Recession impact if the economic numbers don't add up-
 

Recession impact

Odds of recession = 50 : 50 right now, not zero, and i would estimate much higher than that, but lets start with even.

Recession means negative earnings growth . .
Recession means lower earnings multiplier.

Take the lower earnings numbers and put a lower earnings growth multiple and you can easily get an SnP500 index number which starts with a 4, and at the extreme, which would be 100% all in time to buy, an index number which starts with a 3.

The kick when down would be if the foreign buyers don't buy the US treasuries as they have in the past with the current low interest rates we have right now. . The treasury may have to increase interest rates to sell the bonds to foreigners. .

That is the risk right now for the US economy. . . growth can't be financed cheaply any more. MMT might just be an academic theory which doesn't scale in the real world.

Which means that the bond market, with interest rates which have been in a down trend for 40 years, can't continue to have interest rates in a down trend any longer, after it reached near zero during the pandemic.

So a balanced portfolio with stocks and bonds may not have an increasing value. . that is the current risk. . . doesn't mean it will happen, just means that the odds/probability of it happening are higher. .

good luck to us. .

Dow up 3k on 4-9. Dropped again 4-10 in the AM by around 800. Tariff impact still not known and too many people out there who can't spell economy and believe everything they hear from their favorite news source.

At least now the good CEO's will/should earn their pay in order to plan out the uncertain future. How many children/s toys are made in China and what will they cost when they reach the US?

Silver Lining
 

CPI for March is negative 0.1 percent. Inflation is finally settling because of our new economic policies.

So the national and trade debt are a problem that needed to be addressed. A recession has been predicted quite often in the past few years. Would printing more money fix everything, lol.

As the saying goes, "Economists have predicted seven out of the last three recessions":D

Or put a dozen economists in a room and you will get 13 opinions

You People that lost $$$$ in the down turn, just remember.
Not counting your initial investment, the moneys lost wasn't yours to begin with. :highfive:

A little too early for the current admin's policies to be reflected in the March numbers. Shouldn't be too long now.

The usual foreign buyers of US Treasuries may not be overly keen but the interest rates will not be the sole reason.

Yes, the Dow went up 3,000 points in a day, but it was down 7,500 points since mid-December, so that 3,000 points is not profit. My retirement funds are still down over $100,000 since December. I’ve cut way back on spending.

Dream on when the tariffs hit prices will soar. I am sure you have heard this but probably don’t believe it but tariffs are a tax.

Did you survive the recession of 2022? Yes we were in a recession. It was a time to make a lot of money. Coming out of the recession in 2023 thru 2024 you could have made 100’s of % on stocks, I mean a lot of different stocks. Since I sold in December of 2021, I had cash to buy these.
Same thing this time. I sold off last December. When things get back to normal, it’s going to be a very profitable recovery.

The biggest issue during a recession is that you never want to sell any stocks to live off of. You will be selling more shares and your base will be lower for the recovery, which will take you much more time to get back to where you were.

This might be a good time to think about converting your ira into a Roth. Your earnings will be lower so you will pay less taxes and there could be a fast recovery instead of a long drown out recovery.

I’m glad someone is making it so we have free trade. The US has been taken advantage of for way too long. At least the WH is transparent about it and states that we will have a bumpy ride for a while, which again will make investors a lot of money. IMO, when China flips, that’s my pivot to invest, and we will be off to the races.

What if we had a country where the government funded itself with tariffs and all direct taxes were eliminated? Instead of paying interest to a central bank for money creation, we would create non-interest-bearing treasury notes. The government is reduced in size to align with the explicit restrictions on federal power in the Constitution. Inflation would no longer exist with the currency backed by gold. We had such a government before in the late 1800s, and it led to the "roaring 20s."

Inflation was settling before our new economic policies.
Probably not so much going forth.

No good deed goes unpunished:

In short, coming out of the Second World War, the whole focus for the US innovation system was on early-stage R&D, not manufacturing. “Production was the last thing we worried about, since we were the king. Nobody was remotely close to us,” adds Bonvillian.

By resting on its laurels, therefore, the US lost its lead. Meanwhile, post-war Germany and Japan were rapidly rebuilding their industrial bases to counter mass unemployment. This meant their innovation systems were focused on manufacturing, leading to the creation of Germany’s much-vaunted Fraunhofer model (industry and universities working hand in hand) and Japan’s quality production revolution. These were dramatic innovations in the production process, much of which were funded, ironically, by US post-war reconstruction money, such as the Marshall Plan.
Investigating the Decline: Who Killed US Manufacturing

Ridiculous union demands were also a major factor. But relocation to right to work states would have been the solution. Overtime, the ballooning trade deficits will negate the benefits of cheaper imports. But of course short term profits are always the highest priority.

