A Coming Storm Update
The following is a reprint of the March 2015 Coming Storm newsletter…
A Coming Storm Update
Good news. The work of the Lord is progressing. I haven’t written much in the past couple years in part because I didn’t have anything different to say than what I’ve already said. I would write from time to time to say that I felt we probably had a couple more years before the economy turned down again. Today I have a different opinion.
I believe this is the year that we begin to see the economy begin to crack apart. My guess is that if I’m correct and these things begin in 2015, this year will not be the worst of years but will be a beginning of changes which drastically alter life as we’ve been accustomed. I do not have any certainty on the timing, so perhaps I am a year early, but I think the events I’ve been describing the past 5 years begin this year.
The beautiful and important part is that for those who have trained themselves up on depending on the Lord and not on worldly comforts or distractions, this will be a great year of increase in the Lord. He is pouring out His Spirit in unprecedented ways. For many other Christians the years ahead will be a crash course that is graded Pass or Fail. Faith will be tested which will often lead to tremendous growth or a falling away. It will be difficult to stay lukewarm.
I will tell you that recently the Lord has severely warned and admonished me to turn away from the ways of the world and to lead my family into what He has for us in order to be counted amongst those He sets apart for His purposes in these days. I hope and pray that I am willing to fully die to myself in order to receive everything He has for me in this time, both grace and cleansing fire. I pray the same for you!
So how do things look economically today?
The world economies are almost all hemorrhaging badly. The US is the bright spot today. Unfortunately, the US economy is barely getting by. A good economic data point comes out followed by a bad one. Although we have a record long stock market streak and economic upswing, we’ve never really gotten the rip roaring economic growth that one would think comes with such a long market run.
At Christmas time, I was asked by family when I thought the economy would turn down and responded it would probably happen after April because people and thus the stock market usually start the year out cheery and so things usually don’t turn down till May at the earliest. While I still think that would be the most likely earliest beginning, this data might contradict that theory.
I don’t know what will turn the tide negative. It could be that the bad economic data overpowers the good and the stock market crashes as it’s bound to do at some point. It could be that a flight from US Dollars begins perhaps because of a move by China or someone else away from the Dollar. It could be an escalation with Russia over Ukraine that spooks markets. The economy slowing which leads to a stock market tumble seems like a likely first step, but we’ll see.
Let’s look at a few of the issues that are out there right now in no particular order (and this is far from an exclusive list of the serious problems that politicians and bankers have allowed to continue to accumulate because they don’t want to deal with them on their watch)…
- The world economy is already in recession and continues to slow. This has to impact the US no matter what the media might be saying.
- US corporate profit margins are at record highs of around 10% and when margins come back to normal (as they always do) this will cause downward pressure on the stock market. It’s not possible for companies to continually increase profit margin as a way to boost profits (and therefore the stock market). Margins always revert to the mean.
- Greece has elected a political party who has promised its people it will not pay Europe what it owes them. Europe cannot allow this to happen or all the other countries with giant debt problems will want the same deal. In round one, Greek politicians backed down and the can got kicked down the road four months, but then they went back on TV in Greece and said they won’t back down. So round two will be this summer. One side or the other has to win, and the result will be bad either way. This problem is highly unlikely to go away until the Euro is obliterated one way or another. It is the root problem with the Euro that was pointed out by the skeptics at the time, but ignored by the New World Order types that always believe they can create a Utopian society by fiat. When this breakdown happens, it will most likely cause serious economic damage to the US since the US debt problems get highlighted and debt markets will seize up everywhere.
- The US stock market is at record nominal highs, but that doesn’t really mean anything. It’s almost always at a record high right before it makes a new record high. If that weren’t true, it would never get anywhere. What matters is the value of the numbers. In other words, how much profit or cash flow is being made for the price? The most commonly used method to look at this is P/E ratio. The US market is about at a P/E of 18.5 and the long term average is 16. So it’s expensive, but not incredibly so. I’ve seen an analysis looking at a time adjusted (CAPE) 5 year number that shows stocks actually being cheap. I’ve also seen that if you look at median P/E’s (instead of average), the market is at an all-time high (this values all companies more equally instead of letting the biggest companies tilt the average in their direction.) So, you can see what you want to see here depending on how you cook the numbers. But just looking at the P/E ratio, stocks are a bit expensive, but not extremely so. If you believe that the market is going to be rosy going forward, then perhaps it has a good ways to run higher before a crash. If you believe that the headwinds have become too strong, then it’s easy to come to the conclusion that a setback is coming.
