Deutsche Bank Says the U.S. Is Likely Headed for a Recession (Source fortune.com) The U.S. has a 60% of entering a recession in the next 12 months—the highest probability since the Great Recession. That’s according to a team of Deutsche Bank analysts looking at the fact that the difference between yields for long-term and short-term bonds has been shrinking. A so-called flat yield curve, which is the term for when there isn’t much difference between short and long-term rates is often an indicator used by economists to predict an oncoming recession. Short-term interest rates have risen above long-term interest rates before each of the last seven recessions. Typically, bonds with longer maturities have higher yields; bonds with shorter maturities, lower yields. When demand for a bond with a particular maturity rises however, its yield falls as the price of the underlying bond rises. Long-term U.S. Treasury bonds are viewed as something of a safe-haven—like gold. Investors also tend to flock to it when they expect economic weakness in the longer term alongside low inflation. So investors are willing to hold long-term bonds with lower yields because they expect future short-term rates to also fall as a result of looser monetary policy, needed to stimulate the economy in the event of a recession. And in recent months, the gap between the three-month and 10-year Treasuries have begun to close rapidly—a signal to some investors that a recession may be on its way. “This relentless flattening of the curve is worrisome,” the team of analysts led by Dominic Konstam wrote, referring to the graph that plots bonds of different maturities against their yields. “Given the historical tendency of a very flat or inverted yield curve to precede a U.S. recession, the odds of the next economic downturn are rising,”

… And What’s Next for Europe? (Source thetrumpet.com) Brexit is a wake-up call to Europe’s leaders. They need to transform the union from the ponderous unpopular bureaucratic machine, or they’ll be faced with Spexit, Frexit and Departugal. Some in Europe are preparing for others to leave. Schäuble has called for Europe to change course to a core Europe. Former Vice President of the EU Commission Viviane Reding said, “We need a ‘core Europe,’ this must be imposed quickly”. Europe’s six founding members held a crisis meeting the day after the Brexit result was announced. In that response and its need for a quick decision, we can already see the direction the EU is heading: a smaller, leaner, quicker union with more punch. Part of the reason for the EU’s unpopularity is that it is stuck halfway toward a superstate. It is powerful enough to cause problems but not powerful enough to solve them. Europe’s open borders spread the migrant crisis across the Continent, for example, but the EU lacks any common border control. One area where Europe could move the quickest is defense. France has been pushing for unity on this issue since the November 2015 terrorist attacks. Germany is also keen for greater pan-European defense, but talk on this was delayed until after the Brexit vote. The turmoil in the wake of Brexit may delay it a little further, but Europe will not put off the discussion much longer. Bible prophecy is clear that this power will be made up of 10 nations or groups of nations. The EU, minus Britain, has 27. Could that happen in the wake of Brexit? This shrinking of the EU, or the formation of a new 10-nation European body, certainly implies the EU has a tumultuous time ahead of it. Going from 27 nations to 10 may not be easy. The Bible also forecasts the arrival of a stronger leader in Europe—something the EU sorely lacks. The union will require a “confidence-inspiring leader. The nations of Europe have been striving to become reunited, they desire a common currency, a single combined military force, a single united GOVERNMENT. They have made a start in the Common Market.

