Is the U.S. headed for a recession? This Wall Street bank thinks so
A recession in the U.S. is brewing as the Federal Reserve is taking a more aggressive stance on raising interest rates to clamp down on inflation, according to economists at Deutsche Bank.
With inflation at a 40-year high, they predict the Fed will raise interest rates by half a percentage point during the next three meetings in May, June and July. That’s in line with the Fed’s thinking, according to minutes from the latest meeting.
When the Fed raises rates, it becomes more expensive to borrow money since interest rates on mortgages, credit cards and other loans increase in tandem. By taking such action, the Fed hopes to slow down the economy without causing a recession.
IMPACT ON YOUR WALLET: How Fed’s first rate hike in more than 3 years will affect credit card, mortgage, savings rates
2022 RECESSION?:The odds are rising amid soaring inflation, high energy prices
In this case, it’s going to be unavoidable, the economists said in a note published Tuesday.
The U.S. unemployment rate, meanwhile, ticked down to 3.6% last month, which is just 0.1% higher than the 50-year record low unemployment rate that occurred before the pandemic.
Deutsche is one of the first major banks to sound the recession alarm.
Legendary investor Jeremy Grantham sees a ‘superbubble’ in markets and expects the S&P 500 to crash 43%. He recommends overseas stocks and cash as havens.
Jeremy Grantham recently diagnosed the fourth US “superbubble” in the past century, and warned the benchmark S&P 500 would crash 43% to around 2,500 after the bubble bursts.
The veteran investor and GMO cofounder explained in a Saturday interview with Fox Business how investors should position their portfolios against a backdrop of historic market speculation.”
“What I would do is make sure you have some cash reserve,” he said. “There may be some great buying opportunities in the next couple of years.”
The market historian has previously said he holds cash so he can deploy it easily, and a small amount of gold and silver.
“Secondly, I would try and avoid US stocks,” Grantham said. “If you have to own some, I would own high-quality. They always do better in a serious shake-up.”
Grantham, who has repeatedly warned investors are caught in a historic bubble, said an imminent crash in the S&P 500 means a credit crisis is brewing.
“So, blue chips are the way to go. Avoid debt. And to the extent you can, avoid the US. It’s the most overpriced market,” he said.
“Real estate is overpriced everywhere in the world. But the stock markets outside the US are curiously not that bad. They’re in a bull market. They’re overpriced mostly, but they’re only normally overpriced,” he added.
He also touted emerging markets, saying traders could find bargains.
“If you look for the cheap stocks, growth versus value; growth has had an unprecedented decade,” he said. “It is probably the turn for cheap stocks again.”
“One of the main reasons I deplore superbubbles – and resent the Fed and other financial authorities for allowing and facilitating them – is the underrecognized damage that bubbles cause as they deflate and mark down our wealth,” Grantham said in a paper released last month.
Durham to call former FBI general counsel James Baker to testify in case of former Clinton campaign attorney
Durham says CIA found data alleging Trump-Russia connection not ‘technically plausible,’ was ‘user created’
Second , the Government is not seeking to usurp a credibility finding from the jury through lay opinion testimony. Indeed, the Government does not plan to elicit the “opinion” of the then-Managing Partner of Law Firm-1 as to whether he currently “thinks” the press statements were false or misleading. Rather, the Government will appropriately elicit testimony as to the circumstances in which the statements were created, reviewed, and approved; what information was(and was not) provided by the defendant or others in drafting these statements; and whether the Managing Partner knew any of the media statements to be false at the time based on what he knew from his role in managing the firm. Because such testimony flows directly from the witness’s knowledge of relevant facts, none of it encroaches on the jury’s role as the finder of fact on ultimate issues in the case. https://www.scribd.com/document/570091923/70-Memorandum-in-Opposition-Re-Sussmann-Motion-in-Limine-by-USA