Recession 2023- December into January

I'm writing this post a little after 8:00 am, Pacific time, on December 5th, 2023.  This clip above is talking about Bitcoin hitting $42,000 per Bitcoin yesterday, and hovering around $41,000 and change.  Bitcoin bottomed out, in the last trough, in December of 2022 at around $16,600 per Bitcoin.  As I write this, Bitcoin is $42,304.  So Bitcoin is up about 155% in less than a year.  Why?  It continues to attract investors as a store of wealth, a "digital gold," as some people call it.  But mostly, financial giant BlackRock will probably get the approval for a Bitcoin spot price ETF (exchange traded fund), possible as early as January 8th, 2024.  If not in January, that ill most likely happen in mid March, 2024.  That will allow major institutional investors (hedge funds, pension funds, etc.) to invest in the ETF, based on the price of Bitcoin, as easy as investing in any other stock or ETF.  That's BIG.  BlackRock has also applied for an Ethereum spot price ETF, as well, so the same could happen for Eth, most likely at a later date.

This post is written for entertainment and education purposes only, and should not be taken as investment advice.  Do all needed due diligence, and consult needed professionals, before making any investment decisions.  Please read the disclaimer linked below.

Disclaimer

But Bitcoin is not even the big news in the market today.  The real news is another huge decline in bond rates.  The benchmark U.S. 10 year treasury bond, was paying 4.98% in interest on October 18th, 2023.  To put that in perspective, on January 5th 2020, pre-pandemic, it paid 1.79% in annual interest.  In August of 2020, that rate of return dropped to about .53%, one half of one percent interest paid on your money each year.  That's not much.  

The bond market is HUGE, much bigger than the stock market.  This is where the Big Boys (and Big Girls) play, where institutions with billions of dollars (euros, yen, yuan, kroner, whatever) put large portions of their money.  Now, bonds have an inverse relationship between price and interest rates, which is tricky to get your head around.  When prices go up, when buying bonds is popular, the interest rates go down.  When investors sell bonds to buy other things, the interest rate paid goes up.  So, in the last month and a half, enormous amounts of global money have been going into bonds, and that has pushed the interest rate on the U.S. 10 year bond (a good gauge of the overall market), from almost 5% interest, down to 4.17% right now.  

At the same time, gold prices have soared.  They had hovered around $1,950 (per troy ounce)for a long time, then dipped down to around $1,850.  Now gold is up to $2,013.  It spiked up to $2,148 the day before yesterday.  

What does it mean when the biggest institutional investors in the world pour hundreds of billions of dollars into gold and U.S. government bonds?  They're scared.  This is called a "flight to safety."  The most sophisticated investors in the world are running for cover.  They know a global recession is here in places (like Germany), and that's it's coming to pretty much everywhere else.  They smartest investors in the world are hunkering down for a financial storm, an economic hurricane.  They're protecting their wealth from loss, until the storm blows over, and the big damage is done.  Then they'll look for new opportunities, when things settle down.  

Here's what that means for all of us regular people.  Here's how I see the next couple of months playing out:

Stocks- The U.S. stock market is at or near all time highs, about the same levels it was at two years ago.  But now our dollars are worth about 20% less, due to all of the inflation.  So stocks are actually worth less than they were in 2021.  It's December 5th.  On Friday, December 8th, the window for most companies to buy back their own stock closes, because the next earnings season is approaching.  So the biggest driver in stock prices, businesses buying back their own stock, will mostly shut off this coming Friday.  I expect stock prices to really begin dropping next week.  

Virtually every economic indicator has been flashing red, recession warnings, for months now.  The stock market has ignored this.  Starting next week, it looks like reality will begin to set in.  After the holidays, reality will REALLY set in on stocks.  I personally expect 30% to 50% drops in stocks in the next few months, overall.

Gold- Back in July, somewhere, I said I expected gold to pop up to around $2,150, maybe $2,200, and then back off.  I think we are near peak gold prices now.  It may get to a solid $2,200 for a week or two, maybe.  But I DO NOT think gold will soar to $3,000 an ounce.  Sorry gold bugs.  I like gold, over the long term, but our inflation is turning into disinflation now, and probably outright deflation come January.  I think gold will settle at a new level, a bit over $2,000 an ounce, and stay there for most of 2024 and into 2025.  Silver?  It should pop higher, maybe to $35-$40 and ounce, but it's stuck at $25 right now.  I don't see it soaring either.  Silver is also a good hedge against future inflation, and affordable to average people, at $25 (plus premiums) an ounce.  But I don't see it taking off in 2024.

Interest rates- Here's the good news, for average people, interest rates, overall, should drop quite a bit in 2024.  The Fed will begin lowering rates, because of the recession that we are already in (in my opinion), but that hasn't been officially recognized yet.  A banking crisis will force The Fed's hand, in early 2024, and interest rates will probably drop 1% to 2% in 2024, generally speaking.  

