Uh-oh!
Here’s an admission that will convince… absolutely no one.
Not from your editor… but from someone much more important. Or so they say.
We speak of Treasury Secretary Dr. Janet Yellen.
Her latest comment about inflation and the prospect of a recession should leave you concerned… mightily concerned.
More below…
Take a Little Here, a Little There
It’s a well-known fact (or it feels like it, anyway) that when the chairman of an English soccer club expresses “full confidence” in the team’s manager (coach), you know the manager’s days are numbered.
We’re sure it’s a similar story in American sports leagues. The last thing any coach with a poor-to-average track record wants to hear is that he has the “full support of team ownership!”
It has always been that way, and it always will be.
It’s a not-too-dissimilar story in markets and economics. When the Grand Poobahs in government and central banks assure you something couldn’t possibly happen… you can almost be assured it will happen.
The latest example is Dr. Yellen’s witterings on the chances of a recession. As she told Yahoo! Finance News yesterday…
I don’t see the basis, really, for a recession in the outlook… [and] I think we have a good, strong economy.
Well, that’s blown it!
Mark yesterday’s date in your diary – June 24, 2024. That’s the day we can pinpoint as the day the proverbial wheels started to fall off the economy… with a recession within the next year as an almost dead certainty.
We only slightly jest. The truth is, such a statement as that from Dr. Yellen is what we should expect around this time in the market cycle.
Stocks are at a record high. The bond rate has slipped back after peaking just a couple months ago. And Bitcoin is now back to around $60,000.
Oh, and the market’s bullish stock darling, Nvidia (NVDA), is no longer the world’s biggest listed company. We guess that was also a likely sign that we’ve seen the market top.
(Although in truth, with Nvidia’s rate of advance, anyone could have – and did – say the stock had topped out at various points over the past year.)
Mark our words on this. As we’ve mentioned previously, we’re not saying a major market crash is imminent. But we do say that you’re a fool if you haven’t prepared for the prospect of a long decline in stock prices over the next year.
It’s why we’ve suggested progressively taking money out of the market. Holding cash… holding gold (and silver)… and, if you really feel you must have exposure to stocks, we say a handful of carefully picked speculations could work out just fine.
Of course, if the market does slump, those speculations will too. But what the heck? If you’ve downsized your portfolio because of that very risk, taking a small hit on a few risky stocks won’t hurt much.
In short, we figure your best bet is to remain alert in this market. It’s still not the time to sell everything. But taking money off the table here and there is the best market bet you can make right now.
Cheers,
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Kris Sayce
Editor, The Daily Cut