U.S. Stocks Suffer Worst Day in Six Years

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U.S. Stocks Suffer Worst Day in Six Years

Market jitters are a harbinger of things to come.

On Monday, the United States stock market plunged by 1,175 points, making it the worst day of trading in six years. The 4.6 percent decrease wiped out all gains made in 2018 and sent investors running. At one point, the market had fallen 1,600 points, before bouncing back. On Tuesday, panicked investors waded back into the marketplace, and by the end of the day, stocks were up 1.7 percent.

For the past year, all eyes have been on the stock markets, thanks to U.S. President Donald Trump. Since becoming president, Trump has pointed to the hot stock market as a sign of the success of his administration. During his one year in office, the market has smashed records and added nearly $6.9 trillion in market cap. That’s close to half of what was added in the eight years Barack Obama was president.

Monday’s loss comes as the first major blow to the smooth stock markets under President Trump. Jitters began creeping through the marketplace on Friday, February 2, when stocks fell 665 points, a precursor to what happened on Monday. News broke that day that the U.S. created more jobs in January than expected, and that wages saw their biggest jump since 2008 when the economic crises hit. At the same time, U.S. Treasury yields increased, as did the value of the U.S. dollar.

Those are all good developments, but the market plunged. Why?

Inflation and Interest Rates

All those factors put together signal that a period of inflation could be on the horizon. Higher wages mean higher costs to produce goods. To help prevent inflation from running away, governments will raise interest rates to restrict the flow of money in the economy.

It was the fear of inflation and rising interest rates that sent investors fleeing from the stock market on Monday. Hussein Sayed, a currency dealer and market strategist, said, “The era of cheap money is ending, and for markets who got addicted to it, it’s undoubtedly bad news.”

Interest rates have been at record lows for the past decade as the U.S. allowed easy access to money to help prop up the economy. Individuals and companies could borrow with little worry since interest payments were meager. Now that the economy seems to be recovering, the government has to consider raising interest rates to stave off inflation.

Greg McBride, a financial analyst at Bankrate, said: “Markets have been addicted to low interest rates and global central banks pumping money into the financial system. As economies around the world are improving, this means higher interest rates and less stimulus from central banks. That’s why investors are throwing a hissy fit.”

Cheap money has led to a hot, overvalued stock market. Any increase in interest rates would put a squeeze on that market. Fearing a loss in their investment, investors simply dumped stocks. As Stratfor pointed out, “[A]fter years of quantitative easing, the bubble received a small puncture and global prices rapidly deflated—though, thus far, only to a manageable degree.”

What happened on Monday was what most financial commentators view as a market correction, cooling down inflated stock values. The question now is, Was this a one-time event or will there be more wild swings? Stratfor noted:

The next few weeks may well demonstrate that the two-day plunge was merely an anomaly and that stock markets will recommence the steady upward plod that has become so familiar in recent years. But even if that is the case, and this proved to be just a temporary market event, there are some indications that the market’s roller-coaster ride might be an important harbinger of future behavior.

If the stock market is indeed propped up by debt, future interest rate hikes could send investors running again.

Bond Rates

The biggest story, and the most concerning to America, is the fact that the U.S. bond market is changing in some big ways. Over the past month, a quiet sell-off of U.S. government bonds has added more uncertainty to markets.

To generate money, the U.S. government sells bonds, which equate to receiving loans from private investors. Someone will buy a bond for a certain time period at a certain interest rate. The government pays out interest each year, and when the bond expires, the government pays back the amount of the bond. These are considered the safest investment you can make. Bonds bring in immediate cash to the government, but also add to the debt.

The bond sell-off means that investors don’t care for U.S. dollars anymore. Interest rates on 10-year bonds rose to 2.8 percent, the highest since early 2014. When interest rates on bonds go up, it means the government is working harder to attract more buyers. It also means that the cost of bonds already issued goes down. Why would you buy an older bond when you can get a newer one with a higher interest rate?

Rising bond rates also contributed to the market plunge on Monday, as investors feared losing on their investments. This is bad news for the U.S. government. If it starts losing customers to buy its bonds, it won’t have any way to finance more debt. Already the government is facing a near $1 trillion deficit in 2018, and much of the funding for the debt comes from new bonds. If interest in bonds continues to slump, the government won’t be able to finance its debt.

The lack of interest in bonds is due to a variety of reasons. The stock market rate of return has been much higher than bonds, luring investors to get rid of bonds for more lucrative stocks. Another reason is that yields on European bonds are rising, also making U.S. bonds less appealing with a lower rate of return.

