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The United States economy is facing an increased possibility of a recession, with key indicators flashing warning signals. In particular, the Conference Board Leading Economic Index (LEI), a predictor of economic trends, has dropped to levels unseen since the 2020 pandemic, according to data shared by Global Markets Investor on November 22. Conference Board Leading Economic Index. Source: VettaFi The LEI has now fallen for 32 consecutive months, and such prolonged declines have only occurred during significant economic recessions over the past 65 years.  The index aggregates ten critical economic components and tracks manufacturing orders, consumer expectations, and financial market conditions. Interestingly, LEI’s current level is lower than during the 2020 pandemic. This suggests that economic momentum has weakened, potentially due to tightening monetary policy, sluggish business activity, and deteriorating consumer sentiment. Recession concerns despite bullish stock market The recession concerns have resurfaced despite the U.S. stock market surging after Donald Trump’s victory. In this context, Trump is considered bullish for the economy, but key market players warn that a crash is imminent. For example, Black Swan investor Mark Spitznagel predicted that stocks could lose over half their value in a sell-off by year-end, drawing parallels to the dot-com bubble of 2000. Despite the current rally fueled by cooling inflation and easing Federal Reserve policies, he cited the government’s $34 trillion debt as a key recession risk.  Spitznagel warned that the rally may lead to a severe market downturn. Notably, he has been cautioning of a recession since early 2023. Regarding the stock market signal, economist Henrik Zeberg has maintained that investors should expect a rally in the S&P 500 index and cryptocurrencies before a major crash. Already, the index’s technical set-up is signaling a possible incoming crash.  Probability of a recession  Additionally, in August, J.P. Morgan Research maintained a…

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Filed under: News - @ November 23, 2024 6:21 pm