Credit- The bad news about interest rates dropping is that this recession will hammer the banks, who are already in sad shape.  The banks have totally tightened credit.  They will tighten more, making it harder for everyone to get loans.  Cash is king in 2024.  It will be hard to get mortgages, car loans, and credit cards, because there will be a record level of defaults and foreclosures as the recession becomes obvious in early 2024, and continues to play out.  So even though interest rates will drop dramatically, it will still be hard to get loans, unless you have excellent credit, and a low debt to income ratio.  This goes for businesses and individuals.  Alternative financing options will be huge in 2024.  Non-traditional ways, owner financing, etc., will be the way to purchase big items (which will be at huge discounts).  

Crypto- Crypto hardcores are chomping at the bit right now.  Crypto winter is over, and we're well into crypto spring.  Even though we are heading into a massive recession, huge amounts of money will pour into crypto in early 2024, because of the BlackRock ETF's, (Bitcoin and most likely Ethereum), and potentially Bitcoin ETF's by other companies.  Major crypto coins will be the only "major asset" giving good returns in 2024, in my opinion, though even Bitcoin is not a "major asset" to most investors yet.  

All investors, large and small, will be drawn to crypto, because that's where the good returns will be.  Also, the Bitcoin halving happens in about April, which also usually leads to higher Bitcoin prices, in time.  You can research that for more info.  In this post, about three weeks ago, I wrote about the Bitcoin ETF, and the case for Bitcoin going forward.  Bitcoin was $36,366 per BTC.  Bitcoin has gone up $5,938 per BTC, or over 16%, in three weeks.  Just sayin'.  I think we'll see $100,000 per Bitcoin in 2024, almost certainly.  I, personally, think the next peak will be in the $150,000 to $180,000 per Bitcoin range, maybe in 2025.  $200,000 isn't out of the question, taking all things into account.  It'll plummet after, to a new higher low.  But that's the area where I think it'll peak.

Real estate- Want to buy a house from a disgruntled Millennial who paid $40K over asking price in 2021 because of the FOMO hype?  What to buy a former Air BnB home at 50% off because the owner has 12 of them that aren't renting?  2024 is your year.  If you have CASH.  Want to buy a 20 year old office building for 80% off, or a dead mall?  2024 is your year... if you have CASH.  Otherwise, forget real estate and watch the crash from a distance.  It's going to be brutal.    

Collectibles- If you're into any kind of collectibles, keep and eye on Craigslist or eBay, there will be lots of people selling collections of one kind or another, after getting laid off, in 2024.  So, IF you know that particular market, from sports cards and comic books to exotic cars, there will be deals to be had... if you have CASH.  

OK, that's my outlook on the financial world, overall for December 2023, and into January, and farther into 2024.  This post is written for entertainment and educational purposes, and should not be taken as financial advice.  Do your own research.  Do your own due diligence.  Consult professionals wherever and whenever needed, before making any investment decisions.  

Buckle up.  We've now have four years of warm-up craziness.  Now things are about to REALLY start going nuts.  

Watch out for that glacier! One of the worst recessions of our lives is coming... slowly

Just about everyone, individuals, businesses, and governments, have way to much debt today, more than ever in history.  In this video, Joe from Heresy Financial YouTube channel gives a lot of great advice on how to get out of debt, as quickly as possible.  This is one of the best things Americans can focus on right now, heading into a major recession.

Disclaimer

My best educated guess now is that we see the coming stock crash in September.  That will lead to big downturns in asset prices, and the visible stock crash is when most everyday people finally look up and say, "Oh crap, I think we're in a recession."  That's when it gets real, for the vast majority of people.  That's when home prices begin to drop in more cities, and that's when a lot more layoffs happen, outside the tech world.  Again, this is my educated guess, but as you'll read below, I've been writing about this recession for about four years now.  It's coming at us, but it's been slow, like a glacier.  Slow but sure, but it'll get here.

Some of you, who have been following my blogs for years, know that I've been harping on about this "big recession that's coming," since early 2019, maybe earlier.  Why?  Because it is a part of some ultra long term, and mid term, cycles that I've been watching, for 30 years.  I won't go into all the details, I've written about them many times online (Welcome to Dystopia: The Future is Now).  I've been writing about this for so long because multiple trends and cycles point to a major recession, or possibly a depression, in 2020, or in the years after soon after.  That recession will also usher in all kinds of other changes already happening in our world.  The main one is that we are still leaving the old, Industrial Age, and still moving into the emerging Information Age.  But we're not fully there yet.  

Now I know most people have been hearing people talk about a possible recession for a year or more.  It's getting old.  But there's a big difference between 2023 and 2007, leading into the Great Recession.  For one, YouTube is now mainstream, and social media has allowed people to connect more than ever in human history.  There are a lot of really intelligent people in macro economics on YouTube, giving their own take on what's happening, and where things are heading.  There is also a ton of bad information on YouTube, social media, and across the web, on the chances of a coming recession.  

