Routine correction... or 21st-century nervous breakdown?

[Bill Bonner’s Diary]( Routine Correction… Or 21st-Century Nervous Breakdown? By Bill Bonner, Chairman, Bonner & Partners The fall of the dollar is not the fall of the dollar… It’s the fall of the American empire. – Hugo Chávez [Bill Bonner] RANCHO SANTANA, NICARAGUA – Bad action yesterday. But a big bounce is again in the cards for this morning. Bernie? C virus? Who cares? We’ve got Joe Biden and an even lower Federal Reserve rate! We still don’t know which way the markets are going. But the confusion… absurdity… and volatility bespeak not merely a routine market correction, but a 21st-century nervous breakdown. This giant Humpty of an empire – debt-drenched, bent by age and debauchery, befuddled by decades of wacky monetary policy – is slipping off the wall. And the Fed can’t do anything about it. 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[Click here to register for free]( -- Clear Signal Note what happened in our favorite indicator – the Dow-to-Gold ratio. As colleague Tom Dyson wrote [here]( its 200-day moving average crossed over to the downside. In other words, it gave us a “buy” signal. Buy gold that is. Dump stocks. We didn’t really need the signal. Sticking with our core timing program, we buy stocks when we can get the Dow for five ounces of gold… or less. We stick with the position until the Dow stocks are worth more than 15 ounces of gold, then we trade our stocks for gold. Easy peasy. The Dow-to-Gold ratio went over 15 in 1996. So the bulk of our money has been out of stocks ever since. (The exception is that our old friend Chris Mayer still manages a nearly permanent portfolio of deep-value stocks for us. We stick with it no matter what the stock market does.) [Amazing 17-second Video Reveals Key to Tech Fortune…]( So we missed the fireworks from ’96 to 2000, when the Dow hit its all-time high in terms of gold. But we also missed the crash that followed… and the crisis of ’08-’09, too. And now, stocks are nominally four times higher. Did we miss a 300% run-up? Nope. Because gold ran up, too. Measured in gold – the only true money – stocks are almost exactly where they were 24 years ago. And during those 24 years, we believe the empire peaked out. In other words, with the gold we got when we turned in our stocks in 1996, we can now buy back into the market on the exact same terms. But we’re sticking with our plan. We’ll hold gold until we can buy the Dow for five ounces. But the Dow-to-Gold ratio isn’t the only thing cautioning us out of the stock market. There are two other warning signs… Recommended Link [This weird painting hides a trillion-dollar secret (can you spot it?)]( [chart]( It looks like a painting you might see at the Metropolitan Museum of Art… or the Louvre. But the “artist” who created this portrait is not a name you’d recognize. That’s because it isn’t a human at all. It is an AI “robot.” And the technology behind it is growing at an incredible pace. More than 75 billion devices worldwide could access it by 2025. And according to PricewaterhouseCoopers, more than [$15 trillion in wealth is up for grabs](. That means you need to know the right stocks to buy now. Silicon Valley angel investor Jeff Brown has three companies at the top of his list. He predicts these three companies could one day be worth 15x more than Apple. [Jeff spells it out for you right here]( -- Recession Ahead First, take a look at the transports. According to classic Dow Theory, it’s the transports that tell you what is really going on. The Fed might jive up stock prices generally… but the transports tell you if the goods are moving. Trucks, trains, ships – all products have to get where they are going somehow. So, if there is no upward trend in the transports, a boom in stocks will be false… tentative… and short-lived. And yesterday, while the whole market sold off, transports sold off even more. A midday report from MarketWatch: The Dow Jones Transportation Average is falling 195 points, or 2.1%, and has given back everything it gained in the previous session’s big stock market bounce, and then some. All 20 index components were losing ground. […] The Dow transports, on track for the lowest close since Jan. 7, 2019, had gained 0.9% on Monday after plummeting 14.9% over the previous six sessions. In comparison, the sister Dow Jones Industrial Average fell 2.5% on Tuesday, after soaring 5.1% on Monday, which followed a 13.0% drop the previous six sessions. The Dow transports has now lost 18% since Jan. 16, when it closed at the highest level since Oct. 3, 2018. [New 5G Device Revealed to Public for First Time]( And there’s one further straw in a strong wind: The yield on 10-year Treasury bonds – the common brick upon which rests the whole U.S. financial world – fell below 1% for the first time ever. Since consumer price inflation is running over 2%, the net real return for lending money to the feds is MINUS 1%. This means three things: First, people are running scared. They want what they see as the safest refuge in the financial world – U.S. bonds. Second, the economy is softening. The falling T-bond forecasts recession ahead. Third, speculators expect the Fed to buy more T-bonds at higher prices. Recommended Link [Man Who Picked Apple, Bitcoin Makes Next “Pick of the Decade”]( [ad_img]( Picking the right “investment of the decade” can transform your life… Microsoft in the ‘80s… Amazon in the ‘90s… Apple in the 2000s… Bitcoin 2016. Any one of these could have made you a millionaire many times over. Starting with very little. Today, the Wall Street legend who picked the last two “investments of the decade”… months (even years) before his peers… will finally reveal his new #1 pick for the 2020s. It’s not 5G, artificial intelligence, or the internet of things. The answer will surprise you. And, for those who take early action, it