DUBLIN, IRELAND – Stocks couldn’t decide where to go yesterday. Up? Down? So, they went nowhere.

Nowhere is about as good as it gets in this market. Because signs of an impending slowdown are arriving in the news every day.

The latest item was a sharp drop in the Purchasing Managers’ Index (PMI), which measures the vitality of the industrial sector. The April PMI dropped back to levels not seen in nearly 10 years, with the first falloff in new orders since August 2009.

This comes as Treasury yields – another sign of a weakening economy – continue to slump.

Big Picture

But this approaching recession has been approaching for a long time… and it never seems to arrive. So, we will just let it take its time as we return to the bigger picture.

And the big picture shows the average American slipping and sliding for the last 20 years.

The only reason this has not been more obvious to everyone is thanks to the Chinese and other low-cost producers, whose “Everyday Low Prices” have helped Americans continue to live in the style to which they had become accustomed… even as their real incomes fell.

As we pointed out yesterday, 2016 was supposed to be the seventh year of a great recovery. Voters should have been feeling good – about their country, their economy, and their leaders.

Instead, they turned sour; they voted – narrowly – to throw out the bums of both parties and elect a long-shot outsider, Donald J. Trump.


Phony Boom

The boom was phony. A few people got rich. But most people got poorer. If you take the real GDP of the U.S. and divide it by the population, it shows a gain of about $10,000 per person during the 21st century.

But where’s the money? According to Pew Research, the average wage was about $21 an hour in 1999. And it’s about $22 today – in constant 2018 dollars.

But even this grim picture isn’t grim enough. Earnings diverged in the 21st century.

At the top, salaries got much fatter, which moved the average figure higher. A number of reports tell us that the rich are the only people to have made any financial progress in this century; 100% of the gains went to them.

When you take out the outsized earnings of the top 10%, the typical guy is left with less than what he earned 20 years ago.

Also, the numbers are distorted – and flattered – by fraudulent inflation numbers.

A pickup truck, for example, may cost twice as much as it did 30 years ago. But the data crunchers insist that it’s twice as good. Therefore, they say, it really doesn’t cost more.

Try telling that to the dealer. As we’ve shown, the average guy now has to work twice as many hours to afford the average pickup truck… or the average house.

John Williams of Shadowstats.com calculates inflation the way the feds did in 1990 – without the tricks and statistical bamboozles they’ve employed more recently.

Officially, the consumer price index (CPI) has been about 2% per year for the entire 21st century. But Williams shows the real figure is about 5%.

And if you applied this 5% figure to GDP, deflating the figures properly, you’d see that the whole economy has been in retreat for at least the last two decades.

Peak Greed

This is what the Greed/Fear ratio is telling us.

You’ll recall that the Greed/Fear ratio – the ratio of the Dow to gold – measures the underlying zeitgeist of a society.

Like every natural thing, a society breathes in and out. Sometimes, it is bold. And sometimes, it is fearful. Sometimes, it gets richer with open trade and win-win deals… and sometimes, it closes the door and wants protection.

Greed, or “optimism,” reached its peak in 1999. That was already 54 years after the Allies won World War II, 20 years after China abandoned Full Retard communism, eight years after the Berlin Wall came down, and six years after the creation of the European Union.

At that point – Peak Greed – it took 41 ounces of gold to buy the 30 Dow stocks… up from just 1 ounce in 1980.

“Sell stocks; Buy gold,” we told dear readers. Not that we had any special insight into the future. But the Dow-to-Gold ratio had gotten so far out of whack, it was just a matter of time before it headed back into whack.

And for a while, that’s what happened. Stocks fell. Gold climbed. The Dow-to-Gold ratio very nearly hit 5 in 2009, the point at which we would sell gold and buy stocks.

But it never got there. Instead, in 2008/2009, the feds rode into town, guns blazing with the troubled asset relief program (TARP), quantitative easing (QE), and zero interest rate policy (ZIRP).

If we’re right, the runup in asset prices since 2009 was just a fake-out. Fake money created a fake boom and a fake bull market.

Asset holders – mostly, the top 10% – made money. Everyone else lost ground. The rising tide of renewed optimism was an illusion. All of the downward, fear-inspiring trends continued throughout the 21st century:

Federal debt grew every year; never had we seen such deficits in peacetime…

…Consumer and business debt grew, too – even while profits were supposed to be rising…

…Savings rates sank to all-time lows…

…The velocity of money dropped to Depression levels…

…GDP growth declined to half of the 20th-century levels…

…Home ownership fell…

…The number of those with breadwinning jobs fell…

…The total number of work hours per person fell…

…The number of idle men in their prime working years rose…

…The cost of living went up 50%, officially. For most people, it probably doubled…

…Life expectancies fell…

…The power of the Deep State grew…

…Capitalism became less capitalistic… with more government intervention, supported by both conservatives and liberals…

All the major trends went against a prosperous, free, win-win world.

Rendezvous With Destiny

In September 2018, the feds bounced the Greed/Fear ratio back up to 22. But there it stopped… and then began to sink again. Twice since then, it has tried to rally. Twice it has failed.

Now, the Greed/Fear ratio is about 19. Gold is trading at a three-month high. Stocks are under pressure. If we’re right, the Greed/Fear index will continue to fall…

…until it finally makes its historic rendezvous with destiny somewhere below 5.

Stay tuned…





By Jeff Brown, Editor, Exponential Tech Investor

Workplace productivity company Slack Technologies is set to go public this month. We expect shares to price around June 20.

But Slack isn’t doing a traditional initial public offering (IPO) like Uber and Lyft did. Slack is doing a direct listing… like Spotify did last year.

