How a Manufactured or Virtual Recession Could Cause a Market Crash

Not everyone likes to hear good news about the economy.

Typically, political parties out of power want to see seated opponents get clobbered by economic failure.

In this age a real, or virtual recession, could be manufactured given today's media reach and technological tools when leading to an election - if even just in the minds of voters.

So, you need to ask yourself: Is a recession being manufactured right now? Who benefits from a failing economy or just pushing the recession narrative? Could a manufactured recession or incessant recession fearmongering lead to a stock market crash? And what would happen to you?

Well, I'm going to answer those questions for you.

Only, you're not going to like what's really happening and how bad it's going to get.

But you are going to like knowing what you must do to make a ton of money off the very dirty game that's going to go terribly wrong...

How to Cash In Big Time When Recession Talk Crashes Markets

Let's face it, President Donald Trump is hated by Democrats and a lot of other people. So are the "Conservatives" and Republicans who don't speak out against him or are associated with him because they are labeled as anything disliked or hated by Democrats and left-wing liberals.

That's okay, it's a free country, and people are free to like or dislike whomever they finger as deplorable, for whatever real or manufactured reasons.

Sadly, there's no civility in expressing disagreements anymore. It's either you're right because you're on my side, or you're wrong and a terrible person.

In fact, civility has turned into civil war, making elections battlegrounds and battles bloody.

President Trump's opponents know if there's economic blood in the streets come next November, the president, his Administration, Republicans, and Conservatives will get the blame, and Democrats will probably win the White House and maybe both houses of Congress.

An economy that's failing is the sharpest tool in President Trump's political opponents' war chest. And they're going to use it, even if they have to fake it.

There is no recession on the horizon, unless you see the horizon as any time in the future, however long it takes. Then yeah, there's a recession on the horizon, just not on the foreseeable horizon.

So, why are media outlets who normally rail against President Trump spreading the recession narrative?

Last week on Friday, a The New York Times headline read, "Trump Acclaims Economy, but Voters Are Anxious Amid Recession Talk."

An opinion piece published in The Washington Post by Jennifer Rubin was titled, "How to respond to a manic President driving the economy into a ditch."

Even CNN, one of the president's most vocal critics, hired  former FBI Deputy Director Andrew McCabe, even as McCabe's being investigated by the FBI for lying to the bureau.

As a "contributor," he's about to double down publicly on his hatred of Donald Trump by dumping on the only thing Democrats have to admit that's been good under Trump, that the economy and equity markets are better off than when Barack Obama was running the country.

Almost all of President Trump's detractors are pushing the recession narrative. It's obvious, and politically, it makes sense.

While I support whomever the president is, if he or she is doing a good job, especially managing the economy, I'm not going to agree or even like what some individuals or administrations stand for.

That's life and politics.

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But, somehow, if the economy is thriving and markets are lifting everyone's boats, I'm okay with what I don't agree with elsewhere. And I think most voters and citizens feel the same if their lives are better off financially, and their futures are safer and more secure.

That's why opposing parties want to see incumbent administrations suffer the slings and arrows of outrageously floundering or failing economies.

What's different in today's world is that something like a recession can be manufactured, even if there isn't one developing.

Whether it's the fear of a recession driven by a constant barrage of fearmongering recession articles or if fear infects enough people to change their consumption habits, their investing habits, their homebuying plans, or their confidence or sentiment, then an actual recession could develop.

But either way, a real recession or a virtual recession isn't what you should be thinking about or worrying about...

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What's frightening is what's going to happen to the stock market if the recession rant runs over nervous investors.

They've already got recession on their minds. How can they not? There are new articles and recession forecasts every day. And when profit taking turns to selling to get ahead of other investors selling on recession worries, a panic could sweep across the landscape and stocks could drop 25%, maybe 50%, in a matter of weeks.

The motivation to sell won't come from a recession that isn't here but will arrive on the heels of a stock market panic.

The selling will come from smart investors who know we're on top of an Everything Bubble.  The artificially low rates that got us here, like when they inflated the bubbles that burst in 2008, won't be able to get us out of the next horror show because central banks are out of ammunition.

It's going to happen.

It's just a matter of when and what you're going to do about it.

I'll give you the timing of the crash and how to play it on Friday for your Labor Day weekend reading.

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The post How a Manufactured or Virtual Recession Could Cause a Market Crash appeared first on Wall Street Insights & Indictments.

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About the Author

Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.

The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.

Shah founded a second hedge fund in 1999, which he ran until 2003.

Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.

Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.

Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.

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