If you take a look at the top headline about the stock market today, you’d probably see the first one is about Trump ruling out a recession. The Wall Street Journal ran a story about Trump ruling out a recession and the stock market reacting negatively.
This report is based on an interview in which Trump was asked, “Are you expecting a recession this year?” Trump replied, “I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. And there are always periods of… I think it should be great for us.”
I believe the second-to-last sentence in there is more than just ruling out a recession. If you combine that with previous hints about the economy having to go through some pain, you could argue that maybe Trump even expects a recession. Even Elon Musk reacted to the previous Atlanta Fed’s 1.5% contraction estimate with the following tweet:
“A more accurate measure of GDP would exclude government spending.
Otherwise, you can scale GDP artificially high by spending money on things that don’t make people’s lives better.
For example, you could shift everyone who is building cars to working at the DMV. That would result in no cars and a much worse standard of living, but GDP would appear to be the same!”
This is not a reaction that implies the administration is going to fight an economic contraction.
If you don’t keep an eye on MoneyMorning’s pieces, you may have missed this report.
Our lead analyst Chris Johnson points out that the Magnificent Seven have all been trading below their 50-day moving averages. This is something that hasn’t been seen since the 2022 selloff.
With the exception of Meta Platforms (NASDAQ:META), every single stock is now also below its 200-day moving average. Plus, Chris predicted that the QQQ breaking below its $500 price would trigger another 5-10% downturn, which seems likely with the current macro background.
All things considered, the trends do not seem healthy. The bearish argument this time around has much more merit.
Panic selling all your stocks would be a bad idea. Almost everyone who has done that in the past would tell you exactly that, especially if they sold in the past two years.
But you should make some moves ahead of a possible recession. No one can guarantee whether or not it will happen, so the best you can do is rotate out of some of the higher-risk holdings in your portfolio.
The previous report has some great tips on how you can hedge your portfolio against losses using options and ETFs.
If you don’t want to do that, it would be a good idea to take profits from some of your tech gains and move those into defensive stocks. Here are three to look into: 3 Defensive Stocks That Could Thrive in a 2025 Recession.
