Mark Skousen, Editor of Forecasts & Strategies, gives his outlook for the stock markets, as well as what may happen to the economy if the Federal Reserve continues raising rates.
*This video was recorded on July 12, 2023
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0:00 – FreedomFest 2023
2:10 – Inflation
3:50 – Fed rate hikes
5:40 – What drives the economy?
7:46 – Stock market
8:18 – Housing market
9:25 – Decline of poverty
#investing #economics #stocks…(read more)
BREAKING: Recession News
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Why Stocks Will Keep Rallying Despite Recession Signs
By Mark Skousen
As the economy faces headwinds and recession signals start flashing, many investors are worried about the fate of their stock investments. The uncertain global trade scenario, slowing growth rates, and inverted yield curve have led to concerns about an impending recession. However, despite these warning signs, there are several reasons why stocks are likely to keep rallying in the near future.
First and foremost, market sentiment plays a significant role in stock performance. Even during a recession, not all stocks perform poorly – in fact, some sectors can thrive. If investors remain optimistic and continue to pour money into the market, it can create a positive feedback loop, driving stocks higher regardless of the overall economic conditions.
Secondly, historically, stock markets tend to anticipate the future. They are forward-looking and often reflect investor expectations for the economy six to twelve months in advance. While economic data may currently suggest a recession is on the horizon, investors may already be factoring in potential stimulative measures by central banks or other government interventions. This anticipation can keep stocks buoyant.
Another crucial point to consider is the loose monetary policy pursued by central banks around the world. In recent years, many central banks have pursued accommodative policies, cutting interest rates and providing liquidity to support economic growth. This easy money policy has been extremely supportive of asset prices, and as long as central banks continue this approach, it is likely to keep the stock market rally intact.
Furthermore, corporate earnings remain strong. Even in a slowing economy, companies that have adapted their business models and focused on efficiency and innovation can continue to generate robust profits. Investors tend to reward companies that deliver solid earnings growth, which can help sustain the rally in stocks.
Additionally, alternative investment options are limited. With interest rates at historically low levels, the fixed-income market offers meager returns. This lack of attractive alternatives can drive investors towards equities, creating additional demand for stocks and further propelling the market rally.
Lastly, the wealth effect plays a crucial role. When stock markets rise, it tends to increase consumer confidence and supports consumer spending. As consumers feel wealthier due to their investments, they are more likely to spend, which in turn can help stimulate economic growth. This positive feedback loop between the stock market and the broader economy can provide support for stocks, even in the midst of a recessionary environment.
While there are undeniable signs that the economy is facing challenges, it is essential to recognize that the stock market and the economy are not always perfectly correlated. Stocks can rise, even during a recession, on the basis of market sentiment, forward-looking expectations, loose monetary policy, strong corporate earnings, limited alternatives, and the wealth effect.
Investors should remain vigilant and keep a diversified portfolio to mitigate risks and take advantage of potential opportunities. A careful analysis of individual stocks and sectors, as well as monitoring economic trends, can help investors navigate uncertain times successfully. By focusing on the factors that are likely to support the stock market rally, investors can manage their expectations and make informed decisions that align with their investment goals.
In conclusion, while recession signals may be flashing, there are several reasons why stocks may continue to rally. By understanding the dynamics that shape the stock market and keeping a close eye on key factors influencing its performance, investors can position themselves for success and weather the economic storm.
If it keeps rallying it will be because retail investors are FOMOing in. The smart money will get out early enough but the retail investors get crushed. It happens over and over again. The stock market is really a casino now.
Forward PE is 25. Good luck!
It’s called greed. Greed is good. Until you lose everything.
Aren't CBDCs the ultimate socialist planning dream?
The fed will always support the stock markets and bail them out
come on man! this is just a commercial for this event!
Recession fears mount on Wall Street and inflation remains well above the Fed's 2% target, some of the top commentators in markets, business, and economics have been sounding off on just how bad they think the next downturn might be — and how far stocks may have to fall. I need ideas and advice on what investments to make to set myself up for retirement.
This guest is clueless. Laissez-faire or libertarianism nearly destroyed the world economy in 2007-2008 until massive govt intervention to restore order again with massive bailouts and pardons for corporate criminals. I think Adam Smith would agree with that assessment for anyone who actually read the Wealth of Nations which this guy clearly didn’t.
How could an economy recover when the values of things are based on the faith in the values of things falsely reported, or don't even exist at all? Most portfolios are heavily invested in big institutions whose values are based on unimaginably large derivatives. Toxic, or even non existent tangibles, & this hoax bubble will inevitably burst. Good luck at the BS casino as they take your money and magically make it disappear.
Several of the biggest market experts have been voicing their opinions on exactly how awful they think the next downturn would be, and how far equities may have to go, as recession draws closer and inflation continues.. well above the Fed's 2% objective. I'm trying to build a portfolio of at least $850k by the time I'm 60. I need suggestions on what investments to make..
Its natural< to see so many investors panic amid a worsening bearish market but it is also important to note that the market situation is nothing new in the crypto world.Several factors are driving negative sentiment in the stock and crypto markets right now including inflation, a shaky stock market, rising interest rates, and recession fears. As a result, bitcoin has dropped significantly from its all-time high, breaking below several key technical levels. As a crypto investor, the current situation might seem bleak. However, there are several tried and tested, expert-suggested investment strategies that can help you weather the current crypto storm. In 2 weeks of shorting and trading with signals directly from Tammy Brockman, I have been able to accumulate 22 btc despite the state of the market.
Capitalism is terrible for the environment. Excessive greed is terrible for the environment. Humans will not survive climate change because of greedy ruthless capitalism and excessive consumerism
SHORT COVERING rally is what made stocks go up/ Goldman S
David, I think I have a crush on you! Lol, not in a creepy way but I LOVE all your interviews. Big fan 🙂
Why is he wearing a cap indoors?
URGENT – David PLEASE HELP Harry Dent – his current newsletter is alarming as he told all his followers to short Nasdaq 3000 points ago – is Harry sick!!!!!!!
People are not stupid. The Wall Street gangs pumped the stock up 25% in first two quarters, the next two quarters will show everyone their truth face, down 50%. If you use leverage, down -75%.
I disagree with his view of real estate.
Buying a house is a luxury item, not an investment
Melt up in stocks and crypto amid dollar going to trash. Zimbabwean dollar went to sh*t while their stock market tripled.
David, I do not know a lot lol. But, I cannot understand how that consumer spending is down 9% did he say? But, people seem to be traveling, vacationing, dining out. I can't grasp these things lol. IDK.
The idea that Adam Smith held anything like a contemporary libertarian view of politics is a myth. John Locke is considered the founder of libertarian ideas. if your gonna hold a convention for freedom, then learn your history. David thanks for the report, love the show.