Covid was a false alarm bubble burst for the economy. There was a break in the normal system due to a pre-planned black swan event, but not a real economic breakdown. That is yet to come.
Major indicators like the Buffet indicator and P/E ratio averages still show a massive bubble by historical standards. Meanwhile China (the world's second largest economy), is seeing bubbles burst. In their case they are in the middle of an ongoing real estate collapse from a long overheated market. Sound familiar? Not to mention rampant unemployment (not covered in Chinese media of course).
In the US, despite the fed cutting interest rates, real mortgage rates remain high. The market isn't buying the fed's rate cut signal this time, and with job layoffs already well underway and inflation putting pressure on what little people have left, it's fair to say the actual recession already started long ago. Markets just need to catch up to reality.
The government's official numbers are calculated with increasingly dishonest methods and it's known among many economists that by the time the government admits a recession it's well underway. So I'd much rather rely on consumer sentiment to indicate recession than official stats. The average sentiment of low-middle class workers is very pessimistic and complaints of struggle commonplace.
Warren Buffet's massive investment firm is sitting on more cash than ever before after a big sell off. At the same time valuations of stupid high risk assets are reaching all time highs (Bitcoin, Tesla, etc). Add to that the unsustainability of the AI hype train (input power exponentially outpacing performance gains of the system), as well as the Trump economic hype train you have a recipe for a major correction and crisis.
This crisis could include banks that over bought on high risk assets during the market euphoria thinking number always goes up (it doesn't).
I know some want to believe in the AI+Trump hype train, but this is only an artificial boost before reality sets in. The fundamentals haven't changes and Trump isn't going to change them. A little deregulation is nice, but insufficient to save this sinking ship.
And for the cherry on top, the Jim Kramer contrarian indicator is flashing red... https://communities.win/c/NoNewNormal/p/19A1C9uX4b/best-recession-indicator-yet/c
*[This is not financial advice]
The US is already in a recession, as government spending is the reason GDP is even "growing."
Good post and I agree with the sentiment. I think there will be a crisis in year 1 of Trump's presidency and something they try to pin on him or a scapegoat. Warren Buffet bought up lots of rural mountain land which pisses me off.
What is a good store of money right now? Gold? Real estate? You said Buffett is sitting on cash? how? Short term treasuries?
Any predictions for the U.S. currency itself?
How should i realign my 401ks and roths?
Yeah Buffet is in treasuries.
Anyway you can't ask me these questions after I put the disclaimer. But personally, I'm gambling by betting on a post crash boom in risk off assets, so risk on assets leveraged to risk off assets (if that makes sense). I won't recommend anything specific though since I am taking a lot of risk.
I've almost put as much of a bet as I want in the market, after which any future cash goes into a HYSA (I refuse to directly loan the government money so no treasuries).
I own some precious metals but I stopped buying a couple years ago. I still expect it to go up during the downturn, and as it does I plan to sell some. Personally I'm not considering real estate unless I see prices I like again.
Physical gold is the best store of wealth right now and should see decent (10% or so) gains over the next year. I expect over $3,000/oz happening by the end of 2025, hopefully higher. Land, silver, ammo, alcohol, and any other tradeable commodities are smart to have on hand too. I’m not sure what to do with my 401ks and Roth accounts yet. My options are limited there, unfortunately.
It’s possible, but I think BTC exists to divert people’s money from hard, tangible assets, like gold, into fake fiat bux like crypto. So I’m not sure gold confiscation is needed these days. I could be wrong though.
If you can grab some pre-33 American gold coins, they are neat to own since they “survived” the gold confiscation act of 1933.