Memo #4: Recession expectations increase by 10%
April 7, 2023
As concerns about a potential US recession grow, investors and consumers are understandably apprehensive about the possible effects on the economy, job market, and financial markets. While the current situation isn’t expected to be as severe as the 2008 recession, the combination of weakening economic indicators and an aggressive rate-hiking campaign presents a challenging environment.
Key Market Data
3 Market-Impacting Discoveries
- In 2023, value and European stocks have been outpacing growth and American stocks, as reported by JP Morgan. This marks the second consecutive year where value investors have surpassed growth investors and European stocks have outperformed their American counterparts. For additional market insights from JP Morgan, visit: https://bit.ly/3nVMCSk.
- In 2023, most key U.S. economic indicators have shown signs of weakening, exacerbating concerns about an impending recession. BlackRock suggests that the impact of the most rapid rate-hiking campaign since the 1980s is beginning to surface. Although the upcoming recession is not anticipated to mirror the severity of the 2008 financial crisis, recent banking turmoil has underscored the inevitability of an economic downturn. The critical question remains: How severe will it be? Learn more: https://bit.ly/3UhZka0.
- VanEck has launched its newest thematic ETF, the VanEck Robotics ETF, focusing on the robotics and industrial automation sectors. Trading under the ticker symbol IBOT and featuring a 0.47% management fee, this fund broadens VanEck’s extensive range of sector-specific and thematic ETFs, encompassing portfolios targeting semiconductors (SMH) and video gaming and esports (ESPO).
Interesting Developments in the Market
The good
- Technology stocks propelled the S&P 500 upward by 0.36% to 4,105.02 on Thursday, ending the abbreviated trading week on a high note despite a faltering labor market. The Nasdaq Composite rose 0.76% to 12,087.96, fueled by Alphabet’s 3.78% gain and Microsoft’s 2.55% surge. Concurrently, the Dow Jones Industrial Average inched 2.57 points higher, reaching 33,485.29. However, it remains to be seen whether these gains will persist following the holiday break.
The bad
- Brace yourselves, folks. According to research by Goldman Sachs, the chances of a U.S. recession have increased to 35% from 25%.
To Do
Watch: Check out this video of Robert Kiyosaki highlighting three things to do to make money from the oncoming recession.
Read: Gold prices surge as economic uncertainty and inflation take center stage, nearing all-time highs. The precious metal has proven to be a safe haven for investors amid a weaker dollar. It’s not just the bullion that’s shining; gold mining companies and ETFs have also seen an uptick in 2023. While gold’s sensitivity to macroeconomic factors could lead to a future dip, it’s so far so good for the precious metal this year. Read this piece to understand whether higher gold prices can be expected.
Listen: Check out this interesting podcast on why you shouldn’t invest in individual stocks.
Until next week,
Alex Smith,
Author of Introduction to the Modern World of the Stock Market
P.S.: Me too, buddy.
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