MoneyandMarkets.com: Soft Landing or Recession? Warning Signals

Recession warnings are pouring forth from virtually every reliable indicator, according to Claus Vogt, co-editor of Sicheres Geld (the German edition of Martin Weiss' Safe Money Report) and co-author of the best selling book, Das Greenspan Dossier.

JUPITER, FL (PRWEB) November 15, 2006 -- Is there going to be a soft landing or a recession ahead for the economy? Getting this answer wrong could have a damaging impact on virtually every investment and business decision you make in the next twelve months; getting it right can open up major wealth-building opportunities, according to Claus Vogt, co-editor of Sicheres Geld (the German edition of Martin Weiss' Safe Money Report) and co-author of the best selling book, Das Greenspan Dossier.

In the November 12th edition of Money and Markets, Mr. Vogt highlights the key recession warning signals:

Recession warning #1: A Dramatic Change In U.S. Interest Rates

One year ago, long-term rates were significantly higher than short-term rates. But today, just 12 months later, we see precisely the opposite pattern. This is the so-called "inverted yield curve." In other words ...The cost of short-term borrowing is now significantly higher than the cost of long-term borrowing!

Recession warning #2: The Difference Between Long- and Short-Term Yields Plunges Below Zero

As long as the 10-year Treasury-note yield was 2 or 3 percentage points higher than the short-term rates, as it was in recent years, the economy was coasting along nicely. But now, as the difference between long and short rates has fallen to zero or below, the first phase of the money crunch is here. Moreover, history clearly shows the consequences: In the past half century or more, every time this has happened, the result was: A recession!

Recession warning #3: Manufacturing Index Falls to Critical Recession Threshold

There are few organizations that track this trend more accurately than the Institute of Supply Management (ISM). When the ISM's manufacturing index is above 50, it generally signals expansion; below 50, contraction. Where is it now? It has just fallen to the 50 level, right on the critical threshold of a new recession signal.

Recession warning #4: Housing Market Index Hits Its Lowest Level Since February 1991

Just last week, two of the leading home builders reported such dismal results, "confirming that the slump in the once-hot housing market is far from over," according to the New York Times. The National Association of Home Builders sums it up by surveying builders about present single-family sales, single-family sales in the next six months and buyer traffic. And right now, this index has plunged to its lowest level since February of 1991.

Recession warning #5: Housing Market Decline Comes with Parallel Decline in Consumer Spending

The close relationship between a housing slump and a consumer slump is undeniable. And in recent years, with so many U.S. households tapping the equity in their home like an ATM machine, the connection has been even stronger. But now that cash cow is drying up, so consumer spending is weakening as well.

The clincher: Housing Bubble Is by Far The Biggest of All Time

Never before has the debt behind the housing market been as big as today's. The proof: Back in the mid-1970s, the last time the U.S. experienced a major housing-slump driven recession, only about one-fourth of the debts in America were mortgages. Today, over HALF of the debts are mortgages! These numbers denote massive, sweeping, structural changes. They are telling you not only that the housing boom was a huge speculative bubble, but also that the housing bust promises to be a powerful recessionary force.

In his report, Vogt writes: "Whatever the Fed decides to do will be too little, too late to prevent at least a cyclical recession in the U.S. … and too much, too soon for any investor who's not prepared for inflation and surging commodity prices."

In the report's conclusion, Vogt warns Money and Markets readers, "to be ready for both: Recession AND inflation."

For more information, visit this link:

http://www.moneyandmarkets.com/press.asp?rls_id=488&cat_id=6&;

ABOUT MONEY AND MARKETS

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Wendy Montes de Oca 561-627-3300 or visit www.moneyandmarkets.com.

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