- The US Dollar has made an extreme move higher over the last 9 months or so. This is not because the fundamentals of US fiscal or monetary policy are so strong obviously, but because the rest of the world is having problems. However, the eye of the world will swing back towards the problems of the US Dollar at some point. I would guess that we’re near the high now, but it’s hard to know because so many factors with so many countries are involved. What’s important to understand is that the US problems have not gone away and still must have their consequences. That time is closer. It would seem likely that other economic events would begin to harm the environment before this issue would come to the fore, but who knows, maybe our President’s lone wolf, lawless actions could outrage a large Dollar holder and a Dollar sell off would commence.
- The problems in the world are so severe right now that investors are paying 9 major countries interest to lend them money! So instead of receiving interest to lend money as is the norm. People are paying these countries money because they feel that at least they won’t lose more than what they agree to lose upfront. That is fear!
- Quantitative Easing (money printing) is alive and well worldwide. The central bankers timed it so that when the Fed stopped its QE, Japan would launch a new round. Europe began a huge round of QE since then. Does anyone reading this believe that these governments and bankers can just print new money out of thin air and solve their problems? It’s the only trick they know so they continue it in spite of failure, but move it around to help each other out and keep the people who see the danger off their backs.
- Unemployment is very bad the world over. The US government puts out a good unemployment number today while hoping you don’t notice the fact that we are still very close to record high percentage of the working age people who do not have a job. (Labor Participation Rate) That doesn’t mean a new downturn is coming, but what it does mean is that when it occurs, we head down from a much lower level. In other words, we won’t be able to handle the logistics as well and debt bombs will blow up more quickly and crises will escalate more radically.
I’m getting a bit depressed writing all that out and so I’m ending my list at 8 points. There’s still a huge stack of highlighted reading material on my cabinet, but it doesn’t matter. None of these points tells us exactly what will happen or when. All they do is point to the fact that there are severe issues that have not gone away and will not go away until the system is cleaned out. Because they have not allowed that to happen in decades and instead took on more debt and printed more bubbles into existence, the bursting will be much more dramatic than had we had multiple small ones along the way as is natural.
But none of this is really my point anyways. Yes, we help people to arrange financial affairs to not only survive but come out of any financial crises ahead of where they were. (If you are gaining while most are losing and then everything goes on sale, you are able to dramatically help your position and thus help those around you as well.)
The real point is that these events are not happening in some economic vacuum outside of God’s providence. The exciting part is we are living in days long talked about in scripture. If you are one who believes that everything will just go along like normal and then one day Jesus will appear in the clouds and it will be over, or that you will be raptured away, then perhaps you will not like this message. Because that is not how it’s happening. There are many steps to God’s plan pointed to in scripture that must happen before the end. I have a much better understanding of these important days than I do of what the end of this earth will look like. God is focused on the now in our lifetimes and His plan will be fulfilled and there is an order that is progressing for His plan in Man.
God’s plan has always been to bring many sons to maturity.
Hebrews 2:10 (NASB)
For it was fitting for Him, for whom are all things, and through whom are all things, in bringing many sons to glory, to perfect the author of their salvation through sufferings.
Jesus was made perfect through sufferings. You are not exempt from this (He said to pick up your cross and follow Him.) But the focus should be on the being made perfect, not on the sufferings. Jesus is the model life that God calls us into, not the far away fairy tale savior who doesn’t live in your current circumstances.
Hebrews 12:2 (NASB)
fixing our eyes on Jesus, the author and perfecter of faith, who for the joy set before Him endured the cross, despising the shame, and has sat down at the right hand of the throne of God.
Do you see what was set before Him? Joy! The cross doesn’t sound like joy, does it? But this is the promise of the Gospel. That if we will die to ourselves and take up His life, we will be filled with the joy of the life of Christ in us. We will live in the here and now knowing God and His abundant life no matter what our outer circumstances might look like. This is true Joy. This is true life. And this is the fantastic reality that He is offering in this season. Bless the Lord! And I pray that God blesses you and that you do not miss a bit of it!
I will publish this as both a newsletter and as a blog post. I hope to monitor events as they unfold with more frequency than I have been doing in the past couple years. Most of that will appear on the blog (which you can sign up for here.) Newsletters will tend to be bigger or in some cases more urgent writings which you can sign up for here.