Recession Incoming?! Here’s What You NEED To Watch!!

Foreign It was one of the biggest economic Surprises of the year so far a first Quarter fall in U.S GDP Now while some claimed that this was a Minor technicality others think that a Recession is inevitable In the video today I’m going to break Down exactly what’s going on and analyze Which way the economic winds are likely To blow so if you’ve got money in the Markets right now this is a video you Can’t afford to miss [Music] Okay before we talk GDP there’s Something you should know about little Old me I may say stuff that makes you Wiser but that doesn’t make me your Financial advisor everything in this Video is informational and educational And occasionally Sensational so watch Until your brain is full If this is your first time visiting the Coin Bureau my name is Guy the host of Today’s show this channel is where You’ll find the best content about Crypto so make yourself comfortable and Go with the flow we cover everything Crypto specific as well as other Relevant topics that are also terrific So if this all sounds like your cup of Tea then subscribe and ring the bell Icon if you please that way you’ll know When the next video is released

Okay so I know that crypto is my Obsession but let’s take a look at this Looming recession Let’s start with that GDP decline shall We it came as a bit of a shock the U.S First quarter growth turned out negative At minus 1.4 percent This followed a pretty sturdy 6.9 growth Rate at the end of last year Moreover this was Far Below the median Analyst projections which had q1 GDP Growing at one percent Now despite how gloomy this would have Made most people the markets seem to Rally on the news this had many people Scratching their heads wondering what The hell was going on Well it could be because people thought That the reason for this fall in the q1 Numbers was more technical than anything Fundamental so what do we mean by that Well in order to better understand it we Have to take a look into how the GDP Numbers are calculated as they say the Devil is in the detail Now there are two ways to calculate GDP But the most well known is to use the Expenditure approach basically to Calculate how much has been spent in the Economy It’s calculated as the sum of Consumption government spending Investments and net exports this means That the GDP of a country is driven not

Only by the amount that’s being consumed Or spent in the economy but also by how Much is being invested and more Crucially the difference between exports And imports What many say happened in q1 was that Although we had strong consumption 2.7 Growth versus 2.5 percent at the end of Last year we had a negative change in Inventories and a large fall in net Exports The latter subtracted 3.2 percent from The GDP whereas the former was 0.84 if You run the numbers you’ll arrive at the Negative 1.4 percent that we got for GDP According to the press release from the Bureau of economic analysis quote the Decrease in Real GDP reflected decreases In private inventory investment exports Federal government spending and state And local government spending while Imports which are a subtraction in the Calculation of GDP increased Now what this could imply is that one of The engines of U.S economic growth Consumer spending is still quite strong Whereas all the other factors that could Impact on that GDP calculation were Weighing down on it so does this Adequately explain the fall and is it Much Ado About Nothing Well yes it is indeed true there was a Large drop in government spending this Quarter on account of limited stimulus

Moreover because the U.S consumer Demanded a great deal of goods in the First quarter they had to be imported On the flip side though consumer Spending in other countries and Particularly those in Asia has been Lower that means that the U.S was Importing more than it was exporting in The first quarter bigger Gap in net Exports On top of this investment has fallen Because inventories have fallen as well While there was a large stock of Inventories in Q4 of last year U.S Consumers have voraciously worked their Way through that this year Moreover given supply chain issues Companies in the US have not been able To easily replenish these stockpiles So on the face of it it appears as if The core of the GDP calculation which is Consumer spending is holding up well Better relative to other countries Around the world and hence the reason For that trade imbalance This then led many analysts to claim That the numbers did not concern them And that they still saw strong U.S Growth this year For example gagi Chowdhury of BlackRock Ishare’s investment said quote I would Also say that when we forecast second And third quarter GDP I think we’re Going to see some of the draws from

