Fed Risks Lehman Crisis As US Recession Storm Gathers

The Telegraph’s Ambrose Evans Pritchard reports that “the risk of a US recession next year is rising fast” and that “the Federal Reserve has no margin for error”.

AEP is quite well connected and very well informed on such matters and hence the need to consider what he is saying and more importantly prepare:

“Liquidity is suddenly drying up. Early warning indicators from US ‘flow of funds’ data point to an incipent squeeze, the long-feared capitulation after five successive quarters of declining corporate profits.

Yet the Fed is methodically draining money through ‘reverse repos’ regardless. It has set the course for a rise in interest rates in December and seems to be on automatic pilot.”

“We are seeing a serious deterioration on a monthly basis,” said Michael Howell from CrossBorder Capital, specialists in global liquidity. The signals lead the economic cycle by six to nine months.

“We think the US is heading for recession by the Spring of 2017. It is absolutely bonkers for the Fed to even think about raising rates right now,” he said.

The article can be read in the Telegraph here