Traditional IPOs flow through investment banks. The banks shop the IPO to large institutional investors to determine market demand for shares. This process helps to determine the share price at the IPO. Then, they collect roughly 7% of the total sale for their work.

Depending on the size of the IPO, that can be an obscene amount of money. It is very lucrative for the investment banks… but very costly for the company going public.

A direct listing eliminates that entire process. With a direct listing, the company just lists its existing shares for trading.

Remember, private companies have stock shares also. They are owned by the company’s founders, employees, and investors.

A direct listing lists those shares on a public exchange. Just like a normal stock market, stakeholders who have shares can hold or sell them.

And, of course, there will be buyers of the stock on the exchange. The point is, the market will determine the share price, not the investment banks.

This cuts out the banks… the fees… and the lockup periods for early investors.

By doing a direct listing, Slack is signaling to the market that it doesn’t need to raise additional money. That’s not the purpose of the IPO. It just wants to provide liquidity to its investors and employees.

Direct listings are rare because companies usually conduct an IPO to raise capital. But a flood of private capital has flowed into private tech companies over the last 10 years. From $27 billion in 2009, total venture capital investment hit $131 billion last year.


This flood of capital has distorted the public markets. Technology companies have been choosing to stay private much longer than ever before.

In fact, Slack had 10 discreet rounds of venture capital funding. It’s now valued at $16.7 billion… up from roughly $5 million when the company was founded in 2009.

That’s incredible growth for a private company. It used to be that you had two or three venture capital funding rounds and then went public at a much earlier stage.

But I need to share a secret with you about Slack…

It is a fantastic company. In fact, it is one of the best software-as-a-service (SaaS) companies ever. But its valuation is astronomical.

Right now, Slack has an enterprise value-to-sales (EV/sales) ratio of 40. That’s off the map.

For comparison, one of my favorite software companies, Twilio (TWLO), is currently trading at an EV/sales ratio of 22. That’s high, even for the strong economic market we see now.

I wouldn’t ever recommend a company trading at those lofty valuations, let alone something trading at twice that.

Context and valuation are extremely important in investing. Assuming Slack lists its shares around a 40 EV/sales ratio, its stock is going to collapse by at least 50%.

In a case like this, it is smart to let the hype die out, wait for the shock of disappointment and the stock to fall, and look for a window to buy in when the market negativity is bottoming out.

Jeff Brown

P.S. Mark this date on your calendar: Wednesday, June 12.

On that day, at 8 p.m. ET, I am hosting an online technology investing summit. I’ll share my four biggest predictions for the future of technology. And I’ll talk about four bleeding-edge tech companies that could make investors 10 times their money in the years ahead.

The event is free to attend. If you want to invest in the technology of the future, you’ll want to be there. Go right here.


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Today, one reader writes in with an idea for an alternative to our Greed/Fear ratio

Bill, I think everyone may already have an approximation of where we are in the Greed/Fear ratio, and I’m sure the system you use to measure it will be as accurate as can be. So, as you examine “where we are” at this point, may I suggest another metric you could use that is likely to be no less accurate.

Maslow theorized in his hierarchy of needs that the best of what we can be usually only occurs at the uppermost levels of this hierarchy – where those who have, ostensibly through a pure motive, reached the top through the process of self-actualization – create the win-win deals your dear readers are always in search of. But, as you have suggested often, we left that part of the pyramid a long time ago.

We are instead, as you have also postulated, in a headlong rush back to the bottom of Maslow’s pyramid from whence we came and where evidence of your Greed/Fear ratio abounds. And if we sink too far and linger there too long, we will be competing again for only the basics in win-lose deals.

– John D.

Also, dear readers push back against your editor after we asked whether Trump has gone nuts

Bill, it’s also a first that we have thousands of undocumented illegals entering our country every day. Where I live (California), we have idiots in charge of government who say it’s okay to give non-citizens FREE healthcare when I have to pay thousands each year. You talk about how the system of capitalism has been perverted and corrupted. Yes, it is. What’s your solution for our immigration policy? I would like to know. In the meantime, I don’t need more stuff from Mexico anyway. It’s past time it gets serious with the cartels and people making 1,500-mile treks through its country to get to ours without proper identification or paperwork.

– Randy S.

President Trump is not losing his mind. He is making intelligent decisions! He is the best president we have had in many years.

A. Persons

You said, “Countries take responsibility for securing their own borders,” “But if the U.S. can’t stop people from sneaking across the Rio Grande, how is Mexico supposed to do so?” You must be aware that Trump wants to put up a wall but Pelosi refuses to allocate the funds. She would rather pay more to take care of the illegals than keep them out. Pelosi is smart enough to know these illegals will eventually get the right to vote. The majority will vote for the Democrats. I would like to see what you suggest to fix the drugs and illegals that cross our border every day.

Warren C.

Meanwhile, another reader tells us how much they enjoyed our wine, made at our unique high-altitude vineyard…

The details regarding the Gualfin Tacana were very entertaining. I always enjoy your writeups. We uncorked the bottle of ‘17 last night, and my wife and I both agreed that it may be the best Malbec we’ve ever tasted. And we’ve tasted a lot of Malbecs over many years. I just ordered a six-pack; if we weren’t so cramped for cellar space, it would have been a full case. We’re nearing 1,700 bottles, and stuff is piling up on the floor. I need to build a lot of new shelving, and soon. Looking forward to future vintages of the Tacana…

W. Gillet


Here’s something you won’t hear from the mainstream media… The U.S. electric grid is so weak, it’s prone to an attack from an outside force like Russia.

But, thanks to a new executive order, something called “liquid energy cubes” could soon be installed nationwide to protect local communities.

These mysterious “cubes” are part of a mega-industry that’s set to explode as high as 6,400%. And they’ll send one specific, obscure metal soaring. Read on here for details.