Hello Everyone
There is something that needs to be differentiated.
We are not investing in a structural recession at this time. We are investing in an event. There's an enormous difference between the two, and how we support them matters.
The Financial crisis was a structural problem. It started in 1998 when Congress repealed the Glass Steagall Act and encouraged lenders to help lower-income families, a.k .a. subprime mortgages.
Congress was well intended, but Wall Street did what Wall Street does best- finding ways to make huge profits. In the end, it all blew up.
The financial industry's stress at the heart of the 2008 financial crisis was brutal. We were the target of a lot of anger and confusion worldwide.
I remember waking to screaming phone calls at 6:00 am when Lehman fell. Later that day, we had a conference call with the CEO of our firm, assuring us we were not the next Bear Stearns.
I experienced such paranoia that I periodically woke up in the middle of the night (assuming I slept) to check my phone. I checked it repeatedly to see which company went bust at that hour of that day.
The point!
Life was hard for everyone in 2008, and it took multiple government acts to correct the issue.
That was a structurally based recession. Financial destruction on many levels with integrated structural issues on an entire way of life that ended up being an illusion.
We all paid dearly for it.
Fourteen years later, in August 2022…
Inflation is killing progress, and world news triumphs over fundamentals. The Anxiety that all investors feel is warranted because there's very little to do that's productive.
I am here to tell you that our contraction in the United States is not a structural issue. Yes, the economy is contracting, but only because of overseas events.
We are investing in an imported economic contraction (fancy word for recession), much like the 1973 Iranian oil embargo, the Cuban missile crisis, and the first Gulf War.
Currently, the USA does not need or rely on Russian Oil, Ukrainian food, or anything for that matter from either country. Europe’s dependency on these goods creates structural issues within the continent that each EU/UK leader is grappling with.
The markets will move higher if Europe's food/ fuel supply crisis resolves. We are in a waiting game that will have a positive outcome.
My following email will be about how a very unlikely trading partner could bring down inflation quickly.
That's it.
Christopher R Lakian