Email

What If Recession Talk Is Real?

7 | By Shah Gilani

What if all the recent attention and talk about a recession isn’t media misinformation?

What if it’s real?

Though it’s hard to believe we’re looking at a recession here in the U.S., given how strong consumer spending has been, how unemployment’s been scraping 50-year lows, how wages have been ticking higher, how accommodative interest rates are, and how strong the stock market’s been having just made all-time highs again in July, a recession is still a possibility.

At least that’s what mainstream news outlets are highlighting, that a recession is just over the horizon.

While recession is a possibility, especially if media outlets keep focusing on the prospect of one and some even forecasting one, we’re not there, not even close…

Breaking Down What a Recession Is and How the Media Knows It Isn’t

Technically, a recession is two consecutive quarters of negative GDP growth.

GDP growth in the first quarter of this year was a healthy 3.1%. In the second quarter GDP growth slowed to a 2.1% clip, a meaningful drop but still well above trend and nowhere near flat lining, and certainly a long way from turning negative.

And though I don’t see a recession developing, it doesn’t mean one can’t be manufactured.

What if the President’s detractors could manufacture a recession?

Would they?

The White House Wants Fannie and Freddie to Do Better – Now Everyday Americans Can Get Wealthy

President Trump’s administration has planned a sweeping overhaul of Fannie Mae and Freddie Mac since before he took office. Now, he’s finally gotten what he wanted. Through Public Law 99-514, the two agencies are distributing $72 billion across the country. And smart Americans are using a brilliant investment strategy to claim their piece – $1,000 a month or more. Here’s how you can too

 

The real question is why wouldn’t they?

They hate President Trump enough, and one sure way to dampen his reelection chances is to kill the economy that the President says his policies are responsible for ramping up.

It’s a dangerous play, as much as it’s frightening.

But what scares me isn’t a naturally progressing slowdown that ends up as a recession, even one lasting more than a couple of quarters, or even a manufactured recession.

Because a recession is just a recession and part of the normal business and economic cycles.

What frightens me is what could happen to the stock market if a recession is manufactured by the President’s foes.

It’s all about psychology.

If the President’s detractors infect the public’s perception of how the economy’s doing which impacts consumer psychology and confidence, it could quickly spillover into markets.

If investors start taking more of their profits off the table, if they park capital instead of putting it to work, if negative investor sentiment knocks stock prices down, selling could quickly cascade into a panic ahead of potential recession, which would make one almost self-fulfilling.

I’m afraid of a market crash.

The conditions are ripe for one.

And we’re getting closer to it being triggered as recession talk percolates to a near boiling point.

What worries me is how everything, everywhere has been inflated by so-called “free money” courtesy of central banks the world over. There are bubbles everywhere and they’re all connected, all linked to artificially manipulated rock-bottom low, and worse, negative interest rates.

Next week I’ll tell you how a recession’s being manufactured, by whom, who will benefit, and what you can do to make a fortune from the coming crash recession talk is going to trigger.

Until then, I want to hear what you have to say about all the recession talk, so let me know here.

Sincerely,


Shah

7 Responses to What If Recession Talk Is Real?

  1. Edouard D'Orange says:

    Russia, Russia, Russian collusion! Racism, Racism, Racist! Twitter, Twitter, Twitter Storm! Now, Recession, Recession, Recession Now! Another desperate, cynical attempt by leftists to hurt the President, the Administration, Conservatives, Wall St and Businessmen. The trade wars are a bit concerning but U.S. trade is not nearly hurt so bad by trade tariffs. I believe that Zacks research estimated that the impact would be less than 0.5% to U.S. GDP. So, where is the recession?

  2. John Kane says:

    Shah, your remarks puzzle me. On the one hand a recession is not at hand (unless people ‘manufacture’ one) and on the other you’re afraid of a market crash because ‘the conditions are ripe for one’. Isn’t the latter the point, and why people fear a recession (resulting from a serious crash)?

  3. John R Duggar says:

    Hi Shah: this time you’ve got it upside down and backwards. “Just in time”–that is, just before the country cleaned House (sic) and decimated the Republicans squirreled away there–McConnell and his the gang handed out a gigantic and unnecessary tax bonus to corporations and to the 20% of our citizens who already owned stocks. That costly experiment had nothing to do with solving any of the nation’s real economic and debt problems–as you know well. Instead, it boosted the economy for nine months or so and then it disappeared, leaving behind only more economic inequality. Trump–who appears to know nothing at all about international trade–is now lashing out at friends and foes alike and causing actual, measurable damage to farmers, miners, manufacturers of goods created in the US using imported materials, and so on and on. Meanwhile, China is still stealing American technology and selling it to the world. Like you, I am thinking recession too–but it will flow from a long list of Republican failures, not from some secret recessionist plot.

  4. James Welge says:

    Inspite of everything, talk of Negative Interest Rates coming here, I think rates are going to go up. I think this because the Fed has, since October 2017, allowed the debt on the Fed’s balance sheet to mature, rather than buying more debt from primary dealers (lowering rates) or selling debt (reducing primary dealers cash at the Fed). The Primary Dealers (dealers whose job, by agreement with the U.S. Treasury is to underwrite Treasury Debt issuance) are not very liquid, and probably do not have the cash at the Fed to enable them to underwrite the mountain of debt (U.S. Tbills) being issued by the U.S. Treasury and also buy Stocks and Bonds. The roaring Fiscal Deficits we have run, as a result of our ill advised interventions over the past 16 years in the Middle East, along with the 2017 Massive Trump Tax Cut, have resulted in yawning annual fiscal deficits from the lowest of $600 billion per year in 2004 to our current $1 Trillion annual defict. All we are doing is rolling over the National Debt by issuing new debt, The Primary Dealers do not have the liquidity to enable them to underwrite all of this debt (and then make markets for it with the public) , the result of which is downward preasure on U.S. T-Bill prices, preasures which will result in higher effective interest rates, and higher rates on corporate Debt also.

    All of the above are factors which will eventually lead to a bursting of the current Asset Bubble. Shah, like you, Im concerned that we will have a Panic, its not going to be pretty. It is long overdue to flush the Virus out of the system!!!! Normal Financial Markets and a un beat up Fed Chairman, like Greenspan would have pulled the Punch Bowl away from this Drunken Orgy years ago!!!!!!!!!

  5. Alex Finkelstein says:

    The real data that counts is new manf. jobs. No longer EVERYTHING Made in China etc. I am an elderly person and remember all the factories that are no longer in N.America. Union and management have to get together and co-operate. There should be tax breaks to companies that give opportunities for profit sharing with workers.

Leave a Reply

Your email address will not be published. Required fields are marked *