The Most Predicted Recession Ever

It is remarkable how many sides are predicting a recession, while such a recession has obviously not yet been factored into the share prices. Even in the first week of the number season, in which mainly financial institutions reported results, there were no signs that a recession was imminent.

A recession in Europe is fairly digital, it depends mainly on what Putin is going to do. Meanwhile, Russia has found enough alternative buyers for its gas and oil.

Natural Gas Calendar

Even Saudi Arabia is buying cheap Russian oil so that it can export more oil. Furthermore, Putin knows that in a few years’ time he will no longer be supplying Europe with natural gas and oil, which means that he can make Europe suffer to the maximum by not supplying any more oil and gas next winter. The effects of a total blockade are so great that it would be relatively easy for the European Union to fall apart. It would mean the end for German industry, which is heavily dependent on cheap Russian gas. Already, for many Europeans, the energy bill is unaffordable, and when people do not have enough left over to buy food, they have to choose between a deal with Russia that will directly lower the price of natural gas and oil and have the added effect of preserving the European Union and the euro, or continued aid to Ukraine, which could result in major social unrest on the European continent and the end of the European Union and the euro. Seen in this light, the choice seems simple. Putin gets the Donbas and in return, we get ‘peace in our time’. Now the Americans also have to cooperate on such an agreement and for a long time, they seemed to be pushing for regime change. The moment Putin is called a war criminal by Biden and Biden has accused him of genocide, the door should be reasonably closed. But three years ago, Biden also accused Mohammed bin Salman (MBS) of the murder of Jamal Kashoggi and indicated that Saudi Arabia should be seen as a pariah, with whom nobody wants to do business anymore. Last week, the same Biden begged MBS for more oil. It was a hopeless task as the country is at maximum production, but perhaps Russian imports could ensure that more could be supplied. Meanwhile, MBS has promised to be able to deliver 13 million barrels a day, perhaps with thanks to the Russians.

Also, noteworthy is the deal agreed late last week between Russia and the US to fly each other’s astronauts and cosmonauts to the ISS. The top man of Roscosmos, NASA’s counterpart, has just been replaced by Yuri Borisov, Russia’s former defence minister. This man is less confrontational (although you would not say so with his previous position) than Dimitri Rogozin. Rogozin said earlier that the US should start using brooms to fly into space.

A recession in the United States is not likely in the short term. Consumer confidence is low because of inflation, and for producers, it is mainly because of a lack of personnel. These are not exactly signs of a recession, but rather of overheating. If a recession does occur in the United States, it will probably not be before the second half of next year. Furthermore, a relatively mild recession will probably not be enough to bring inflation under control. Meanwhile, the market is even counting on some interest rate cuts for next year.

The figures of the financial institutions in the United States did not yet point to a recession. Although the share of the largest, J.P. Morgan, fell by 4 percent on the figures (after the 30 percent fall in the share price this year), debit and credit card sales were 13 higher in the second quarter compared to the first quarter and 15 percent higher than a year ago. Loans to consumers rose 7 percent and the percentage of non-performing loans declined. In total, that is less than 1 percent. Of course, J.P. Morgan also increased those provisions, but when everyone is talking about a recession, that is obvious. Even Jamie Dimon does not know what the economy will look like in two years’ time. Only mortgages show a clear return, not so strange after an interest rate increase from 3 to 6 percent (now 5.2 percent). But there are hardly any variable loans anymore, almost everything is fixed for 30 years at much lower interest rates.

Furthermore, a mortgage rate of 6 percent is still lower than the mortgage rate during the housing bubble, but it is true that the higher interest rate combined with the high house price means that for new buyers, houses in the US have become fairly unaffordable. On top of that, too little has been built in the US – good news for landlords in the rental market. The fact that fewer mortgages are being granted does not automatically mean that house prices are falling or that consumers are spending less.