Government spending and from net exports That we saw in the first quarter Probably point to a more resilient U.S Economy well that’s a fair point let’s Not forget the infrastructure bill that Was passed last year in Congress these Massive government spending packages Don’t happen overnight and the funds Take at least six months before they Start going out That means that although we may not have Seen the effect of the spending last Quarter it may come in this quarter also If you believe that Supply chains are Likely to ease up more on that in a bit Then you can expect those net exports to Also normalize now similar arguments Were made by Ian shepherdson the chief Economist at Pantheon macroeconomics Quote this is noise not signal the Economy is not falling into recession He went on to point out that net trade Imbalances could actually boost net Exports in Q2 and Q3 Gus voucher of PNC Financial Services Said quote the U.S economy is not in Recession a few temporary factors trade Inventories and government caused the Economy to shrink Indeed the broader Collective of Wall Street analysts don’t think that we’re Heading for a recession anytime soon That’s thanks to this handy Wall Street Journal economic survey for April

It asked a total of 77 economic analysts Their projections on the number of key Variables one of those was of course Economic growth and the average Estimates were 2.9 2.8 and 2.56 percent Respectively So overblown recession fears well not so Fast that’s because many appear to be Basing their assumptions on historical Norms which are quite frankly not fit For purpose in the current economic Climate That’s because right now inflation is at Levels that we’ve not seen for over 40 Years inflation that appears to be still On the rise and is showing no signs of Slowing down This inflation is of course destructive For everyone’s wallet but it’s less Likely to cause a recession than the Methods used in order to rein it in I am Of course talking about the fed’s Monetary policy now I’ve talked about The fed’s Dual mandate many times in the Past and will leave my most recent video On it in the description But the most important thing here is That the FED has been favoring one side Of that dual mandate growth at the cost Of some seriously high and destructive Inflation So in order to try and rein in that Inflation the FED has to dramatically Reverse course and start raising rates

In fed Pilots it’s trying to achieve a Quote soft Landing essentially guide Inflation down with higher interest Rates without damaging the economy the Only problem is that that’s akin to Trying to land a jumbo jet on an Aircraft carrier it’s more likely to be A crash that overshoots the deck The FED started this reverse course Towards the end of last year when it Began tapering its Bond buying this Taper sped up this year and resulted in The very first interest rate rise in March of 25 basis points The FED is currently having its May Meeting and the market expectation is That it could raise rates as much as 75 Basis points Even the lowest estimate of 50 basis Points is still quite significant given That the previous hike was only 25 basis Points Now of course raising interest rates Does not come without risk that’s Because when the FED raises the base Rate fed funds rate interest rates Throughout the economy also go up higher Interest rates mean lower growth because People are less likely to take out loans Companies can’t take out loans for Investments It could also lead to severe stress as People and companies that have taken out Debt now have higher interest payments

To make that’s a whole other video which I thankfully already done for you folks Link in the description of course But the point is that because the Fed Was subsidizing its growth objectives During covid at the expense of inflation It now has to go the other way and Severely restrict that money supply the Only problem here is whether these fed Actions can really have any sort of Impact on inflation That’s because one of the biggest Drivers of our current inflation is Outside the control of the fed and that Is cost push inflation or more Specifically Supply chains and energy Prices I’ve talked about supply chain issues at Length in a previous video which I’ll Leave linked to in the description I Encourage you to give it a watch to Understand exactly how we’re in this Quagmire But since that video things appear to Have only gotten worse that’s because Not only does it appear as if the war in Ukraine is unlikely to end soon nor the Accompanying sanctions but also because The Chinese government appears Unrelenting in its lockdown policies for Example Shanghai population 28 million People is entering its fifth week of Lockdown and while there have been some Hints that it could be eased people in

The city have not yet felt any reprieve Moreover as I predicted in my previous Video It’s Beginning to spread to other Cities in the country Beijing now Appears to be at a Tipping Point as some Apartment complexes appear to be getting Locked down More venues are being closed and Restrictions put in place right now it’s Not a matter of if but when Beijing is Going to go into a hard lockdown Now the impact that these policies have Had on the Chinese economy is hard to Tell that’s partly because the lockdown Started at the tail end of q1 and partly Because their numbers can’t fully be Trusted But there are already some indicators That things aren’t likely to look good That’s thanks to the April manufacturing And non-manufacturing numbers which show A massive fall over the month You can see exactly what that looks like Over here According to a statement by the Statistics Bureau the deterioration in Manufacturing activities was due to Declines in both production and demand So it’s quite clear that China’s GDP is In for a nasty shock even if the Government stats are able to Miraculously show some growth the impact That these lockdowns are having on the Rest of the world is profound

