With China celebrating their 70th birthday, the markets had to look elsewhere for its daily headline fix. Unfortunately for the market bulls, they were forced to look not at hope (of a trade deal), but at the reality of the economic fundamentals. And what did they see?… They saw the ISM Manufacturing PMI drop to the lowest level since June of 2009. The reading came in at 47.8 following the contraction of 49.1 in August, and missing market expectations of 50.1. They also saw US construction come in below market expectations. This is the late-stage of the business-cycle and it’s unlikely that this time around that $1 trillion deficits, zero interest rates, negative interest rates, and quantitative easing will be able to “rescue” the system. Why?…Because the world is awash and oversaturated in debt and the solution simply cannot be more debt! Nevertheless, this is what is going to be preached from central banks, federal governments, and the International Monetary Fund (IMF). Where we find ourselves today is similar, but different to the environment that led to the Great Recession – history may not repeat, but it does rhyme. The world of the mid-2000s found the consumer over saturated, along with a handful of corporations, and financial institutions that were highly-levered. This inevitable bubble-bursting operation lead to the Great Recession. So, last time it was the consumer and some corporations. This time, it’s the consumer, corporations, governments at all levels, and even central banks. There isn’t enough growth on this planet to mop up this amount of debt. So who is going to be bailed-out this time? Politically, there is not going to be an appetite from the general populace to “save” the banks or corporate America…again. This doesn’t mean that politicians won’t do so, but they’ll do so at their own peril. Therefore, the likely “solution” will be more deficit spending on various projects to appease the masses and central bank intervention of lower interest rates and quantitative easing – great, more of the problem to act as the solution! Twilight Zone, anyone? Despite monetary and fiscal stimulus measures around the world, we continue to witness fundamental economic deterioration. This business-cycle is peaking and the ensuing recession will likely make the Great Recession look like child’s play. This is not said lightly, but when you have more debt than ever, generally weak demographics globally, (especially in major economies), stimulus measures that are not stimulating, political uncertainties and instability, and continued validation that the global economy is slowing – what do you think will happen? Manufacturing down and volatility up. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #Manufacturing #Economy #Debt #EndTheFed #Politics #Invest #Money