Even as interest in U.S. bonds is waning, the U.S. Federal Reserve announced its plans to reduce its bond holdings. As TheStreet noted, “The strategy eliminates a key source of buying that has helped to prop up the bond market over the past decade.” Without the Federal Reserve buying up bonds to fund the government, the Treasury needs to find new clients with deep pockets.

Not only is the Treasury losing a customer in the Federal Reserve, it may also be losing one of its biggest customers of all: China. In January, Bloomberg reported that senior government officials in Beijing recommended slowing or even halting purchases of U.S. bonds, causing a bond sell-off. China denied that claim, however, and bonds recovered. But it shows how shaky the bond market is. If China did suspend purchasing, it would strike a huge blow to America. The U.S. needs to sell more bonds to fund its debt, and America would be hard-pressed to find another customer as big as Beijing. China currently owns $1.4 trillion in U.S. government bonds.

Any slump in bonds means that the U.S. debt will increase faster. It means the government has to spend more money on interest payments—which means more borrowing to cover the cost of those higher interest payments.

The Curse of Debt

As the dust settles from Monday’s crash, most news sources point to fears of inflation and rising interest rates as the cause of the crash.

But that is not the case.

Inflation and interest rates are just a facade. Monday’s crash boils down to one simple cause: too much debt. Debt at the individual level. Debt at the corporate level. Debt at the federal level.

For the past 10 years, Americans have had access to cheap money. Low interest rates have meant they could live beyond their means on borrowed money with little consequence. Companies have used borrowed money to increase sales. The government has borrowed at unprecedentedly low rates from its citizens and other nations by artificially propping up its debt with the help of the Federal Reserve. All this has given the illusion of prosperity. In reality, it has revealed how weak the economy is.

Monday’s crash is a sign that the house of cards that is America’s economy is beginning to wobble. It’s not a matter of if it will fall, but when.

Despite President Trump’s claims, a strong stock market doesn’t mean a strong economy. Following the plunge, President Trump took to Twitter to criticize the market for going down on good news. More jobs and more wages is good news on the surface, but all the debt lurking in the background makes it very bad news.

That’s because America’s economy runs on debt. It needs cheap debt to keep going. The U.S. national debt is over $20 trillion. U.S. personal debt is over $18 trillion. In November 2017, U.S. credit card debt hit an all-time high of over $1 trillion. That surpasses the previous all-time-high posted in July 2008, right before the financial crisis of 2008. Student and auto loans are also at never-before-seen records!

The Trumpet has repeatedly drawn attention to America’s addiction to debt, warning of its deadly consequences. Based on Bible prophecy, it has forecast that America will soon suffer total economic failure, collapsing under the monstrous weight of its own debt. Monday’s crash was just another shudder showing that a collapse is coming.

For those willing to listen, there is a way out of this economic collapse. It starts by understanding that God instituted laws of finance. America is cursed because it breaks those laws, along with many other laws of God. If you want to know how you can escape the snare of debt, be sure to study our free booklet Solve Your Money Troubles!

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Republicans Run Up the Deficit Faster Than Obama

House Speaker Paul Ryan (R-Wisc.) leaves the House Chamber on February 9, following a vote to fund the U.S. government.
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Republicans Run Up the Deficit Faster Than Obama

Listen to the Feb. 9, 2018, episode of the Trumpet Daily Radio Show.

Even with Republicans in charge, the United States is going deeper into debt—and at a faster pace! Today, Congress approved a record-breaking, budget-busting bill that increases federal spending by hundreds of billions of dollars this year and next. Along with new tax cuts, this will push the federal deficit over $1.1 trillion this year. Congressman Paul Ryan warned six years ago that debt destroys empires, but you don’t hear him sounding that alarm today. On today’s Trumpet Daily Radio Show, we discuss this and more—including a brief review of the early history of our lawsuit over Mystery of the Ages and a few thoughts about President Donald Trump’s speech yesterday at the National Prayer Breakfast.

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Two Noteworthy Trends in Germany

About 400 Bundeswehr recruits partake in their ceremonial vow.
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Two Noteworthy Trends in Germany

If you’re paying attention, you can see that major change is underway in Germany.

I want to bring your attention to two recent news items from Germany. Some might consider these to be a bit ordinary, but I think each hints at the development of some larger, prophetic, more alarming trends.