Global Financial Turmoil: A Severe Worldwide Economic Recession in 2016-17 (Source globalresearch.ca) The first month of 2016 has witnessed the most severe drop in financial stocks ever, with the MSCI All-Country World Stock Index, which measures major developed and emerging stock markets, dropping more than 20 percent, as compare to early 2015. For sure, there will be oversold rallies in the coming weeks and months, but one can expect more trouble ahead. The current unfolding crisis is essentially a continuation of the 2007-08 financial crisis which has been temporarily suspended and pushed into the future by the U.S. central bank, the Fed, with its aggressive and unorthodox monetary policy of multiple rounds of quantitative easing (QE), i.e. buying huge quantities of financial assets from commercial mega-banks and other institutions, including mortgage-backed securities, with newly created money. As a consequence, the Fed’s balance sheet went from a little more than one trillion dollars in 2008 to some four and a half trillion dollars when the quantity easing program was ended in October 2014. Other central banks have followed the Fed example, especially the central bank of Japan and the European central bank, which also adopted quantity easing policies in monetizing large amounts of financial assets. The Bernanke Fed was very worried that the 2007-08 banking crisis would lead to a Japanese-style deflation that would wreak havoc with an overleveraged economy. The hope was to avoid a devastating debt-deflation economic depression like the one suffered in the 1930s. By injecting so much liquidity in the system, the Bernanke Fed created a gigantic financial bubble in stocks and bonds, even though the real economy has grown at a somewhat languishing 2 percent growth rate. Stock prices went into the stratosphere while interest rates fell as bond prices rose. Last December 16, the Fed announced officially that it will no longer blow into the financial balloons and that it was raising short-term interest rates for the first time since the financial crisis, setting the target range for the federal funds rate to between 1/4 to 1/2 %. This was a signal that the financial party was over. And what’s more, this means that the stock market and the bond market will once again go in different directions, as a reflection of the state of the real economy, no matter what the Fed does. Since 2008, the U.S. Fed has painted itself into a financial corner from which I personally felt it would be difficult to extricate itself. Indeed, it would be extremely difficult to correct the financial bubbles it has created —as an unintended consequence of salvaging the mega-banks in creating trillions of free money —without damaging the real economy of production and employment. If global stock markets collapse and if price deflation accelerates, making it more difficult to service the debt of consumers, corporations, and government alike, a repeat on a larger scale of what has happened in Japan over the last twenty-five years can be feared. This, at the very least, could lead to a global economic recession in 2016-17. If we go back in history, it could also be a repeat of the 1937-38 crash and recession, eight years after the crash and financial crisis of 1929-32. One thing can be made clear: The creation of the Fed in 1913, as a semi-public American central bank, has not prevented the occurrence of financial crises. It has, however, been a boon to large banks because it has served as an instrument to socialize their losses.

Taiwan ‘to test-fire missiles in US’ as China tensions rise (Source AFP) Taiwan plans to test-fire its newest anti-missile system for the first time in the United States next month as relations with rival China deteriorate, a defence source and media reports said Monday. Relations between China and Taiwan have cooled rapidly under the island’s new Beijing-sceptic president Tsai Ing-wen, who took office in May, ending an eight-year rapprochement. The test of the US-made Patriot Advanced Capability-3 (PAC-3) system will be launched at the White Sands Missile Range, New Mexico, in early July, a defence ministry source told AFP, in a move likely to irk Beijing even though it was arranged before Tsai took the helm. According to the source, the test will be conducted in the US to avoid China collecting information about it, and due to space restrictions in Taiwan. The American Institute in Taiwan, the de facto US embassy, would not comment on the test, which was also reported in Taiwan’s Liberty Times newspaper. Despite having no official diplomatic ties with Taipei after recognising Beijing in 1979, the US is still Taiwan’s greatest ally and main arms supplier. The missile system was purchased in 2008, well before Tsai’s leadership, and the test was approved by the US last year, according to the Liberty Times. Taiwan bought three earlier model PAC-2 systems in the 1990s and also tested them in the US. They were deployed in the densely populated greater Taipei area. It then bought the new PAC-3 — a system designed to intercept incoming ballistic missiles near the end of their trajectory — as part of a $6.5 billion arms sale by the US in 2008, which infuriated Beijing at the time. The system is already partly operational and will shield Taipei, as well as central Taichung and southern Kaohsiung from any Chinese missile attacks, according to the defence ministry. The Taiwanese missile unit involved in the July drill will fire two missiles to intercept a missile launched by the US military, which simulates an incoming Chinese ballistic missile.

Why Britain’s Vote on EU Membership Is So Momentous (Source thetrumpet.com) Getting 28 nations—each with its own proud and separate history, in many cases a history largely comprised of fighting other European nations—to form a superstate was always a tall order. Practically speaking, it will only be possible with a smaller group of nations. And even then, they will only be able to stick together for a short time and in the face of a common enemy. But if the EU falls apart in the wake of a Brexit, Germany will remain Europe’s richest and preeminent power. With Russia rising, Central and Eastern Europe will continue to look to Germany for defense. The prosperous, northern European nations immediately surrounding Germany will still have strong trade links with Germany, and there will be a strong incentive for Germany to form an open-border zone with these nations. Last year, Britain’s government borrowed an equivalent of 4.4% of its gross domestic product. The only EU nations with a higher level of borrowing are Spain and Greece, both troubled economies that have required some form of bailout. Britain’s trade is in a dire position. Its current account deficit is at 7% of GDP—the highest peacetime level since records began in 1772. At the heart of this problem is the simple fact that Britain is importing far more than it is exporting. The state of a nation’s society is much harder to quantify than the state of its economy, but here too the situation is dire. In the Aug. 11, 2011, Australian, Theodore Dalrymple wrote: British youth lead the Western world in almost all aspects of social pathology, from teenage pregnancy to drug taking, from drunkenness to violent criminality. … British children are much likelier to have a television in their bedroom than a father living at home. One third of them never eat a meal at a table with another member of their household—family is not the word for the social arrangements of the people in the areas from which the rioters mainly come. These problems are all unconnected with the European Union. Many EU nations do not share them, and leaving the EU won’t fix any of Britain’s social problems. The soon-coming resurrected “Holy Roman Empire”—a sort of soon-coming “United States of Europe”—a union of 10 nations will rise up out of or following the Common Market of today (Revelation 17). Britain will NOT be in that empire soon to come. Germany is the economic and military heart of Europe. Probably Germany will lead and dominate the coming United States of Europe. But Britain will be no part of it!

