Actually, the title is a little misleading. Recession isn’t coming, it’s here, and we’ll be lucky if it stops at recession. A recession, with deflationary pressure is a formula for depression.
We already had a whiff of deflation in gold prices last week as commodities sank in harmony with sinking equities markets. That small of a sample can hardly be used to justify a bigger trend and I’m not trying to make last week out to more than it is, but signs pointing to recession are hard to ignore at this point.
Not surprisingly it’s a commodity that points to the severity of the coming recession, except this time it’s copper. In 2008 we saw the same collapse in copper prices as global manufacturing demand cratered. Today we’re seeing a collapse in copper prices near 2008 levels, though not as steep.
So, what does that mean for next week? With the volatility indexes off the charts, weekly and daily predictions are going to contain a high degree of uncertainty.
In the long-term outlook it all depends whether unity breaks out in Europe and sanity in the U.S. At some point we’re going to have to face the fact that a little protectionism in our trade policy is not necessarily a bad thing.
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