First, the sales of guns and nonlethal small arms in Germany is booming. Handelsblatt reported last week that the “number of applications for small arms permits has set new records. In 2017, 557,560 people obtained such a license. In January 2016, only 300,949 people had a permit. This means ownership soared by a staggering 85 percent in just under two years” (emphasis added throughout).

This suggests that more and more Germans feel unsafe and anxious. “The fact that Germans are arming themselves might be rooted in a sense of deteriorating safety,” Handelsblatt reported. “There is a growing feeling that the state cannot sufficiently protect its citizens and therefore they must protect themselves.”

Second, the number of young Germans joining the military is rocketing. The Express, as usual, put it most dramatically: “Germany Preparing for War? German Teens Enlist in Record Numbers Thanks to Social Media.” There’s some hyperbole there, but the basic point is accurate: More and more young Germans are choosing to join the army.

In 2011, only 689 underage (under-18) Germans enlisted in the Bundeswehr. In 2017, more than 2,100 minors signed up, including 448 girls. The German government is thrilled because the number of enlisted soldiers is at a historic low and more are needed.

The growth is the result of a savvy government-sponsored social media campaign to recruit young people to the military. One of the most successful recruiting tools is Die Rekruten (The Recruits), a YouTube documentary that follows the lives of 12 young recruits and has attracted more than 44 million views. “Die Rekruten is one of Germany’s most successful social media projects ever,” reported the Guardian. In fact, the show is now so popular it has been “rolled out on the public tv channel rtl ii and spawned a spin-off series following the German military in Mali.”

Up until 2009, the issue of military conflict was so sensitive and unpopular that German media couldn’t even use the term “war” when referring to the Bundeswehr’s deployment in Afghanistan. Today, some of Germany’s most popular shows online and on television feature the Bundeswehr and its foreign engagements!

Postwar Germany has been loath to show too much pride in its military and has been slow to engage in military conflict. But the popularity of programs like Die Rekruten and the fact that more and more young Germans are joining the Bundeswehr indicate that Germany’s relationship with its military is clearly evolving. This is a trend we need to watch.

In a recent Key of David program, Gerald Flurry explained how the German-led Holy Roman Empire is a hidden superpower, a dangerous entity that for now is happy to lurk quietly in the shadows. Mr. Flurry quoted Herbert W. Armstrong, who in 1981 warned: “What the world does not realize is that, under cover, secret planning is proceeding furiously, uncovered by the news media, unknown by the public.”

If you’re paying attention, you can see that major change is underway in Germany. The nation faces a number of growing domestic and foreign threats (Russia, migrants, Europe’s economic woes, a potential U.S. financial downturn). The German public is growing more unsettled, anxious and frustrated. Germany’s mainstream leaders are proving inept and inadequate. Meanwhile, the international community is pressuring Germany to play much more of a leadership role in world affairs, politically and militarily.

Take a close look and you’ll see that Germany is quietly but quickly changing. The fact that gun sales are soaring and young Germans are swooning over the Bundeswehr, I think, is evidence of this change. In his program, Mr. Flurry warned: “The world doesn’t see what is brewing in Germany and Europe!”

Thanks to Bible prophecy, we can see what is brewing. And we can know what the end result of Germany’s transformation will be. What a wonderful gift from God Bible prophecy is!

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Why Germany Is Arming Certain African and Middle Eastern Nations

German Chancellor Angela Merkel and Algerian Prime Minister Abdelmalek Sellal
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Why Germany Is Arming Certain African and Middle Eastern Nations

German government sets record for weapons exports.

Germany’s public broadcaster ard reported on January 23 that during the legislative period between 2014 and 2017, Germany exported more weapons than any prior German government.

“Germany is the world’s third-biggest arms exporter, but weapons sales remain a domestically sensitive issue given the country’s World War ii history,” Reuters reported on January 23. Yet over the last four years, the German government has approved a record $30.9 billion in weapons sales, according to data leaked to ard from the Economics Ministry. Exports to nations outside the European Union and nato jumped 47 percent compared to sales approved by the 2010–2013 government.

Algeria imported the most German weapons ($1.7 billion), followed by Egypt ($866.9 million). Germany wants close cooperation with these two because of their strategic location in Africa. Algeria’s long coastline makes it a crucial partner in monitoring the Mediterranean Sea, so Germany sold Algeria two frigates in 2017.

Egypt has control over both the Red Sea and the Suez Canal—the gateway for European imports from and exports to Africa and the Middle East. Germany hopes the Egyptians will use the submarines it sold them to keep that trade route secure.