could lead to an eventual $1.6 million payout. [See #1 Pick]( Fully Addicted Of course, it is not our place to advise the august Fed governors on how to do their job. But in the spirit of civic mischief we offer this little hint about how an Inflate-or-Die economy works. Once you begin inflating… you have a period in which, by decisive and steadfast action, you can undo the damage and return to a more-or-less healthy and honest economy. That is what Paul Volcker did in 1980. It’s too late for that now. When an economy becomes fully addicted to your funny-money stimulus, you can’t take it away. The withdrawal pains are so severe that, politically, it is impossible to do. Businesses, larded up with debt, will fail. Rich campaign contributors will close their wallets. The voters will howl for more giveaways just as tax revenues decline and deficits soar. And economists at Harvard and the International Monetary Fund will tell you that you are a fool for “withdrawing stimulus” when the economy needs it most. So, you have to keep adding stimulus (inflation… liquidity… etc.). But it’s not enough to add what the market expects. That is the error the Fed made yesterday. A 50% rate cut had already been fully priced in. “Buy the rumor, sell the news,” say the old timers. Speculators know as well as we do that the Fed is in an Inflate-or-Die trap. Then, when the Fed only cut the expected 50 basis points, they sold. An economy that depends on inflation (more money and credit from the central bank) is inherently unstable. It can’t stand still. The feds have to up the ante all the time or it collapses in on itself. So heads up, Jerome Powell. If you want to join Alan Greenspan on the “Committee to Save the World”… or join Ben Bernanke as The Atlantic magazine’s “Hero,” you’ll have to do better than a measly 50 basis points. Regards, [signature] Bill Like what you’re reading? Send your thoughts to feedback@bonnerandpartners.com. FEATURED READS [Federal Reserve Slashes Interest Rates]( Attempt to Address Coronavirus Impact]( our editor expected, Fed intervention related to the coronavirus has begun. While longtime Diary readers will know the [government can’t remediate economic damage]( Donald Trump has reamed the Fed for being “slow to act”… [Doug Casey: Now Is the Time to Invest in Undervalued Metals]( been pounding the table on gold for quite some time now. But Bill’s friend and colleague Doug Casey says now is the time to also consider investing in these other undervalued metals… MAILBAG Mixed opinions after a Dear Reader said, in Tuesday’s mailbag, that “disrespecting the president weakens a strong nation”… Sharene’s point is right on. There is an undertone of dissent from these messages sent out towards our president. If you don’t like our president, keep your opinions out of your newsletters to us. The majority of the people think he is doing a good job whether you/people do or not. – Bryan S. Your president doesn’t need any help to weaken your nation – he does that job very well on his own. He truly is the emperor without any clothes. I’m really not sure if he can differentiate between truth and lies, which is worrying for someone in his position. I hope I’m wrong, but I’m not sure that would be any better. My thanks to Bill for his erudite take on politics and economics – always extremely interesting. I also find the tales of his travels fascinating. Keep up the good work! – Dave G. Justifiably calling out a president when warranted doesn’t weaken us as a nation. I believe if we have leaders who take notice and recognize mistakes, we can be stronger. We are supposed to speak truth to power, regardless of who is in power. What weakens us as a nation is having a leader who divides its people with his comments or tweets almost every day, deliberately lies multiple times a day to its people, makes uninformed decisions based on what he sees on television, and bows down to authoritarians while distancing our allies. – Hugh M. While other Dear Readers discuss [the coronavirus]( and Bill’s hosting the Dyson family in Nicaragua (read more about that in Tom Dyson’s Postcards From the Fringe e-letter, [right here]( The coronavirus is dangerous. Some people suffer illness and some people suffer death. My impression is that it is more contagious and possibly more lethal than some other viruses. We don’t really have enough information to know just how lethal it is at this point. It could become a pandemic, however with the attention and energy devoted to fighting the disease, I believe its destruction will be minimized. – Richard D. Love your take on things, Bill. And yes, your great analogies also! It’s sweet that you’re putting up Tom, Kate, and the kids at Rancho Santana. You’ve built a beautiful community. – Bert B. Is Trump weakening the nation “well on his own,” as Dave thinks? Is the coronavirus’ impact going to be limited, like Richard thinks? Write us at feedback@bonnerandpartners.com. IN CASE YOU MISSED IT… [Internal Bank Document Reveals Shocking Change on Page 36]( [chart]( This internal document details a shocking policy change taking place at the highest levels of the banking industry. And your bank could be involved… While many Americans may be blindsided… If you act early enough, you could turn this into a huge opportunity. [See How This Could Affect You…]( [Bonner and Partners]( Bonner & Partners 55 NE 5th Avenue, Delray Beach, FL 33483 [www.bonnerandpartners.com]( [Share]( [FACEBOOK]( [Tweet]( [TWITTER]( This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. To stop receiving these emails, click [here](. Bonner & Partners welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-681-1765, Mon–Fri, 9am–7pm ET, or email us [here](mailto:contactus@bonnerandpartners.com). © 2020 Bonner & Partners, LLC. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Bonner & Partners. [Privacy Policy]( | [Terms of Use](