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The Early Signs of Economic Downturn | USMR Market Insights

Coy Wells presenting signs of an economic downturn with a display of a purple graph and a red negative arrow
Mar 4, 2019

The mainstream media has been using the word “recession” on a more frequent basis. When we start seeing that, we know that they’re starting to prepare. Today, the stock market, from being overvalued, sits at a level that exceeds the Great Depression.

The Early Signs of Economic Downturn | USMR Market Insights

Coy Wells:               00:17

We're now in the first quarter of 2019 and everything seems to be status quo. Meaning that the stock market is continuing to maintain and we're not seeing these drastic changes like we saw in 2018. The metals markets is also maintaining and holding as well so we're not seeing this radical change or these changes that should be expected in the marketplace. But the one thing that is starting to change is that the mainstream media is starting to bring up the word recession on a more frequent basis. When we start seeing that that means they're starting to prepare. The same indicator was there in 2018 when they were talking about the stock market being overvalued. Okay. Being overvalued just tells us that the earnings of the company are not supporting the stock prices that they're currently being sold at. And one of the ways to measure this is either the Shiller index or the Cape ratio, cyclically adjusted price to earnings

Coy Wells:               00:50

Right now, to put that in perspective: in 2008 the stock market as a composite, a total was sitting at a level of 17. The great depression was at 30. Obviously the Great Depression was recognized as a lot worse than 2008 obviously. But you can see the difference. Today, the stock market from being overvalued still sits at a level that exceeds the Great Depression. Now in October through December, because there was a selloff, we saw the Shiller index or cape ratios pull back but we're now above what it was during the Great Depression. So what that means for you and I, the average consumer, is that the risk is extremely elevated. When the risk is elevated, that's when we have to be worried. And not only do we have to be worried about the risk, but right now they're talking about a recession because they're giving you the buzzwords to start preparing and most retirees believe that a recession is around the corner.

Coy Wells:               02:34

Remember, a recession takes place when things are peaking. As they have done over the course of about the last six months. GDP in the United States sitting at about 3.7, one of the best we've seen in a long time. They keep talking about unemployment being at one of the best that we've seen in records at a very low point. We also know that the economy of the United States is on it's longest growth expansion ever recorded in history. And we also know that right now the stock market has continued to maintain extremely high levels. So everything is peaking. And when it's peaking is that is when we have to start being worried about a recession or something that could be worse than a recession. So to get more information on this topic, you can pick up U.S. Money Reserve's, latest report, ‘the next recession's here's what it could look like'. So please click on the link below or call the number on your screen to get your copy today. If you're watching from YouTube, please subscribe to the YouTube channel so you don't miss a single episode. For U.S. Money Reserve's, Market Insights, I'm, Coy Wells, and thank you for watching.

 

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