I probably know the answer to this question before I even ask it, but…
Have you started to panic?
Sure, watching the Dow drop 600 points can make even the most seasoned investor start to question whether our economy is teetering on the edge of collapse…
And if you were to listen to some of the talking heads on Fox, MSNBC, or CNN – you’d think that we were just a few weeks or months away from a full-blown recession.
We’re not…
But you’d think we were.
However, Credit Suisse has just released some very revealing information…
And once you see what they’ve uncovered – you’ll rest a lot easier knowing that your money is safe.
First, before we talk about what Credit Suisse thinks – let’s talk about what’s going on in the market.
Wow…
An over 600-point drop in the Dow, 75 points in the S&P 500, and 240 in the NASDAQ is NOTHING to take lightly.
That’s a HUGE dip…
Brought on by the escalation of the trade war by China and Trump’s proceeding tweets that almost sounded like the ravings of a mad man.
After China said that it would place tariffs on $75 billion worth of American products…
Trump seemed to come unhinged – firing off a series of tweets aimed at both the president of China, Xi Jingping, and Federal Reserve Chairman, Jerome Powell – Wall Street reacted…
Big time.
His tweet to China?
“China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!) on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%,” the President tweeted.
Rough, for sure, but it may have been the tweet aimed at Powell that sealed the deal.
Trump said, “As usual, the Fed did NOTHING! It is incredible that they can ‘speak’ without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work ‘brilliantly’ with both, and the U.S. will do great… My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”
Oof.
The fact that Trump either doesn’t realize or doesn’t care that his words have a direct effect on the market by now is astounding…
But they certainly did have an effect, and we saw the impact in the subsequent drops.
Now, couple this event with the recent talk about the inverted yield curve…
And you’re talking about a panic unlike we’ve seen in years.
The recession that hit in 2008 was hard – and it wasn’t so long ago that people don’t remember the hardships we had to endure.
However, historically speaking, whenever the yield curve inverts – it tends to be a sign that a recession is coming. It’s what the pundits on Fox, CNN, and MSNBC are saying – and they’re absolutely right.
Historically speaking – an inverted yield curve IS often a precursor to a recession…
But what these same talking heads AREN’T talking about is the fact that the yield curve is just ONE part of a multifaceted equation that can define a recession – and those other factors are all doing just fine, according to Credit Suisse.
The firm has created a “recession dashboard” – almost like a bingo card – of the seven main economic indicators that seem to have predated a recession dating all the way back to 1973.
In each of the recessions since then, many of the indicators either fell in “recessionary” or “neutral” – which isn’t the case for the current economy…
According to their chief U.S. equity strategist, “Key signals such as labor and credit trends remain quite healthy.”
This report was met with a shared sigh of relief in many of the back rooms on Wall Street…
But like much of what happens in these back rooms – the power brokers and fat cats aren’t really talking about it – probably so they get a chance to make a little more cheddar while the rest of us are panicking.
Well, consider this article your own personal sedative…
You can rest easy. We’re not headed for a recession any time soon…
I thought this would be the best use of our time together this week – as I’m sure this was a question, or at least a concern that was in the hearts and minds of a lot of you.
While we’ll have plenty of time to talk about winning stocks…
I figured your peace of mind was more important this week.
We can talk about making money next week…
Well, that is if our President can keep his fingers to himself and off Twitter.
Of course…
It would be nice if one of his people would tell him that too.
“The trick to forgetting the big picture is to look at everything close-up.”
― Chuck Palahniuk
