It’s Going to Happen
The markets are beginning to discuss the probability that the ultra-fast way in which the Trump administration is reshaping America’s role in the world, might lead to a recession.
I personally believe these fears are overblown, but we must understand them thoroughly, because IF markets behave as if one is coming, it presents a buying opportunity and if markets are indifferent to it, then we must hedge.
So, which is it?
First of all, we had two bear markets, when measured by the S&P 500, dipping below the 200DMA, in the past five years and that’s a lot:
Courtesy: Zerohedge.com
The first one was the March 2020 Covid-19 panic and the second one was the monetary rate hike induced sell-off of 2022.
Are we heading into a 3rd bear market in 5 years?
Trump’s plans rely on the public mandate he received and, therefore, what Trump watches closer than anything else is CONSUMER CONFIDENCE. In order to keep it high, Trump must get oil prices lower – gas at the pump is the beating heart, the pulse, the blood in the veins of the American Middle Class and I believe you’ll be SHOCKED at the lengths that this administration will go to, when it pursues energy costs.
Mortgages are the second lever Trump can pull, if he wants Americans to gain confidence in his policies and give him breathing room to continue to reshape the world for generations to come.
We believe that this will be done, through a combination of banking deregulation.
Third, we think that Trump will focus on food prices. By winning in these key areas for the consumer, he could continue, even past the first 100 days, to be laser-focused on his pro-business, pro-deals, pro-peace approach.
Courtesy: Zerohedge.com
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As you can see, this type of fund inflows is NOT the product of retail investors but the outcome of institutional positioning in gold ahead of a weaker dollar era.
Even more interesting is the fact that these inflows are accompanied by massive COMEX moves to fill the vaults!
Courtesy: Zerohedge.com
Gold is the real money and I believe this trade is 80% done for 2025 – I do LOVE silver, in contrast. Silver is really capable of hitting $37/ounce, if we AVOID recession and cut interest rates.
Especially, if this is accompanied by flat stock market, similar to 2016!
Another consideration is that markets have already pulled back significantly, with the NASDAQ 100 in correction territory.
We are coming out of two amazing years for markets, so what I believe will happen is that between now and May 1st, when Trump’s first 100 days in office end, the markets will not find much optimism.
But, if we avoid the recession and come out strong, from a peace agreement between Ukraine and Russia, the low price of oil will fuel the consumer and we’ll see an American Golden Age.
Courtesy: Zerohedge.com
With China open for business, with Europe spending on defense, with the prospect of Peace in Ukraine and with Trump at the White House, it’s hard to bet on recession, even as the signs are there.
Best Regards,
PortfolioWealthGlobal.com
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