:thumbup:

Tariffs literally are not a tax, only Congress has taxing authority.

VAT is a tax and the EU has it on US goods. Why not complain about that actual tax in goods out allies have in place?

Tariffs not yet figured in to the inflation report. Expect grain and gasoline/diesel prices to decrease (which affects everything) and just about everything else to increase in the short term. We do seem to be getting a lot of new investment in the country, but it will be a while before that translates into new permanent jobs. Negotiating new trade rules is not a bad idea, but the way it was done was not a good idea. Thanks to Musk, Dimon, and Ackman for getting a change in course. Going to be a wild ride for the next few months at least

Producer Prices Plunged Most Since COVID In March | ZeroHedge

With government spending being abated, maybe we will luck out and the Fed might actually start lowering rates.

Investors are running away FROM US treasuries because the rest of the world VIEWS the US as becoming UNSTABLE.

Unstable if you are a headline reader.

Stronger if you understand.

:read:

People tend to believe that our imports from China are LARGER than they really are. In 2016 it was 21% of total imports. Today it is ONLY 13% .

In general, people may NOT be spending in April because of the unpredictability of the current situation. If we were a CEO thinking of building a new factory, we more likely "table" that idea because of uncertainty. Why NOT hold cash and wait? If businesses and regular people PULL BACK on expenditures, then the economy grinds to a HALT. There could be massive worker layoffs. Then the small % of people with available cash could buy up EVERYTHING at a DISCOUNT.

True. The March numbers are not very meaningful. April numbers may hit like a sledgehammer!

VAT is charged on the consumer in Europe on nearly all goods.
Not at point of import or by importer, and definitely not just on US goods.
VAT as an average over Europe is about 20%. It is a Purchase Tax.
Ranging from 8+% in Switzerland, to 27% in Hungary.

A tariff IS a tax on imported products.

“Investors are running away FROM US treasuries because the rest of the world VIEWS the US as becoming UNSTABLE.”

This is exactly what an investor wants to hear! This is when you can make some good money. Remember the famous quote from Warren Buffet: "be greedy when others are fearful".

You think the Oracle’s, Broadcom’s, Nvidia, Amazon’s, and thousands of other great companies are going broke/or going out of business? Of course not.
Have cash ready to get into some of these great companies that people are afraid to invest in

Agreed. Tax cuts for the RICH NEVER "trickle down". They won't help our MASSIVE debt problem. (actually make a bad thing........WORSE).

OOOOOOOOOOOOOOOO, it does trickle down.
Top 10% account for 50% of consumer spending.

The top 10% is about the only ones paying down the massive debt.

Good, big companies will endure. Small and inefficient companies may NOT survive. The trick is to TIME your stock purchases. Buying after 2 consecutive quarters of NEGATIVE GNP would be a possible method. If it is a "V" type of recession, then it would take a quicker reaction to buy.

Not to worry
 

I use the analogy that you let the puppy crap on the rug for six months and then you try to house break it . The passing of NAFTA caused it & that was continued by both political parties!
( admin, I'm not being political.)😇
. It's gonna take a little bit of time to get us back together, but it will happen! Give it six months and you'll see!🇺🇸

Recession odds closer to zero.
 

New jobs report is spectacular, trillions of investments coming back to America, better trade laws, quit watching the lamestream news, the odds of a recession are zero.

Bologna

Only thing I see becoming unstable are the globalists.

Japan sold all of its US Treasury Bonds. That is a fact. And not an encouraging one. Also US consumer sentiment has fallen for the last 4 months.

Big up day coming Monday on Wall Street now that Trump just removed tariffs on China for computers, smartphones, TVs, chips and other electronics.

Some.

That's true. My mistake. But, the fact that Japan is selling ANY US Treasury Bonds shows that they are worrying about US unpredictability. For the same reason OTHER counties are also selling US Bonds.

This whole tariff thing is proving to be the fuse that is lighting the bomb, which is our country’s real problem that nobody seems to want to address. That problem is our country’s unsustainable level of ever growing debt (over $36 trillion and rapidly growing). Without foreign countries willingness to fund our country’s out of control debt levels, we are basically screwed. Anything we do that causes foreigners to loose confidence in the financial stability of the good old US of A spells disaster. Not to mention the fact that the interest payments alone on the debt are crippling to the nation’s budget. Stay tuned and buckle up, this has the potential to get very ugly.

There is an old financial theory called Furganson's Law
that says when the interest on a country's debt EXCEEDS the money spent on it's military, then that country risks having big problems. And right now the US debt interest EXCEEDS the military spend by a small amount.