So we have the normal mainstream business media telling people everything is wonderful in the economic world, because that's their job, to keep you happy, in an attempt to keep a recession from happening.  So we have far more people available to listen to or watch, on economic issues and business news these days, than ever before.  We have the broadest, and best, and worst, information leading up to this recession, of any recession in history.  You can do research yourself, and compare different sources, and see what makes sense.  That's why this recession feels old already, even though it probably hasn't officially started yet.  There's far more information out there, and far more people talking about it, than any other time in history.

This recession tried to happen in late 2018, when the stock markets in the final months of the year.  But The Fed lowered interest rates in the following months, to buy some time.  Then this recession tried to happen again in early 2020, sparked by the unexpected pandemic that we're all trying to forget.  But that was followed by The Fed creating about $6 trillion in new money, basically out of thin air.  That's how fiat currencies work... near the end of a long cycle. Yeah, we were all Hood Rich for a while, and a lot of people bought stupid stuff with much of that money from PUA, PPP and other programs.  Then, in 2021, the inevitable inflation wave from that huge jump in new money began, and surged upward, and didn't go away.  Many months later, The Fed, who created the inflation to begin with, started raising interest rates, faster than ever in history, to fight inflation.  Interest sensitive parts of the economy, like real estate, hit the brakes soon after, in the booming areas.

Now I'm a macro economics and futurist geek, and I actually enjoy trying to figure out long term trends.  Most of you aren't, I get that.  Here's where I see things headed (most likely) in a nutshell.  All kinds of economic indicators (yield curve inversions in the bond market, among them, are flashing red.  There is a major recession coming, there's not a doubt in my mind of that.  We've seen real estate slow down in many places already, interest rates have soared, it's much harder to get loans now, for many businesses and individuals.  We've seen tens of thousands of layoffs in the tech sector in recent months?  Why have there been so many layoffs in tech?  Because those are the smart people.  They know something dark is coming, and they laid off people early on, rather than waiting six months or a year, like many other businesses have.  

We've been through recessions before, what's the big deal about this one?  There are several, much deeper issues happening in society now (see "Dystopia" link above), and this recession (possibly a depression) will dramatically change nearly everyone's lives.  There's a lot of change that's going to happen outside the financial world, as well.  That's why I think this one is a big deal.  

I could ramble on for hours here, but I'll keep it somewhat short and sweet.  I think we have about three months before things really hit the visible downward spiral.  For most of you out there, getting out of as much debt as you can, is one of the smartest moves right now.  If you've kept debt to a minimum, and have a pretty recession proof job, hey, more power to you, carry on.  But if you're like most Americans, you probably have a bunch of debt that's gotten harder to pay as interest rates went up.  Listen to the video above, it's about 15 minutes.  Look at your situation, and see if any of his ideas make sense.  

Here are some of my favorite YouTube channels for financial information.  If you're interest, check them out, they all have lots of videos, and a ton of information on different aspects of the economic world, personal and business finances, and investing.  Check them out if you want, see if they have some info helpful for your situation.  

The Money GPS

Heresy Financial

Reventure Consulting (real estate focused)

Stephanie Pomboy interview (business oriented macro outlook)

Danielle De Martino Booth (former Fed employee and macro expert)

The Rich Dad Radio Channel

Ray Dalio (short interview)  His "Debt Cycle" concept is another long term cycle predicting a major economic crisis soon.

Daniella Cambone Show/Stansberry Research 

Wealthion

Lyn Alden interview

Blockworks Macro

George Gammon

Steven Van Metre

Eurodollar University

There are no paid links in this post.  I don't agree with everything all of these people say, but I've found all of these channels to be pretty solid information, over all, depending what you are interest in.

I've started a new blog, about side gigs, and ideas and info for small businesses.  Check it out.

Small Business Futurist

As of the late summer of 2023, I'm doing a lot of my writing on Substack, a platform designed specifically for writers.  Check it out!

Steve Emig:  The White Bear's Substack

Real estate in 2023? Watch this...

Being the futurist/economics geek that I am, I discovered Nick Gerli's channel, Reventure Consulting, last spring or early summer, I think.  This video is ten minutes worth of really solid information.

When The Fed started raising interest rates, just about a year ago, I started looking for people keeping tabs on where real estate was going.  I expected the hyper-FOMO market to top out and begin to turn downward in 2022, which it did.  After checking out several YouTube channels, I started watching Reventure Consulting regularly, not really sure about his predictions at the time.  

His thoughts and forecasts proved right, time after time, over the last several months, and he watches the local markets, all over the U.S..  I know most of you don't want to watch these types of videos, even if you're thinking about buying or selling a home, or wondering what to do in your own personal housing situation.  This ten minute video has a lot of info packed in it, so it's a great one to watch right now.  Nick looks at the actual, current, data, and has a long term perspective on overall trends, which is amazing for as young as he is.  This is solid, data-backed info, on the not-so-great direction of where real estate is headed right now, overall. 

With Nick's new U.S. real estate app, currently free as I write this,* you can look up lots of stats on your own area, down to zip code zones, or any other region, around the country.  If you have any interest in where real estate is heading in 2023, watch this video.  

Check ou tmy new blog about finding new uses for old buildings

Adaptive Reuse SoCal

* Not a paid link.