The recession will get here soon enough. In the meantime, prepare for it. From James Rickards at dailyreckoning.com:
Analyzing today’s economic conditions is a challenge.
If the world is in good economic health, you can describe the policy reasons behind that condition and identify specific stocks and sectors that will outperform the market.
You’d point to trends such as low inflation, positive real interest rates (a sign of strong growth resulting from a healthy competition for funds) and stable exchange rates (indicating that investment decisions are made on the basis of fundamentals rather than speculation).
If the world is in poor economic health, the analytic process is much the same but with very different inputs and forecasts.
You’d expect to see widespread inflation (or deflation), high unemployment, declining GDP growth (or negative growth), declining world trade and a host of poor public policy choices including high tax rates, tariffs, export subsidies, overregulation and counterproductive policies based on climate alarmism.
In either the good scenario or the bad scenario, the analyst knows how to approach policy recommendations or investment allocations.
Without being glib, if you’re in a good place, keep it going. If you’re heading in the wrong direction, turn around.
Well, what if we had both dynamics at once?
That’s a pretty good description of where the world is today. The U.S. is a good place to draw the contrast between good and bad news.
