RECESSION IS IN SESSION

A recession is defined as a period of temporary economic decilne during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. It would come as no surpirse that since our economy was juiced up the past two years we were well over do for a correction, and since returns were so outrageous it is only right that the drawback is as well. When you consider how the whole world had to shut down, the government had to respond in a way to propel the economy which was printing billions to help out certain aspects needed in order to keep a healthy economy. Everything moved to online and investing became more accessable than ever creating a huge wave of retail investors corresponding to a huge wave in returns of speculative growth tech stocks. Since then most, if not all have retreated to precovid levels whiping away all their gains.

This is mainly due to the fact that it is no longer the federal reserve job to speed up the economy but rather slow it down by increasing interest rates and reducing their balance sheet. This is no surpirse to anyone keeping up with the markets and economy, but what was more so is the fact that inflation is still rising. The federal reserve expected inflation to peak a few month ago and to begin to decline but they were wrong and have now changed their opinion to believeing that inflation is in fact right now at its peak and should retreat in the coming months. Another thing that has came out of no where and pulled back stocks even more than expected is the war in Ukraine.

This has caused commodities, mainly oil and wheat, skyrocketing as well as a decent rise in the safe haven investment of gold. IAU, gold, is up 9% YTD while the NASDAQ is down ovewr 12%. Usually people run to bonds in an environment like this but results have differed, showing that commodities were the ovbious better play. One of the better preforming bonds in this recent market switch is TIPS, which is expected since it's even in the investments name (Treasury Inflation Protected Security). TIP has out preformed AGG, total US bonds, by about 9% the past two years. Consumer Defense stocks are one of the winners this year this year gaining a little over a percent the past 3 months while tech is down over 13%. Many believe banks could be winners this year since interest rates are bound to consitently raise. But instead, financial stocks are down over 6% the past 3 months. Banks are a riskier bet during a time like this, it could be a hit but also a miss if things get worse and don't play out as expected. Many analysts and CEOs are expecting a recession in the near future, BAC has even just released a statement expressing this as their opinion. Make sure your portfolio is prepared and you are not gambling with speculative stocks!