Warnings
Warnings
A recession is being spoken about more and more. UBS took a poll of wealthy investors and found that increasingly more are preparing for a downturn. Mike Maloney of goldsilver.com has a video explaining the correlation between interest rate cuts being used to time recessions.
UBS is took and poll and found that wealthy investors are hedging against a market downturn.[1]
“A majority of rich investors expect a significant drop in markets before the end of next year, and 25% of their average assets are currently in cash, according to a survey of more than 3,400 global respondents. The U.S.-China trade conflict is their top geopolitical concern, while the upcoming American presidential election is seen as another significant threat to portfolios.
…
Still, it seems that wealthy investor caution is strictly for the short-term. Almost 70% of respondents globally are optimistic about investment returns over the next 10 years.
‘The challenge is that they seem to want to respond’ to short-term uncertainty ‘by really shortening their time horizons and shifting to assets like cash that are safe,’ said Michael Crook, a managing director on the investment strategy team. Though with many of these people investing on a time horizon across decades and for future generations, that ‘seems like a mismatch.’”
Mike Maloney points out that in the past two recessions, the Fed cutting interest rates preceded a recession by a few months. The December 2000 rate cut preceded the recession in March 2001 by 3 months and the July 2007 rate cut preceded the Great Recession beginning in December 2007 by 5 months. July 2019 was the first rate cut since 2008 and ocurred 4 months ago as of November.
Rate cuts continued on September 18th and October 30th. Go to the 7:52 minute mark but the whole presentation is interesting.[2]
[1] https://www.bloomberg.com/news/articles/2019-11-12/world-s-rich-readying-for-major-stock-sell-off-ubs-wealth-says
