Permabear Jeremey Grantham has been in the news recently. In a CNBC interview, he predicted that U.S. stocks would plunge and the U.S. economy will tumble into a recession.
It’s important to note that Grantham is a bond manager and has been touting this line of commentary for some time. The fact is when interest rates rise, the bond market gets obliterated. Grantham has a vested interest to scare investors out of stocks, so they can flee to the bond market and provide Jeremey with some temporary relief.
I have noticed that Grantham never talks about the underlying earnings associated with stocks and, in my opinion, he has virtually no credibility. He has a conflict of interest and is always bashing stocks. So, I encourage you to ignore permabears like Grantham, unless they are willing to discuss earnings and the underlying fundamentals associated with the stock market.
That said, it has been an overwhelmingly scary time for investors. The up-and-down action we’ve seen this year has been enough to make anyone’s stomach churn.
The worst might be over, but I do expect the S&P 500 to continue to oscillate after hitting a new low and bouncing back on improving trading volume.
At Breakthrough Stocks, we’ve focused our strategy on fundamentally sound stocks that can weather the storm.
In today’s Market 360, we’ll take a look at the chances of recession and provide you with the best place to park your investments to prepare…
Is A Recession Coming?
That is the question. And one that no one can answer with 100% certainty.
A recession is defined as a period of temporary economic decline where trade and industrial activity are reduced. We generally identify a recession by a decline in GDP for two successive quarters.
My favorite economist, Ed Yardeni, is now estimating that the chance of a recession is 40%.
Specifically, Yardeni cited that:
- Investors are in a foul mood
- Consumer sentiment has dropped sharply
- Regional business surveys are depressed
- Consumers are losing purchasing power
- And there is a chance of a credit crunch
After pointing out these five factors increasing the odds of a recession, Yardeni commented in his Wednesday briefing that analysts are still revising their 2022 and 2033 earnings estimated higher and there is aggressive insider buying, which bodes well for a stock market recovery.
The fact is the Commerce Department recently revised its first-quarter GDP growth estimate slightly to an annual decline of 1.5%, compared to its preliminary estimate of a 1.4% decline. The decline is due to a productivity drop as well as a record trade deficit. Fortunately, the Commerce Department also reported that consumer spending rose 0.9% in April, so as long as consumers are spending, the U.S. should be able to skirt a recession, since approximately 70% of GDP growth is tied to the U.S. consumer.
That said, decades-high inflation is still running wild. Even if we skirt a recession in the near term, I still believe that we’ll have to deal with continued market volatility as we head into the summer months.
So where should we put our money?
Your Recession Protection Plan
Our quality, fundamentally superior Breakthrough Stocks have thoroughly demonstrated that good stocks “bounce,” especially in the wake of their first-quarter announcements.
Furthermore, many of our Breakthrough Stocks are now benefitting from institutional buying pressure, i.e., i.e., money flow as the money fleeing FAANG stocks – Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Google (NASDAQ:GOOGL, NASDAQ:GOOG) – looks for new places to invest.
What makes Breakthrough Stocks different? Persistent money flow.
Last week during my Great American Wealth Shift event, I detailed exactly what goes into my money flow system.
Simply put, we follow where the money is “flowing”… and right now that is in companies that are profiting from high inflation. I should add that smaller domestic stocks also have a big edge over multi-national stocks, especially now that the FAANG bubble has been “pricked.” So, it’s no surprise that my average Breakthrough Stock has 44.7% average annual forecasted sales growth and 151.7% average annual forecasted earnings growth.
Furthermore, in the past month, the analyst community has revised their average consensus earnings estimate 16.5% higher, so I am expecting another round of earnings surprises when the next earnings announcement season commences in July. We just finished a strong earnings announcement season and I am proud that my Breakthrough Stocks posted a strong average gain in the past month.
Today, I am recommending a tantalizing new stock that’s set to explode, and I will be releasing four exciting more buys in tomorrow’s Breakthrough Stocks Monthly Issue for June. Three of these new stocks are profiting from higher commodity inflation and all are profiting from an increase in money flow, so I look for them to climb higher in the coming weeks and months.
Join me at Breakthrough Stocks today so you can read the issue the moment it comes out and act on my buy advice right away.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Facebook (FB), Amazon (AMZN), Google (GOOG)
