“The World’s Most Powerful Economic Indicator Is Signaling a Recession”, Says Prominent Macro Investor

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As an analyst with over two decades of experience navigating global financial markets, I found George Gammon’s insights during his recent interview with Michelle Makori of Kitco News to be both enlightening and cautionary. His extensive understanding of the current economic landscape, coupled with his ability to interpret complex data points, provides a unique perspective that is invaluable for investors like myself.

On the 27th of July, Michelle Makori from Kitco News had a comprehensive talk with George Gammon, an expert in macroeconomics and host of The Rebel Capitalist Show. During this conversation, Gammon shared his views on different economic aspects, particularly highlighting that a key global economic indicator suggests a recession is about to happen soon. He also voiced worries that the banking crisis isn’t over yet, and offered insights regarding macroeconomic data, the Federal Reserve’s moves, and his investment plans.

As a crypto investor, I’ve been closely following the ongoing banking crisis that started in 2023. Banks seem to be hesitant to lend due to an imbalanced risk-reward scenario in today’s economic climate. George Gammon suggests this reluctance to extend loans points towards challenging times ahead. He refers to our current situation as the “middle innings” of this crisis, hinting that more turbulence is on the horizon.

In their discussion, Makori steered the topic towards the complexities of the global banking network. Gammon explained that this interconnectivity can intensify crises, using as an example the surge in unrealized losses within U.S. banks to $517 billion by Q1 2024. To provide context, he compared these figures to the approximately $75 billion in unrealized losses during the 2008 Global Financial Crisis. Gammon emphasized that such substantial losses, primarily in treasuries and mortgage-backed securities, are indicative of a serious underlying financial vulnerability. He acknowledged Makori’s insight for bringing attention to these crucial data points, underscoring the gravity of the current state of banking worldwide.

Concerning the Federal Reserve’s actions, Gammon noted that the Fed tends to act reactively instead of ahead of the curve. He clarified that in past recessions, the Fed has not managed to orchestrate a smooth economic recovery without causing significant turbulence. Makori’s queries suggested that the ongoing interest rate increases alongside high inflation are straining the economy even further. Gammon predicts that, given these circumstances, the Fed may ultimately be compelled to lower rates sharply, which could indicate a severe recession rather than a gentle economic adjustment.

Through Makori’s insightful inquiries, Gammon delved into his unique investment approaches. He revealed that his portfolio primarily focuses on gold, considering it more as protection than a risky asset. Additionally, he disclosed his practice of earning returns from one-year U.S. Treasury bills to purchase long-term, out-of-the-money call options on the NASDAQ. His goal is to capitalize on potential market peaks or collapses. Moreover, Gammon highlighted the significance of preserving liquidity for purchasing undervalued assets during market slumps, a concept that Makori effectively probed further in her questions.

Discourse on the Topic: Bitcoin and Other Unconventional Financial Choices

In our discussion, Makori shifted focus to forecasting economic trends. Gammon anticipates a substantial recession around mid-2025, aligning with the New York Fed’s likelihood projections. He identified key factors that could trigger economic volatility, such as international conflicts and domestic political turmoil. Makori’s inquiries about the forthcoming U.S. elections hinted at Gammon’s viewpoint that a Trump win is probable due to his strong public persona.

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2024-08-02 04:28