Many of the top destinations for German arms exports are in the Middle East. But weapons exports is not the only area Germany is involved in.

Various countries cooperate with the German weapons industry in order to develop their own weapons industries. German voters aren’t keen on selling arms to countries like Saudi Arabia, so the Saudis fly in German weapons expertise.

Andreas Schwer began running Saudi Arabia’s arms industry this year. The former board member in the armaments division of the Düsseldorf Rheinmetall Group is now the ceo of Saudi Arabian Military Industries (sami). With Germany’s help, Saudi Arabia hopes to become a major weapons producer.

Turkey is constructing its own tank-manufacturing plant in cooperation with German arms manufacturer Rheinmetall. The nation already produces numerous weapons under German license. Besides small arms, the list includes submarines, frigates, speedboats and minesweeping vessels. Turkish production helps explain why German arms exports decreased slightly in 2017.

Recently, Germany has increased its military cooperation with Jordan. On January 14, it delivered military equipment worth $22 million to improve the country’s border control. The equipment included two training aircraft, 70 trucks and 56 vans. Germany also has 280 soldiers stationed in Jordan to help fight the Islamic State and provide stability to the region.

Germany is after more than a profit: It is strategically influencing foreign policy and building alliances that can stand up to Iran. This “Merkel Doctrine” seeks to counterbalance Iran’s power by arming Sunni Arab nations and Israel. At the same time, Berlin is justifying a more robust use of its military.

Last November, Hasnain Kazim highlighted in an article for Spiegel Online the danger of Iranian domination of the Middle East. Germany is deeply worried by Iran’s advances: The more it dominates the Middle East, the more it can threaten strategic sea gates and the greater the threat of terrorism.

“Northern Africa is turning into a battleground with enormously important prophetic implications,” wrote editor in chief Gerald Flurry in the April 2013 Trumpet issue. He discussed the spread of Iran-backed terror groups but also warned that “Iran isn’t the only one interested in Africa. Germany is making strong inroads as well. Both of these powers are racing to get as much control of North Africa as they can. They will inevitably clash with each other.”

In the Bible, Psalm 83 describes an alliance between Arab nations and Germany. Daniel 11:40 records that the alliance will turn against Iran. Specific nations mentioned in the Psalm 83 prophecy include Assur (Germany), Edom/Amalek (Turkey), Ishmaelites (Saudi Arabia and neighboring nations) and Moab/Ammon (Jordan).

Daniel 11 shows that Egypt will fall into the Iranian camp. While Germany seeks an alliance with Egypt, it is cautious of the fact that Cairo hasn’t had a stable government in recent years and was briefly in the hands of the Muslim Brotherhood. Daniel 11:40 shows that Germany will invade Egypt militarily because of its alliance with Iran.

The Trumpet has warned since 1992 about this developing clash with Iran. Over the years, we have seen more and more evidence that the prophesied clash is imminent. For more information, read Mr. Flurry’s article “Watch Algeria!” and request his booklet The King of the South.

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Listen to the Feb. 8, 2018, episode of the Trumpet Daily Radio Show.

Former U.S. President Barack Obama’s role in the Trump-Russia dossier scandal is becoming more apparent every day. The latest revelation of the ongoing saga shows that then President Obama was intensely interested in a particular fbi probe. From the irs scandal to mass data collection to the Department of Justice targeting religious groups, Obama had a habit of using government agencies to flex his political will. On today’s program I discuss how intertwined the former president is with the scandals that appear daily in the news.

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Iranian Presence in Mediterranean Sea Alarms Israel

An Iranian soldier stands guard near the Iranian Kharg replenishment ship docked in the Red Sea Sudanese town of Port Sudan.
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Iranian Presence in Mediterranean Sea Alarms Israel

‘Iranian ports in the eastern Mediterranean are a real risk for Israel.’

Israeli Adm. Shaul Chorev (Ret.) has warned that Israel’s next proxy war with Iran “could see a focus on the [Mediterranean] Sea.”

The Jerusalem Post quoted the retired naval officer on January 28 as cautioning that the strategy of Iran’s Lebanese proxy, Hezbollah, clearly shows that “they will target Israeli strategic assets.” To do that, he said, they could use suicide vessels or land-to-sea missiles.

Iran “is on the verge of reaching the Mediterranean, including the use of Syrian ports by the Iranian Navy,” Chorev said. “Iranian ports in the eastern Mediterranean are a real risk for Israel.”

