While the financial world continues to delight in Trump Mania, the US economy has rolled over into recession.
I realize this sounds completely insane. After all, stocks are at new all time highs and a full 61% of Americans view the economy as “strong.”
Unfortunately, this is perception, not reality. When it comes to the economy today, Americans are like the guy who hasn’t realized the party is over, and keeps dancing while others are already starting to leave.
Consider Government tax receipts. This is perhaps the single most objective economic metric on the planet. If the economy is growing, business are being started, jobs are being created, and more people and entities area paying taxes.
However, if the economy ISN’T growing, the growth rate of this metric quickly rolls over.
Feast your eyes on this. Tax receipts have turned negative (Year over Year) for the FIRST time since the financial crisis. And as you’ll note, this has NEVER happened outside of a recession in 40+ years.
Don’t let that little uptick fool you. This is a blip in multiyear downtrend (note tax receipts PEAKED in 2010 and have been trending lower ever since).
The last time this happened was RIGHT. BEFORE. THE. FINANCIAL. CRISIS.
You know what else happened back then?
Stocks had just hit new all-time highs, having become overbought and massively overextended from their long-term trendline.
Kind of like today.
This is the sort of environment in which Crashes happen.
And while the odds are low that we get an actual Crash… this environment is more conducive to Black Swan events than any other in the last seven years.
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Chief Market Strategist
Phoenix Capital Research