Recession Watch

We are living in interesting times. Stocks are rallying and more companies . The economy is supposed to be doing amazing, but the traditional stock market is pricing in federal rate cuts over the latter half of the year. Unemployment rates in these United States are said to be at lows with the most recent rate at 3.8 percent in March 2019. This is unprecedented. Unemployment rates are at its lowest since 1969.

Over 70% of 2018 initial public offerings have been unprofitable, the trend has continued into 2019.

At the same time, we’re seeing investors flock to safe haven assets such as gold. We’re seeing inverted yield curves, increased investor appetite for bitcoin, gold oriented nominees to join the Federal Reserve and other aspects such as the US 10 Year treasuries falling below the Federal Funds Rate.

Fears of a recession aren’t simply constricted to the United States.

Global Worries
These concerns are express in the global economy.

Reports suggest that the UK economy has slowed down in possible connection to Brexit and an overall global economic slowdown. Countries such as Ireland, India, Australia, Korea, Canada, already have low interest rate and have cut or indicate potential for cutting.

These factors coupled with peaking earnings growth, increasing geopolitical risks, and ever more troubling financial conditions do not help to assuage the concerns of investors.

Again, prior to the last recession, many weren’t calling for a recession. Now, a simple twitter search will yield negative sentiment and a bearish outlook going into the next year. Further issues such as U.S. consumer debt levels are also a cause for concern. This means that individuals may not be able to spend and move the economy, requiring more stimulus from the government.

Further, as the U.S. switches to more protectionist policies this may cause more issues in the short term leading to economic slowdowns.

Trump Regime and Recession
Many talking heads believe that a recession will only occur after the election. They believe this is so because the current administration is pro-business and has the proper incentives to stimulate the economy helping to secure a 2020 election.

Be Aware
Pay attention to potential recession concerns and allocate your assets accordingly.