Raoul Pal is always on recession watch. He has an interesting video below. He claims the US is in recession.
The Federal Reserve manipulates money and credit. They create the boom and bust cycle. Therefore, at some point, a recession will come. There is no wisdom in making such a statement. The question is always when.
I agree with Raoul Pal on many things.
First, we are living through tech bubble 2.0. The Silicon Valley madness is very real. Companies go public with no intention of ever making a profit. The public gobbles up these shares. There are tales about the South Sea Bubble. One story about the South Sea Bubble always made me laugh. Apparently, an adventurer started a company entitled, “A company for carrying on an undertaking of great advantage, but nobody to know what is.” He opened an office in Cornhill, London the next day and sold a 1000 shares. That night he took off on his adventure and was never heard from again. When investors bid up a stock that states it has no intention of ever making a profit, I wonder about the sanity of some people.
Second agreement is about debt markets in general. Corporate and government debt is going to blow sky high one day. He begins his discussion about corporate debt at 39:25. When junk bonds approach 0% you know you are living through madness. Some companies have way to much debt.
However, there is no reason why this can not continue for many more years. The yield curve is back in positive territory. Credit and money supply growth is robust. Earnings growth is still positive. We have not even entered an “earning recession” like that of 2015 and 2016. I do not believe a US recession will start this year. I think US stock markets are going higher. One of us is dead wrong.