Access to the Mediterranean is strategically important to Iran’s aggressive pursuit of regional hegemony. It’s also a geopolitical necessity, which “explains why Iranian and Persian strategy has always focused on developing proxies or strategic relationships with countries amenable to its designs,” Geopolitical Futures wrote on January 3.

Iran has aggressively exploited the conflict in Iraq, the civil war in Syria, and the political strife in Lebanon to extend itself deeper into its western neighbors and thus create an 800-mile “land bridge” connecting Iran to the Mediterranean Sea.

On January 25, Israeli ambassador to the United Nations Danny Danon disclosed classified intelligence at a United Nations Security Council meeting to warn that “the Shiite crescent has reached [Israel’s] doorstep [and that] the Shiite crescent is alive and well; do not let Iran turn it into a Shiite horizon.”

Ambassador Danon said that Iran controls 82,000 troops in Syria and has spent $35 billion on weapons factories there. He said Iran is “building missile factories in Syria, in effect turning the innocent people in the surrounding area into human shields.” He added: “Iran is turning the entire country of Syria into the largest military base in the world.”

“[I]f we turn a blind eye in Syria,” he warned, “the Iranian threat will only grow.”

Reports state that Iran is building a base in al-Kiswah, Syria, just 30 miles from Israel’s Golan Heights. Iran is also reportedly building a naval base near Tarsus, along the eastern Mediterranean.

Ambassador Danon criticized Europe for appeasing and empowering Iran through the Joint Comprehensive Plan of Action nuclear deal and for doubling Iran’s trade with the Continent. He then gave a warning that will resonate with long-time Trumpet readers: “The money the regime earns from your economic deals will be spent on ballistic missile testing, nuclear development and promoting worldwide terror …. [W]hile you are making a profit; Iran is building an empire. … Iran starts with Israel; it is you who are next.”

For more than 20 years, Trumpet editor in chief Gerald Flurry has used Bible prophecy to warn that Iran will pose a real and immediate threat against Israel, as well as against Europe.

The Mediterranean Sea is an essential part of Iran’s strategy.

The Bible reveals this strategy in Daniel 11:42-43. It states that Iran, which it calls the king of the south, will bring Libya, Ethiopia and Egypt into its orbit. Mr. Flurry wrote in his July 2016 article “Mediterranean Battle Escalating Into World War iii!”:

[W]hy would Iran want an alliance with Libya and Ethiopia? All you need to do is get a good map of the Middle East with the emphasis on the Mediterranean Sea and the Red Sea, and then you can see why. These two countries border the two seas that comprise the most important trade route in the world.

Iran already dominates the Persian Gulf. Now it is working to take over the Red Sea—you can see this by how involved it is in Yemen. Iran also has a heavy influence in Somalia. It has had a long-standing relationship with Sudan, and prophecy tells us it will gain control of Ethiopia and Egypt. Egypt controls the Suez Canal, which is the gateway to the Mediterranean Sea.

Putting this together, you can see that Iran seeks to control the greatest trade route in the world!

Iran’s push into Syria comes from this ambition. Iran has already used its strong presence in Syria, Lebanon and the Mediterranean to finance and arm Palestinians in the Gaza Strip and the West Bank, and we can expect it to continue its plans to destroy the State of Israel.

In The King of the South, Mr. Flurry writes that Iran’s goal is to destroy Israel and control the Red Sea and the Mediterranean Sea:

[W]hat if you have radical Islamic nations along this sea trade route with real airpower—including missiles? That could give Iran virtual control of the trade through those seas. Radical Islam could stop the flow of essential oil to the U.S. and Europe!

Iran could also potentially get control of Jerusalem, [Islam’s] third-holiest site. I believe Jerusalem is more important to Iran than the oil is. The Islamic people have fought the Catholic Crusades for about 1,500 years over control of Jerusalem. Bible prophecy says one final crusade is about to erupt.

Iran conquering Jerusalem would suddenly galvanize the whole Islamic world! It would spread radical Muslim influence to many countries outside the Middle East. It could lead to dangerous rioting and terror in Europe, Asia and even America. …

If Iran gets control of that trade route, it could create enormous damage and chaos in America and Europe almost overnight. [Europe is] not going to allow [Iran] to get control of Jerusalem and the world’s number one trade route!

Iran’s aggression, especially in waters so close to Europe, will not be targeted at Israel alone. As Ambassador Danon said, “Iran starts with Israel; it is [the Europeans] who are next.”

To learn more about these events from a biblical perspective, request our free booklets The King of the Southand Jerusalem in Prophecy.