The Dreaded “R” Word: While You Need To Be Ice Cool About This Hot Topic
Posted by Martin Denholm on January 14, 2008
Hi – and welcome to the Smart Profits Blog.
Statistics show that it takes most folks less than 20 seconds to decide whether it’s worth sticking around on a website, or whether something is worth reading.
I figure at this point, the clock is ticking at about 6 seconds, so I guess the next 14 seconds are kind of crucial, huh?
Well, how about this: The National Bureau of Economic Research (NBER) has spat their New Year’s champagne right back in the faces of investors and declared that a U.S. economic recession is now “more likely than not.”
I know that’s not exactly the news that most folks want to hear, but hey… I’m just a messenger here, so don’t go shooting. Yes, the financial world is littered with useless, attention-seeking soundbytes these days, but this one is important, since the NBER is the only group that officially confirms a recession.
It’s not hard to see why. Already in the midst of a long-awaited real estate correction (which still seems to be shocking for some folks who seem to have forgotten that what goes up must come down?), the U.S. Department of Labor said that 2007 ended with an almighty fizzle in terms of job growth.
Historically at a time when many employers draft in new recruits to handle the holiday rush, the economy generated a measly 18,000 non-farm payroll jobs for the month. That isn’t going to be enough to spur much consumer spending – a point noted by NBER chief Martin Feldstein. And given that consumer spending accounts for about two-thirds of U.S. GDP growth, the economy could well be set for more struggles.
But as my colleague and Investment Director of the Xcelerated Profits Report Karim Rahemtulla states, “While recession is a hot topic for debate on the news and business shows, the bottom line is that while a recession may come, it will go, as well. The Fed is priming the pump, but it doesn’t guarantee immediate results. The fundamental truth is that when interest rates are low, and heading lower, it will begin to stimulate economic growth at some point – especially in a country that thrives on spending and credit. America is not Japan of the 1990s, where 0% interest rates do squat for the economy. America is a consumer-driven economy that binges, then purges, only to binge again.”
What’s That, Mate? A Recession?
If it’s any consolation, my fellow Brits aren’t faring much better. The economists at Dresdner Kleinwort just added to the bitter English January chill (trust me… I’ve barely thawed out from the last time I experienced it) by saying that Britain has a 50-50 chance of slipping into economic recession itself.
No prizes for guessing the culprit: What the bank calls a “toxic combination” of a crumbling real estate market and that oft-noted poison – the credit crunch.
Talk about “globalization.” Once again, America sneezes… and Britain catches a cold.
In fact, after a prolonged run, the U.K. housing market could be braced for its worst slump since the 1990s.
I’ll certainly keep you posted on developments both here in the U.S. and in the U.K. as the two countries seem to be experiencing remarkably similar economic fortunes – at least where GDP growth and the housing markets are concerned.
In addition, I’ll give you some profitable tips along the way. So stay tuned.
I’ll wrap up this first post for now. But there will be more. The very latest economic, market, and investment news from the U.S. and around the world. The hottest trends and the companies poised to profit from them. Plus much more.
Besides this, though, I’ll also introduce you to my network of colleagues – professional traders, specialists, and investment gurus that I work with continuously. They’ll be posting and writing guest editorials for you regularly, showing you the methods behind their investment systems and strategies and how they work, giving you the most profitable investment opportunities they see. Through them, you’ll be in a great position to profit, no matter what the stock markets are doing.
In fact, another of my contacts – biotech expert Marc Lichtenfeld – just returned from the JP Morgan Healthcare Conference in San Francisco. He tells me that in addition to attending presentations from the world’s top healthcare companies, he also had dozens of one-on-one meetings with individual CEOs. Right now, he’s sifting through the mass of information and conducting further research on the potential blockbuster stocks. You’ll hear from Marc shortly.
Simply by getting to know us, you’ll immediately become part of an elite set of investors, with exclusive access to one of the most successful investment teams in the U.S. – a benefit that most investors would love, but only a very small fraction actually have. So stick with us as I give you the key economic and investment insights you need to know and introduce you to my colleagues, who make money for a living.
Martin
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