Ten Key Points
- Steen has 25% equity allocation.
- Miners and information technology are his two key areas.
- Recession odds have been at roughly 60% for a long time according to Steen’s basic model.
- Trump policy makes recession odds even higher.
- Cost of capital has increased significantly.
- Some of his very smart friends believe in the Trump story but Steen is skeptical.
- Trump is building a wall not just around Mexico but all of the US. This will reduce global trade massively.
- Nixon recession is the platform Trump has adopted even though China relationship heads opposite to what happened under Nixon.
- The drive higher in the US dollar since 2014 has been about the dollar cost of capital for funding, not the policies of Trump.
- Fed, Trump, some corporations including J&J all looking for weak dollar policy.
Like Steen I have viewed that a US recession has been likely for some time. And also like Steen, I believe Trump’s protectionist stance is a bad thing.
We will soon find out.
Mike “Mish” Shedlock