leverage this information. As we move into the self-drivng cars, they will want to track even more.  Adobe just announced new services unveiled today to help businesses analyze data from web-enabled autos.  Adobe will provide analytics, marketing features, and help automate audio ads, enhanced by the company’s artificial intelligence feature called Sensei.

From Adobe …”With the new analytics service, companies can capture behavior signals in the vehicle, such as song selections or voice interactions with the infotainment systems. This could then help better personalize what driver or passenger sees or hears in their vehicles—such as an offer from a restaurant or a discount at the hair salon, based on navigation data.”

There are many valuable services where drivers are willing to trade their data, such as live traffic services like Inrix, that can save a driver hours of time in exchange for sharing location and speed information. There are also products like Autobrain, that offers connected car services, like car diagnostics, via a dongle that plugs into a car.

Insurance companies are now offering discounts to drivers who use their apps that can record driver behaviors such as speed, braking , and if the driver is holding the phone or using Bluetooth.

“We give value back to the customer,” said Mariel Devesa, Farmers’ head of product innovation, noting that drivers can save up to 13 percent on their insurance based on their habits. “And they can improve as drivers by seeing their scores.”

While there are definite benefits to the consumers,  there are a lot of groups anxious to get hold of this data. Companies are now trading information collected from multiple sources, including cars, to reveal travel and buying patterns.  Aggregated information can be purchased from navigation companies, for example, and combined with other so-called anonymized information from dating apps to identify the habits of a specific demographic.

“We can tell who’s on the road, where they live, how frequently they make this trip, and whether or not they are on vacation,” said Laura Schewel, founder of StreetLight Data, which provides such information to clients like urban planners and retailers.

As for privacy, don’t be looking for the courts to protect you. As reported in Forbes, the government has a solid argument in noting drivers’ right to privacy does not stand where they consent to using services like OnStar that rely on tracking to work effectively. As a SiriusXM spokesperson told Forbes  “all customers agree to the terms and conditions, and the privacy policy, of the service when they sign up”.

Sources: NY Times, Bloomberg, Forbes