DiMartino Booth Warns, Rising Rates Are "An Accident Waiting To Happen" For Stocks

Via Greg Hunter's USAWatchdog.com,

Former Fed insider Danielle DiMartino Booth is not optimistic about a surging economy in 2018.



Booth contends,

“We have seen 24 consecutive back-to-back months when credit card spending has outpaced incomes.  That tells you households are struggling to get by.  This is not Yves Saint Laurent handbags and Jimmy Choo shoes.  These are families who are using their credit cards to take care of the necessities, to fill up the gas tank, to buy groceries and fill up their refrigerator...

We have seen month after month of subprime automobile delinquencies, and we are starting to see a big tic up in FHA mortgage delinquencies as well.

...We are at almost 10% (delinquencies) of FHA mortgage loans.  Underlying this sugar high that we will see from all of these hurricanes and rebuilding efforts and wildfires, underneath that, still waters run deep and the economy is not doing well.  We are a consumption driven economy that is weakening underneath. 

The sugar high will absolutely wear off in 2018.”

What about the bond market in 2018? Booth says,

“We have gone from $150 trillion (in global debt) in 2007 to $220 trillion and counting today.  If you delude yourself into thinking a rising rate environment can be good when we have tacked on $70 trillion of debt in the last decade, you are fooling yourself.

It is an accident waiting to happen, and anyone who doesn’t think that it will take the stock market down with it is more optimistic than I am by a country mile.”

Booth says, along with a “bond market debacle,” the world will see inflation right along with it. Booth explains,

“Look at lumber prices, look at the cost of packaging, plastics, raw materials, the producer price index... is at a six year high right now.  It’s called the mother of all margin squeezes. 

Companies are suffering.  We have inflation.  We have very real inflation, and it is hitting corporate America between the eyes.  We have seen inflation happening, and we continue to see it happening...

Rental inflation is off the scale...Inflation is up for 2018, and it has been up.  We can have deflation and inflation at the same time.  If all of this debt that has built up, especially for households, if they are allocating more of their income to servicing debt, then they have fewer dollars to spend on other things.  So, you are going to have deflation and inflation at the same time.

What does the regular guy on the street do? Booth says, “Figure out a way to have exposure to precious metals.  Put your bubble vision on mute.  You do not have to be invested in the market.  That is a fallacy.  Take what you have and pay down your debts.”

Full Interview below:

After the Interview: Danielle DiMartino Booth said after the interview,

“I am scared because we (America) are in a really bad place right now. People (in the markets) are going to get shellacked. They have no idea what the momentum is going to look like on the downside.”


Umh Wed, 01/03/2018 - 14:38 Permalink

Waiting? Waiting? Waiting! While I am certain that rates will eventually be higher holding my breath is out of the question.

wmbz Wed, 01/03/2018 - 14:38 Permalink

“We have gone from $150 trillion (in global debt) in 2007 to $220 trillion and counting today"

~ $220 trillion. Wait until it doubles and it will. We ain't seen nothing yet.

This lady is talking crazy talk! "We" love debt, that's how we roll! Just grab a hold of the block chain and hang on!

wisehiney Wed, 01/03/2018 - 14:46 Permalink

So funny.

The chicks and fags at the fed.

Cut rates for 35 years.

To punish savers and encourage risk taking.

Then the dumb mofos hit the zero bound.

And now they want to convince the world that higher rates are better.

Because they found out that negative rates are deflationary.

But so are higher rates, now they have built the debt mountains.


I double dog dare you to keep raising.


I think that I will "financially repress" you mutha fuckas for a change, FOMC.

JibjeResearch wisehiney Wed, 01/03/2018 - 15:18 Permalink

It will be interesting to see how the Fed deals with shits in 2018.

1.  Cut taxes: well.. sure, now print more or borrow more.?

2.  Cut interest rate?  Well sure.., to zero and beyond to negative...?

3.  Raise rate?  Well .. sure..., up to 5% ?


Bwahaha ahahhaha...... TINA Bwhahha ahahahhah ahahaha...

Someting gotta geeve lolz ahahahha

In reply to by wisehiney

Clock Crasher Wed, 01/03/2018 - 15:10 Permalink

China yield curve inverted?  Chain reaction?  The equity markets still need to put in a top and consolidate there for a long time.  Only +8% away from Nasdaq 7000!

Like bitcoin.  You thought she was dead to rights but in reality she is consolidating 15,000 preparing a strong move beyond 20,000.  When it falls apart you'll know in short order and this is not what it would look like. 

everything1 Wed, 01/03/2018 - 15:30 Permalink

Uhhhh..  With inflation coming the last thing anyone is going to do is pay off debt, they'll keep robbing the corporations blind be it through consumers excess CC spending, or CEO's sucking all they can while they can, health care industry is a good example of skimming as well.  They've done it before, and they are doing it again.  And, it works out just fine.  Yeah the job cuts just keep getting deeper and recessions worse, but that's the economy you keep, this isn't a country like Norway where everyone shares equally, this is a step on you neighbors head kind of country.

Refinance the debt you want to keep, or just keep rolling it all over, but with rates going up, HAH, fooled yah.  Rates are never going up, the only thing going up is the debt.  If rates go up it's because the economy crashers took over your government.

khakuda Wed, 01/03/2018 - 15:43 Permalink

Uh, rates are nowhere.  A 1.25% tbill gives a yield of about 82 basis points after tax - well under any measure of inflation.

Real rates are very negative still.

aliens is here Wed, 01/03/2018 - 15:56 Permalink

I am not scared. I can prepare for it that's the best I can do. Being scared 24/7 is bad for your mental health. So, prepare for the worst and hope for the best.

Not if_ But When Wed, 01/03/2018 - 16:23 Permalink

I also read her book, which is quite good in criticizing the Fed as an insider.  I'm surprised she didn't mention anything about their academic-leaning instead of real world-leaning dysfunctional bias.     CPL 593H