26 Jan Buckle Up For A Bumpy Ride
The signs that we have been receiving from the economy haven’t been so good as of late. Considering the state of the economy domestically and globally, any news at this point is bad news. Although the recent problems of the markets haven’t seen a dramatic change there are still other developments worth looking into and being aware of.
Not to continue beating a dead horse, but the oil industry has seen better days than last week. A Michigan refiner is charging -0.50 cents per barrel of heavy sulfur oil, one of the lowest grades of oil. Granted; it is the lowest grade, and the idea is to make the money back by volume of sale, but a negative price is still a negative price. What this shows us is that the decline has not stopped for the oil industry and it most likely will not any time in the near future.
On the global scale, equity markets have fallen across the globe marking the worst start to a year in history. The only reason for a slight rebound at the end of last week was due to the expectation of a central bank intervention. However the economic pattern we are witnessing now seems to be repeating itself yet again. Economies stall, investors get scared, markets fall, and central bankers print more money and everything is okay again. Unfortunately this pattern cannot continue forever, eventually economies will begin to fall, and no amount of central bank intervention will be able to get them up.
On the domestic front, real wages are up 1.6% from last year. Now although this statement suggests positivity, it actually represents a negative outcome. Even when adjusted for the inflation rate wages are still stagnant. The only force pushing wages up are the legislation demanding for a higher minimum wage, which will no doubt drive down businesses. Not only does this mean that consumers have less money to spend on hover boards and organic groceries, but it means that there will be less spending on credit. These low expectations of the future as well as weak consumer spending are two vital signs of deflation.
These developments are not the only to be concerned about in economically troubling time. With many changes and occurrences around the world it is important to know that you are prepared for the season difficulty ahead. Call Ortiz World Wealth, your registered investment advisor representative, today and make sure that you are prepared for the worst.
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