The Mainstream Media Reverses Course on a Recession

Several banks called for a recession in 2025 as recently as last week, following a surprise negative read in GDP.

But with a China trade deal in place, many of those big Wall Street banks are reversing course. This morning, JPMorgan noted that it did not see a recession anymore.

That’s also reflected in the betting markets. Polymarket showed as much as a 66% chance of a recession in 2025 – as recently as the start of the month.

Today, the odds are now down to around 40% – and should fall further as more trade deals are announced.

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As Andrew notes:

Most mainstream analysts will take a current trend and extrapolate its continuation out forever. That’s lazy, first-level thinking. A better approach is to think in terms of probabilities and what can change them. Tariff and trade news can – and now has – changed on a dime.

We’re still skeptical about this current market rally, even as many factors have turned bullish.

Why? One reason is simple – we won’t rule out a recession as government spending shrinks.

Given that the government spends more than it brings in, about 6% of GDP, a government recession wouldn’t be a bad idea — just a painful, but necessary correction.

That’s the line of thinking behind some of our upcoming research, where we look at President Trump’s three-step plan to reform the economy on sturdier ground. If it comes to pass, it could be an incredibly positive Grey Swan event. We’ll have further details on that research later this month.

-Addison

Several banks called for a recession in 2025 as recently as last week, following a surprise negative read in GDP.

But with a China trade deal in place, many of those big Wall Street banks are reversing course. This morning, JPMorgan noted that it did not see a recession anymore.

That’s also reflected in the betting markets. Polymarket showed as much as a 66% chance of a recession in 2025 – as recently as the start of the month.

Today, the odds are now down to around 40% – and should fall further as more trade deals are announced.

Turn Your Images On

As Andrew notes:

Most mainstream analysts will take a current trend and extrapolate its continuation out forever. That’s lazy, first-level thinking. A better approach is to think in terms of probabilities and what can change them. Tariff and trade news can – and now has – changed on a dime.

We’re still skeptical about this current market rally, even as many factors have turned bullish.

Why? One reason is simple – we won’t rule out a recession as government spending shrinks.

Given that the government spends more than it brings in, about 6% of GDP, a government recession wouldn’t be a bad idea — just a painful, but necessary correction.

-Addison

Debts and deficits will eventually cause a crisis. Treasury Secretary Scott Bessent’s effort to help bail out the Japanese Yen this week is entirely motivated by self-preservation. The contagion signal flashing in Japanese bonds since late ‘25 is infecting the BOJ, which may be forced to sell U.S. Treasurys to stabilize its own currency.

The copper price is no doubt benefiting from inflation driven by money printing. But the doc don’t lie. Copper’s new all-time highs, while gold and silver still languish, are a sign the AI growth story is also that of the global economy itself.

Many miners were profitable with gold around $2,000 and silver near $50. At sustained prices closer to $4,000 gold and $60 silver, the arithmetic changes dramatically.

The stock market is getting an unexpected boost to kick off August, bucking the historically weak summer session for the U.S. stock market.

What’s happening? The Bank of Japan and the U.S. Treasury are making a coordinated effort to support Japanese yen; a move last attempted nearly 30 years in the height of the Asian Financial contagion (1998).

Many miners were profitable with gold around $2,000 and silver near $50. At sustained prices closer to $4,000 gold and $60 silver, the arithmetic changes dramatically.

The stock market is getting an unexpected boost to kick off August, bucking the historically weak summer session for the U.S. stock market.