Donald Trump's economic agenda has become further delayed by what seems like daily leaks from the White House. This may finally bring about the long-awaited equity market pullback of at least 5 percent. However, what will prove to be far more troubling than Trump's ongoing feuds with the FBI and the press, is the upcoming market collapse due to the removal of the bids from global central banks.
The markets have been feeding off artificial interest rates from our Federal Reserve and that of the European Central Bank and the Bank of Japan for years. In addition, the global economy has been stimulated further by a tremendous amount of new debt generated from China that was underwritten by the People's Bank of China. After it reached the saturation point of empty cities, China is now building out its "Belt and Road Initiative" that could add trillions of dollars to the debt-fueled stimulus scheme that has been spewed out over the world-wide economy.
Adding to this, the New York Fed just informed us that households are spending like its 2008. In fact, Americans are now in more debt than they were at the height of the 2008 credit bubble – a new high of $12.7 trillion - exceeding debt loads right before the entire financial system fell apart. In fact, total U.S. debt has now reached 350 percent of GDP.
The perma-bulls on Wall Street argue this willingness to take on debt demonstrates optimism among banks and other lenders about economic growth. Consumer spending accounts for nearly 70 percent of all economic activity in the United States.
But the truth is the bull market in equities has been fueled by a record breaking pace of central bank money printing and an unsustainable accumulation of global debt that has reached $230 trillion, or 300 percent of GDP.