Europe needs united army, EU parliament committee head urges after Brexit (Source RT) The idea of a common European military headquarters has been revived by the head of the European Parliament Committee on Foreign Affairs, shortly after the UK’s citizens voted in favor of Brexit. “We need more cooperation in the European defense policy,” Elmar Brok told Die Welt. The new armed forces could be modeled after the Franco-German model, making European foreign policy much more effective, Brok believes. “We need a common (military) headquarters and a coalition (of EU countries) acting in accordance with the permanent structural cooperation of the EU Treaty. From such a group an EU army could eventually emerge,” said Brok. A united EU armed force would “strengthen the role of Europeans in [global] security and defense policy, make Europe fulfill better its responsibilities in the world and would also achieve more synergies in defense spending,” the MEP said. The head of the Foreign Affairs Committee acknowledged that at present an EU army is not possible due to legal restraints and restrictions, and creating one would imply making changes to the European constitution and international treaties. The European Parliament would also have to be given ancillary powers. Next week, the EU’s high representative for foreign affairs and vice-president of the European Commission, Federica Mogherini, is expected to present a new “global strategy” of European foreign and security policy. The draft document will be delivered at a meeting of EU heads of state or government. The new military concept is being called to replace the European Security Strategy (ESS) policy document enacted in 2003. European leaders regularly speak in favor of boosting military spending, citing looming “Russian aggression” against the NATO member states in Eastern Europe. On the eve of the 70th anniversary of the Nazi invasion of the Soviet Union, Chancellor Angela Merkel said Germany should substantially increase its defense spending. The EU cannot rely on the transatlantic partnership with the US to deal with “external threats,” the chancellor said.

Monsanto Roundup Herbicide Disrupts Rats’ Uterine Development. “Glyphosate-based Herbicides Might be Endocrine Disruptors”. Study (Source gmwatch.org) Glyphosate herbicide disrupts the development of the uterus of female rats when they are exposed for 7 days after birth, a new study (abstract below) by Argentine researchers shows. The glyphosate herbicide caused cell proliferation and structural changes in the rats’ uterus. This was in spite of the fact that no signs of chronic or acute toxicity or differences in weight gain were seen in treated pups. Glyphosate herbicide also disrupted the expression of proteins involved in uterine development. The authors conclude that exposure to glyphosate herbicide may affect female fertility and/or promote the development of uterine cancer. They also state that their study is the first to show endocrine-disrupting effects of a glyphosate-based herbicide on the uterus of newborn and prepubertal rats, supporting the possibility that glyphosate-based herbicides might be endocrine disruptors. Miscarriages in GM soy-growing regions. Doctors and scientists have noted high rates of miscarriage – sometimes called “spontaneous abortion” – in women living in regions of Argentina where GM Roundup Ready soy is grown and sprayed with glyphosate herbicides. The new study may shed light on this phenomenon.

A Stock Market Crash Is Near When Hedge Fund Managers Do This…(Source moneymorning.com)

Where better to look for clues to the next stock market crash than to some of Wall Street’s most powerful and greedy players – hedge fund managers. Because hedge fund managers spend their days studying not just individual stocks but all the forces affecting the markets – from U.S. economic indicators to what the Chinese yuan is doing – they’re among the first to get wind of a possible crash. And their single-minded devotion to act in their own self-interest means they’ll start shifting their investing gears the second they smell trouble. That’s just what’s been happening. “The top 50 hedge funds sold off U.S. equities for the second consecutive quarter. Funds unloaded nearly $55 billion worth of shares in U.S. equities during the first quarter, which was more than triple the value removed in Q4,” FactSet analyst Andrew Birstingl wrote in a research note last month. Equally ominous is that institutional investors have also been selling stocks. At the end of April, activist investor Carl Icahn said in a CNBC interview that the stock market is nearing “a day of reckoning.” And he’s put his money where his mouth is. According to SEC filings, Icahn Enterprises has a net short position of a whopping 149%. Likewise, billionaire investor George Soros cut back his holdings in U.S. stocks by 37% in the first quarter of 2016.

