President Trump Warns Of Stock Market Crash πŸ‘‰ If A Democrat Wins The White House - financialanalysis

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Tuesday, February 25, 2020

President Trump Warns Of Stock Market Crash πŸ‘‰ If A Democrat Wins The White House

Every time the stock market has a sizeable downdraft, President Trump blames the Federal Reserve or the Democrats. And with Bernie Sanders' win in Nevada still looming large over the market, and futures struggling to shake off yesterday's brutal drop, the fact that Trump is back at it this morning is hardly a surprise.
In the past, Trump has warned that a Democratic "Clown" president would lead to a "1929"-style crash, coined the slogan "If you want stocks to fall, vote Democrat" and blamed the Dems for market "disruptions".And this morning, the president is at it again, warning if he loses the upcoming presidential election, there will be a stock market crash "like you have never seen before." E-Mini S&P500 has erased all gains made during Asia hours and moved into the red since Trump's comments.
With Sanders on track to secure the nomination in a nightmare for establishment Dems, we suspect we'll be hearing this from Trump more frequently as we head into the summer.Yield Curve Says Recession Is Nearing for the U.S. Economy
There’s a recession looming for the U.S. economy. Be very careful. Don’t expect 2020 to be as rosy as 2019.
You see, the mainstream media and politicians will tell you everything is great and you don’t really need to worry about the economy. But I can’t stress this enough: don’t get lured by the false optimism.Economic indicators are popping left, right, and center, and they say a recession is becoming inevitable for the U.S. economy.
For instance, look at the chart below. It plots the difference between the yields on 10-year U.S. bonds and three-month U.S. Treasuries. Economists refer to it as the yield curve.
This difference has been a very powerful signal. Whenever it reaches negative territory, it’s deemed, “inverted,” and one of the surest signs that a recession is fast approaching.In late 2000 and early 2001, the yield curve was inverted. A few quarters later, economic slowdown prevailed. Fast forward to 2006 and mid-2007, and the yield curve became inverted again. A severe recession followed just a few quarters later.
If there was a scale of how precise the yield curve has been as an indicator of economic slowdowns, it would get a very high score. We are talking precision of between 70% and 90%.
Here’s the kicker: the yield curve is inverted again. In early 2019, we saw the difference between the yields on 10-year U.S. bonds and three-month U.S. Treasuries drop below zero. Then, that difference bounced a bit.
Now it’s back below zero again.
This shouldn’t be taken lightly whatsoever. In fact, it wouldn’t be wrong to say that this indicator should be on every investor’s watchlist.
Why Should You Care If a Recession Is Fast Approaching?
Dear reader, there are at least four things you should know in case the U.S. economy faces hardships in the coming quarters (in no particular order):
The Federal Reserve doesn’t have any tools left to fight an economic slowdown. Interest rates are already too low to be able to make a meaningful impact by lowering them further. Will the Fed drop the rates below zero? Will the negative interest rate policy (NIRP) get triggered in the next recession?
The U.S. government is running a budget deficit of close to $1.0 trillion these days. It’s happening when the economy is relatively fine. If a recession happens, the government could be forced to spend a lot more, so the budget deficit could soar immensely. This could hurt the U.S. dollar and U.S. credit ratings.
There’s a lot more consumer debt out there. Americans have borrowed a lot of money during the economic recovery that began after 2009. In the next recession, if we see job losses, will people be able to pay their debts? We could see defaults on consumer loans.
How will the stock market perform? We have seen an immense run in stocks over the past decade. Know that the stock market moves ahead of economic data. If we assume that a recession is coming, key stock indices could be in the midst of forming a top.

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