Firstly given that the Slowdown is in Demand as well this means that Chinese Consumers are less likely to be buying Western Goods as you will recall from That GDP calculation I did earlier net Exports are impacted by the amount of Goods that are being imported in these Regions This further weighs on the GDP numbers In the second quarter Then of course you have the impact that These lockdowns are having on the Production and distribution of those Goods as I pointed out in my video about Supply chains China’s closure of these Ports and restrictions of Truckers Coming into covert hotspots is having an Incredibly destructive impact Beyond this you also have the risk that When these lockdowns do eventually lift There’s going to be a barrage of orders From companies in the west that are wary Of running out of inventories this is Likely to flood Western ports with a Crush of imports once again According to Jacques vandermeeren the Chief executive officer of the port of Antwerp quote we expect a bigger mess Than last year it will have a negative Impact and a big negative impact for the Whole of 2022. So what does all of this mean Well disruption of manufacturing in China and also in the West on account of

Limited supplies for one thing You then also have that immense cost Push pressure on inflation the higher Inflation goes the more the FED will Have to tighten the more it hammers the Economy a triple Whammy But of course China’s lockdowns are not The only risk Weighing on the global Economy We are now in the third month of Russia’s invasion of Ukraine and to say That it has been a disruption is putting It mildly Not only has the invasion itself Completely destroyed Ukraine’s economy To say nothing of the suffering Inflicted upon its people but the Sanctions against Russia are likely to Send it into a deep recession too in Fact those sanctions are likely to cause Even more global economic damage than The conflict itself This is something that I talked about in Much more detail in my video on the Impact of sanctions it’ll be in the Description for you guys But things have got a lot more heated Since that video was made that’s because Russia is starting to make good on its Promise to stop sending gas to those Countries that don’t pay for it in Rubles and the first two countries to Have experienced that are Poland and Bulgaria when gazprom recently turned

Off the taps Europe cried foul and screamed blackmail Which it no doubt was but as long as They are dependent on that gas they Can’t say much more About a quarter of Europe’s energy Generation is thanks to gas and about 40 Of that comes from Russia This action by Russia and the looming Threat of further blackmail has been Weighing on other countries that could Be in the firing line Yes countries are trying to adapt and Wean themselves off Russian gas however Many fear that this cannot be done fast Enough If there is a situation in which Russian Gas is turned off for the rest of Europe Then the unthinkable gas rationing is Likely to take place I’ll leave a link to this ft article in The description but the picture that it Paints is not a pretty one at all Industries will have to Lobby Governments in order to make the case as To why they should be allowed to receive Gas over homes and other businesses Companies will go under If this story plays out then it will be Hard for Europe to escape a recession According to the bundesbank Germany Central Bank quote in the severe crisis Scenario real GDP in the current year Would fall by almost two percent

Compared to 2021. naturally this isn’t Good for Europe but it’s bad for the Rest of the world too as I mentioned Before a Slowdown in Europe means less Demand for U.S goods and hence a Worsening in the trade balance and GDP Also we cannot forget the impact that an Oil and gas embargo will have on the Prices of these commodities Countries in Europe will be scrambling To make up the shortfall with imports From other regions this will of course Push up prices for everyone around the World this will result in more inflation Which the FED will have to fight with Policies that impact on growth it’s not At all unrealistic to assume that we Could be heading for a period of low Growth and high inflation I.E Stagflation Not since the 1970s have we seen this Economic reality play out a reality that No one thought likely until a few months Ago so do I think we could be heading Into a Slowdown or even possibly a Recession Well let’s see what others are saying About this Quagmire we find ourselves in Let’s start with perhaps one of the most Well-known Global Financial Organizations out there I am of course Talking about the IMF it has recently Slashed its growth estimates for the Region and warned of quote severe

