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source: Eurozone GDP Growth Rate, Courtey of tradingeconomics.com


source: United States GDP Growth Rate, Courtesy of tradingeconomics.com



The Inverted Yield Curve and Recession

Pre-recession Could be Current State of U.S. Economy, Emotionally!

Defining a recession as two consecutive quarters of negative GDP growth doesn’t tell the whole story of the effect human emotions has on the financial markets. Before there are any consecutive quarters of negative GDP growth, there is the impact of human emotions on the financial markets, which should be taken into consideration. So, by the time two quarters of consecutive GDP growth hits the headlines, investors’ emotions would’ve already nose-dived into depression, dragging down the economy with it. That scenario could be the vampire plaguing the current U.S. economy.

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US Treasury 30-Year Bond Yield Hits Record Low, Economy Heading for Recession?

The infamous inverted yield curve is used to forecast economic recession and it too has shown itself a few times recently, flip flopping its way into the hearts of paranoid investors. The take-away from this is that for a true economic recession to occur, the inverted yield curve must remain inverted for many months to qualify as a true predictor of economic recession.

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US Federal Rate cut has come and gone, Now What?

The price of gold has certainly benefitted from the US-China trade war, hitting a six-year high of $1,510. When there are uncertainties in the US dollar and global economy, investors look for safe-haven asset classes to stash their cash. Gold is one of those safe-haven asset classes that investors turn to during times of trouble. In addition, the price of gold is inversely proportional to the price of the US dollar. This means that whenever the price of gold goes up, the price and value of the US dollar goes down. So, as currency traders who trade the USD against other currencies, we should all understand the relationship between the USD and AUX (Gold).

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The Current EUR-USD Price Action is Not Surprising

The moment the decision by the Feds to cut US interest rate is announced on July 31st, the US dollar will begin tumbling faster than a lightning thunder bolt. This is how the game is played. So, if you don’t understand the game, it is time to learn it.

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US Retail Sales Rose, But Building Permits Fall; Fed Rate Cut Decision Pending

The monthly building permit report is watched closely by traders, investors, economists, and by the Federal Reserve. Because all related factors associated with the construction of a building are very important economic activities (for example, financing and employment), the building permit report can give major hints as to the current state of the economy in the not-so-distant future. So, the fact that the latest building permit numbers came in well below estimates, there is cause for concern and the Feds may very will cut interest rate to jump start the economy by putting a cap on the progress of deflation.

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US Inflation Rate Fell from 1.8% to 1.6% Giving Strong Indication of a Fed Rate Cut in July

With a strong US dollar, the stock market suffers. This was also one of the reasons why President Donald Trump lashed out at the Feds claiming that the agency was not doing enough to stimulate the economy, condemning the agency for hiking interest rates two times this year, thus stifling the efforts of the US President to stimulate the economy when he championed the passing of legislation which allows huge tax breaks to companies.

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