RECESSION ALERT: The FED Just Crashed The Stock Market
Published: 2022-04-29
Status:
Available
|
Analyzed
Published: 2022-04-29
Status:
Available
|
Analyzed
Predictions from this Video
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The transcript notes that the US economy is halfway to a technical recession, defined as two consecutive quarters of declining GDP, with the first quarter of decline already recorded.
"technically if we're getting into the nitty-gritty a recession is defined as two consecutive quarters of declining GDP of which we're already halfway there"
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The primary concern is the potential for stagflation, a phenomenon not observed since the 1970s.
"the real worry is not so much the declining GDP but instead the potential for stagflation which is something that we have not seen since the 1970s"
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Stagflation is defined as a combination of slowing economic growth, increased interest rates, and rising unemployment occurring simultaneously.
"For those unaware this refers to the perfect storm of slowing growth higher interest rates and Rising unemployment all occurring at the exact same time"
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Historically, 16 recessions between 1869 and 2018 have coincided with positive stock market returns.
"from 1869 through 2018 there have been a total of 16 recessions that have had a positive stock market return"
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The stock market historically peaks approximately six months prior to the commencement of a recession.
"on average the stock stock market tends to Peak six months before the start of a recession"
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Since 1945, the stock market has experienced an average drawdown of 29.2% during every recession.
"throughout every recession dating back since 1945. the stock market has at some point seen a sell-off with an average drawdown coming in at a whopping 29.2 percent"
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Following a recession, the market has historically recovered and posted an average profit of 1.7%, with an average gain of 15.3% in the subsequent year.
"by the time the recession is over the market recovers and posts an average profit of 1.7 percent with an average gain of 15.3 percent in the following one year"
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The stock market has consistently shown gains in the three years following every historical recession.
"in the three years following every single recession we have ever had the market was 100 in the green"
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The 'skyscraper index' theorizes that the completion of skyscrapers often marks the end of a significant building boom, potentially preceding an economic downturn.
"the skyscraper index in 1999 it was theorized that the completion of skyscrapers tends to cap off what is a large building boom"
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Alan Greenspan's 'men's underwear index' suggests that a decline in sales of this staple item indicates tightened finances and a likely upcoming recession.
"the men's underwear index from none other than the former chair of the Federal Reserve Alan Greenspan he mentioned that men's underwear is a staple item with predictable stable sales so if you see a decline in men's underwear sales it signals that finances are tight and most likely a recession is coming"
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The 'lipstick index' posits that women tend to increase spending on small luxuries like lipstick as a mood booster during difficult economic times.
"the lipstick index suggesting that women would spend more on small luxuries like lipstick as pick-me-ups when times are hard"
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Historically, the stock market experiences its worst performance just before a recession is officially announced, which often presents the most opportune time to invest.
"the worst tends to come right before a recession is announced and usually that coincides with being the best time to buy"
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A recession might lead to a slower pace of interest rate hikes by the Federal Reserve than currently anticipated.
"if we do see a recession then maybe that means the Federal Reserve won't raise interest rates as fast as we expect"
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Historically, no recession has extended beyond an 18-month period.
"no recession has ever lasted for longer than 18 months"
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