Economic consequences for Europe given The ongoing War this has forced it to Lower its growth forecast not only for The region but also the entire global Economy This was part of its global economic Outlook report published about a week Ago and speaking of the IMF one of its Ex-chief economists seems to think that We are at serious risk of falling into a Recession Kenneth rogoff is a well-known Harvard Economist and he made this case in a Guardian op-ed I’ll leave a link to it In the description but what he says is Quite alarming For example he thinks that the risk of a U.S recession has recently soared with The main uncertainties now being its Timing and severity he also thinks that China’s zero covert policy is causing Significant economic damage and it could Already be in a recession As it relates to the old continent quote A recession in Europe is almost Inevitable if the war in Ukraine Escalates Scary stuff Another important perspective on this is That of Bill Dudley an ex-federal Reserve chairman he recently wrote in a Bloomberg op-ed that quote the FED has Made a U.S recession inevitable In the piece he takes swipes at current

Fed policy and thinking One is the thinking that they had no Impact on the high levels of inflation That we currently see and yes it does Still think that and the other is that It thinks it can somehow engineer a soft Landing because of similar episodes in The past Dudley claims that quote the fed’s Application of its framework has left it Behind the curve in controlling Inflation this in turn has made a hard Landing virtually inevitable now another Report that I want to bring your Attention to is this one from Deutsche Bank in it DB’s Chief economists warned That the US is on the brink of a major Recession and that it will be much worse Than expected they said quote we regard It as highly likely that the FED will Have to step on the brakes even more Firmly and a deep recession will be Needed to bring inflation to heal they Also estimate that in order to Significantly bring inflation down to Those Target two percent levels the Fed’s fund rate will have to rise to at Least the five or six percent level For a world that’s already so indebted Such a measure is not likely to end well Okay but that’s One Bank what are all The investors saying well something else That you may find interesting is this Survey that polled over 1200 major

Investors worldwide it was conducted Over the first few days of April What the survey finds is that a Worldwide recession could be just around The corner moreover according to the Centex economic indicator investor Confidence in the Eurozone is now at its Lowest level since the early days of the Pandemic but perhaps one of the most Illuminating surveys about a potential Recession is that which polled 4 000 Adults in the US according to the survey A full 81 percent of the respondents say That they think the US is likely to Experience a recession this year Moreover the vast majority of those Surveyed said that they are worried About this recession now what do people Do if they are worried about economic Hardship well they safe they slow their Spending which of course ends up further Impacting economic growth If consumer sentiment does eventually Sour that could be a further drag on GDP Remember that the consumption part of The GDP calculation was the one that Everyone was trumpeting earlier less Consumption lower GDP and a recession Bake some inflation into that equation And you’ve got what the economists like To term a quote show And that’s it for most of my video but I Want to give you a few of my own

Thoughts on the matter the negative q1 GDP numbers were no doubt a shock when The consensus estimate is for a one Percent growth and you have a 1.4 Contraction that’s shorter ring alarm Bells yes there were some large Adjustments to the net exports and Investments but they are still an Important component Moreover the assumptions that these are Likely to reverse themselves in Q2 are Hopeful at best given everything else That’s going on in the world right now Demand for exports is likely to be muted And Supply chains are only going to get More strained Not only will this have a negative Impact on output and consumption but It’s also going to add further pressure To inflation inflation that is now quite Frankly out of control The FED is going to have to try and Reign it in but it’s between a rock and A hard place Does it risk a recession with severely Restrictive monetary policies when a Great deal of the price pressure is Coming from something that it can’t Control all I will say is that I’m glad I’m not in Jay Pal’s shoes From where I’m standing I think that it Will be hard to Stave off a recession Europe seems poised to enter one given That Putin isn’t interested in ending

The war and wants to settle scores China Is probably already in a recession and Even if it isn’t you’ll want to take its Official numbers with a truckload of Salt And then you have U.S consumer Confidence which could likely be further Harmed by high inflation low growth and Higher interest rates So the main question now appears to be Not if we will head into a recession but When Recession a not my favorite meme that’s For sure anywho that’s it for my video Sorry if it was on the gloomy side but There it is I am super Keen to get your feedback Though so do you think we could be Headed into a recession or do you think These fears are overblown I’d love to Know so post stem comments down below While you’re tapping away at that Comment you absolutely have to check out My socials page this has the links to All the official places that you can Follow me off the tube these include my Telegram Channel where I share market Analysis and Views Twitter where I share News and other tips Instagram and Tick Tock for behind the scenes views and Memes and of course my email newsletter Where I share a breakdown of my personal Portfolio as well as a breakdown of some Upcoming videos if you want to help

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