“Great Danger”: US-NATO Missiles Threatening Russia. Putin: “We Know and they Know that we Know…People do not Understand how Dangerous the Situation Really Is” (Source RT) The US anti-missile defense systems being installed near Russia’s borders can be “inconspicuously” transformed into offensive weapons, Vladimir Putin has said, adding that he knows “year by year” how Washington will develop its missile program. Talking about NATO’s ballistic missile defense systems in Eastern Europe, Russia’s president said that the Americans are now deploying their missiles at these military complexes. “The missiles are put into a capsule used for launches of sea-based Tomahawk missiles. Now they are placing their antimissiles there, which are capable of engaging a target at a distance of up to 310 miles. But technologies are developing, and we know around what year the Americans will get a new missile, which will have a range not of 310 miles, but 620 miles, and then even more – and from that moment they will start threatening our nuclear capability,” Putin said at a meeting with the heads of international news agencies at the St. Petersburg International Economic Forum (SPIEF). “We know year by year what will happen, and they know that we know,” he said, adding that Western officials “pull the wool over [their news outlets] eyes,” who in turn misinform their audiences. The main problem, according to the Russian president, is that people do not understand how potentially dangerous the situation really is. “The world is being pulled into a completely new dimension, while [Washington] pretends that nothing’s happening,” Putin said, adding that he has been trying to reach out to his counterparts, but in vain. “They say [the missile systems] are part of their defense capability, and are not offensive, that these systems are aimed at protecting them from aggression. It’s not true,” Putin told the journalists, adding that “strategic ballistic missile defense is part of an offensive strategic capability, [and] functions in conjunction with an aggressive missile strike system.” The “great danger” is that the same launchers that are used for defense missiles can be used to fire Tomahawks that can be installed “in a matter of hours,” Putin noted. “How do we know what’s inside those launchers? All one needs to do is reprogram [the system], which is an absolutely inconspicuous task,” he said, adding that the governments of the nations on whose territories these NATO complexes are based would have no way of knowing if this had happened.

US TO RUSSIA: We’re staying in the Black Sea (Source businessinsider.com) The US will maintain its presence in the Black Sea despite a Russian warning that a US destroyer patrolling there undermined regional security, the US Navy secretary said. The USS Porter entered the Black Sea this month, drawing heavy criticism from Moscow. Turkey and Romania are expected to push for a bigger NATO presence in the Black Sea at the NATO summit in Warsaw next month. Aboard the USS Mason, another US destroyer, in the Mediterranean on Thursday, Navy Secretary Ray Mabus told Reuters it was the US Navy’s job to deter aggression and keep sea lanes open. “We’re going to be there,” Mabus said of the Black Sea. “We’re going to deter. That’s the main reason we’re there – to deter potential aggression.” Mabus spoke days after Russia criticized NATO discussions about a creating a permanent force in the Black Sea. “If a decision is made to create a permanent force, of course, it would be destabilizing, because this is not a NATO sea,” Russian news agencies quoted senior Foreign Ministry official Andrei Kelin as saying. Russia, which annexed Ukraine’s Crimea in 2014, has its own Black Sea Fleet based at Sevastopol. The NATO summit takes place as relations between Russia and the alliance are severely strained over Moscow’s role in the Ukraine crisis and in Syria. While Russia says it poses no threat to alliance, NATO is considering what to do to counter what it sees as growing Russian aggression. Mabus said the US follows the rules of the Montreux Convention, which says countries without a Black Sea coastline cannot keep their warships there for more than 21 days. The NATO members Turkey, Romania, and Bulgaria are all Black Sea Basin countries. Bulgaria appeared to buckle to Russian pressure on Thursday. Prime Minister Boiko Borisov said he would not join a proposed NATO fleet in the Black Sea because it should be a place for vacations and tourists, not war. Also increasing tensions with Moscow is the US Navy’s deployment of two aircraft carriers in the Mediterranean ahead the NATO summit as Washington seeks to balance an increase in Russian military activities in the Mediterranean