Michael Pento Warns of Exploding Debt, Inverted Yield Curve, and Then “Economic Armageddon”
GoldSeek.com
Tuesday, 30 May 2017
Mike Gleason: Michael, how are you today? Welcome back.
Michael Pento: I’m doing fine, Mike. Thanks for having me back.
Mike Gleason: When we had you on last you commented that you believed the market was pricing in President Trump getting virtually all of his policy agenda pushed through Congress, the tax cuts, repealing Obamacare, and so forth. To say Trump has encountered some resistance in Washington would be a major understatement. The establishment of the right doesn’t seem to like him. The left and the mainstream media of course hate him. So, Michael before we get into the effects this will have on the markets here, first off, handicap for us the chances of Trump, based on what’s been transpiring in recent weeks, miraculously gaining enough allies in Congress in order to get his initiatives passed.
Michael Pento: I did say that the market was pricing in the imminent effect of a massive tax cut — and I meant tax cut, not a tax reform package. In other words, cutting the rate from 30% to 15% or even 20%, but certainly not offset by any spending cuts or an elimination of deductions. The market is still pricing in a lot of that hope and hype, in my opinion. But I had said and warned from the beginning, this was back right after the election, I did say that the Trump “stimulus” package — and I’ll put “stimulus” in quotes and I’ll explain why in a second — I said that the Trump “stimulus” plan would be both diluted and delayed.
It looks like that’s exactly what’s going to happen and is happening. I would be very, very shocked if we see anything before the August recess in the realm of healthcare, certainly in the tax reform package. It is my best guess that in early 2018 Trump will ram through a very adulterated and attenuated package that will be mostly a minor reduction in the rates, which is for the most part offset by some type of a reduction or elimination in write-offs.
In other words, the market is extremely, extremely overvalued, and – and we’ll get to this later – the only thing left holding this market together on top of a massive bubble is the perpetual QE from Europe and Japan. I do not expect the QE from Japan to end any time soon, although I do expect later this year at least some salvos from the BOJ, that that’s something that they might be able to do in the future. I do expect QE to end in 2017 in Europe.
Mike Gleason: Leads me right into my next question here. You summarized things very well in your Pentonomics piece this week. And for folks who aren’t getting those, you simply have got to get on the email list and get those on a regular basis. Go to PentoPort.com and sign up for that. It’s truly fantastic stuff. I want to read an excerpt from that and then get your comments here. You wrote:
“The truth is this extremely complacent and overvalued market has been susceptible to a correction for a very long time. But just like Trump, it has so far behaved like it is coated in Teflon. North Korean atomic bomb tests, Russian election interference, Trump’s alleged obstruction of justice, an earnings recession, GDP with a zero handle; who cares? As long as a tax cut could be on the way and global central banks keep printing money at a record pace, what could go wrong?”
With all that said, talk about the danger and when and where things might finally fall apart here, Michael.
The Rest…HERE
