Post by
Experienced on Feb 15, 2024 10:28am
Race to the Bottom
Well the numbers are now in for 2023.
Germany has taken over from Japan as the 3rd largest economy in the world.
So is this good news for Germany?
Well I guess so. But the kicker is that the reason they overtook Japan was that their economy didn't shrink as much as it did in Japan. Not exactly the way you would like to move up in the rankings IMO. It's a bit like a team getting into the playoffs because the other team choked as opposed to winning it outright.
Some indicators suggest that Canada is also in a recession. France grew by .1% in 2023. China is still growing but at half the rate ir was a few years ago and that assumes that you actually believe the numbers coming out of China.
Meanwhile, the US stock market is at an all-time high. Investor sentiment is in the Excessive Greed category. The US Government is running an annual budgetary deficit of 2 trillion and according to the CBO it will rise to 3 trillion in a few years based on current Government approved spending. So this number could grow with new spending plans or a recession/slower growth than in the base case assumptionsor some combo of both.
On the consumer side which is 60-70% of the US economy, credit card debt is at an all-time high and growing.
With that as background, up to you to decide what your asset allocation should be but as the opening line in the old show "The Hill Street Blues" says - "Be careful out there".
Comment by
liljohnnyjoke on Feb 16, 2024 8:40am
The US market is at all time highs ONLY because of the run up in the Mag7 stocks since October. those 7 account for 25% of the Dow/S&P. So they mislead that the economy is fantastic.