As I write this, Tropical Storm Gordon is churning toward the U.S. Gulf of Mexico. This storm is strengthening. It may be a hurricane by the time it slams into land. And that makes me think about something else. Something that could be very profitable … for you.
For a while now, Martin Weiss has been warning us about a tidal wave of debt that is going to drown markets around the world before finally washing up on U.S. shores. Well, we are seeing some urgent warning beacons. Beacons with names like Turkey and Argentina.
All signs point to this storm getting worse. And these are just pieces of a bigger picture …
Total global debt is a whopping $169 trillion. That’s up from $97 trillion on the eve of the Great Recession. That’s according to the McKinsey Global Institute.
To be sure, debt doesn’t matter until it matters. After all, the U.S. has $21.2 trillion in debt. And our markets and economy are humming along. Even though, in just the first nine months of the year, interest on that debt — paid by the U.S. government — increased by an additional $40 billion year-over-year.
Just the interest alone on the debt is now a half trillion dollars a year. Horrific!
This is partly due to the fact that the U.S. now goes deeper in debt to the tune of a trillion dollars a year. But it’s also due to rising interest rates.
The trends are ominous. Storm clouds are building higher and higher.
And yet, the U.S. market keeps tootling along. Indeed, as growth in emerging markets seems to be downshifting, the U.S. is accelerating. Real Gross Domestic Product growth for the second quarter was just revised up to 4.2%.
And our fearless “honey badger” market shakes off bad news. It’s no wonder. Scared by the global storm, money from around the world is flooding into U.S. stocks.
Meanwhile, out where the real storm is brewing, those beacons keep going off. Turkey … Argentina… and now South Africa are seeing funds bolt and their stock markets plunge. Even South Korea is starting to flash its own warning.
Mexico is OK … for now. But don’t think it’s safe, either.
Related story: How to Cash in on Trump’s Mexican Showdown!
In fact, there is plenty of worry to go around. That’s why the emerging-market indices around the world plunged last month.
Take a look at this chart of one of the biggest funds, the MSCI Emerging Market Index, and an index of emerging-market currencies, in this chart from Bloomberg …
That looks bad, and it’s getting worse. Those EM currencies are getting shredded. The MSCI Emerging Markets Currency Index just hit its lowest level since May 2017.
Many on Wall Street will tell you to buy the EM dip. Anyone who tells you that is an utter fool. Or maybe he wants to sell you the bag he’s holding.
Can this get worse? Heck yeah, this can get worse. In fact, I expect it to get worse.
We’ll see the flow of funds in global markets follow the crisis map that Martin laid out. You can either heed the warning he has sounded about this, or you can wait to dogpaddle as that wave comes in and drowns you.
Martin and I made a video about this. And I recently sent my subscribers an update, in report form, called “Fishing Ahead of the Tsunami.” Because there are ways to make money ahead of this crisis.
That’s what you should be doing. Curling up under your desk is not an option. You better get busy, because while that tsunami of debt is certainly coming — and leaving havoc in its wake — there’s still time to prepare.
And if You’re a Stock Speculator,
There is Another Opportunity
You can use an inverse fund that goes higher as emerging-market stocks go lower. An obvious pick would be the ProShares Short MSCI Emerging Markets ETF (NYSE: EUM). It has average volume of more than 639,000 shares per day. That’s plenty liquid.
And if you’ve got a spine of steel — and cojones to match — you could use the Direxion Daily Emerging Markets Bear 3X Shares (NYSE: EDZ). That’s a TRIPLE inverse fund.
EDZ is too wild for me … I like to sleep at night. But for certain speculators, those who crave volatility and potentially out-of-the-ballpark payoffs, it could be just the ticket.
Look at this chart comparing the performance of these two funds over the last six months, compared to the iShares MSCI Emerging Markets ETF (NYSE: EEM).
EEM has lost 11.3% in the past six months. Terrible. No surprise, then, that the ProShares Short MSCI Emerging Markets ETF (NYSE: EUM) has gained 11.65% at the same time. And that triple-leveraged Direxion Daily Emerging Markets Bear 3X Shares (NYSE: EDZ) is up a hefty 33%. Nice.
Again, I don’t think this trend is over. I think it’s going to get worse. That storm is brewing. Those warning beacons are going off one by one. You can prepare for this storm, and profit from it. Or you can sit on your hands until the wave is washing over you. The choice is yours.
All the best,
Sean
