Behind the record highs lies a very different economy \u2013 one that\u2019s quietly stalling. Blue-collar workers are getting squeezed. Manufacturing is in a slump. Debt is surging. And inflation refuses to let go.<\/p>\n
Today, we hand over the Digest to Charles, who reveals why \u201cthe economy\u201d isn\u2019t one story at all \u2013 it\u2019s two completely different worlds. One is thriving. The other is in trouble.<\/p>\n
He shows how the data is pointing to a brewing slowdown\u2026 why it hasn\u2019t yet shown up in Big Tech\u2019s profits\u2026 and, most importantly, how investors can still protect and grow their wealth if this \u201credneck recession\u201d spreads.<\/p>\n
From hedging with gold and Bitcoin to targeting the strongest corners of the AI economy, this is a must-read for anyone trying to invest smartly in 2025\u2019s split economy.<\/p>\n
Enough introduction. I\u2019ll let Charles take it from here.<\/p>\n
Have a good weekend,<\/p>\n
Jeff Remsburg<\/p>\n
You can\u00a0almost\u00a0understand President Donald Trump\u2019s decision to fire the head of the Bureau of Labor Statistics\u2026 and his insistence that the economy is far stronger than the employment numbers indicated.\u00a0<\/p>\n
After all, the stock market is hitting all-time highs, and the American tech sector is absolutely\u00a0crushing\u00a0it. With Nvidia and the rest of the Mag 7 leading the way, the U.S. is spearheading the AI revolution and leaving the rest of the world behind.\u00a0<\/p>\n
End of story\u2026 right?\u00a0<\/p>\n
Well, that depends on which economy you\u2019re talking about.\u00a0<\/p>\n
It\u2019s almost nonsensical to talk about \u201cthe economy,\u201d because it\u2019s wildly different depending on where you look.\u00a0<\/p>\n
The tech sector is\u00a0booming, and most white-collar and creative jobs are still in good shape.\u00a0<\/p>\n
But outside of the tech bubble, it\u2019s not looking so hot.\u00a0<\/p>\n
The middle class and blue-collar economy is hurting.\u00a0<\/p>\n
Inflation still stings\u2026\u00a0<\/p>\n
The manufacturing renaissance has yet to materialize\u2026<\/p>\n
And wage growth is stalling.\u00a0\u00a0<\/p>\n
Writing for\u00a0The Telegraph, Melissa Lawford calls it the \u201credneck recession\u201d because working-class workers are the worst affected.\u00a0<\/p>\n
But blue-collar workers aren\u2019t the only ones suffering. Younger workers and those with student loans are also in a real bind.\u00a0<\/p>\n
So today, let\u2019s pick through the numbers to see what\u2019s really happening in \u201cthe economy,\u201d and how it could affect your investment strategies.\u00a0<\/p>\n
Manufacturing Is Dead<\/p>\n
American manufacturing contracted for the fifth consecutive month in July.\u00a0<\/p>\n
It\u2019s tempting to simply blame the tariffs, but that misses the full story. We had a\u00a0brief\u00a0blip of manufacturing growth in December and January, but before that manufacturing had been in decline for 26 consecutive months.\u00a0<\/p>\n
Some of this is the long hangover from the pandemic. The trend since late 2021 has been to spend less on \u201cstuff\u201d and more on experiences.\u00a0<\/p>\n
Some of it is due to inflation biting into budgets.\u00a0<\/p>\n
And more recently, some of it\u00a0is\u00a0due to tariff uncertainty causing executives to sit on their hands.\u00a0<\/p>\n
But whatever the cause, the takeaway is the same: The blue-collar economy is hurting. And there is no indication it\u2019s turning around any time soon.<\/p>\n
The Consumer Is Loaded With Debt<\/p>\n
Credit card debt plummeted during the pandemic.\u00a0<\/p>\n
With most of the country getting stimulus checks, rent holidays, student loan moratoriums, and every other manner of free money, there was a debt reset of sorts.\u00a0<\/p>\n
It didn\u2019t last.\u00a0<\/p>\n
By the end of 2021, most of the stimulus money had been burned though. By early 2022 credit card debt was back to pre-pandemic levels. It\u2019s now a full 30% higher than its old 2020 peak.\u00a0<\/p>\n
By itself, that\u2019s not necessarily a problem. Except that Americans are having a harder time paying the balances.\u00a0<\/p>\n The delinquency rate on credit cards is now at the highest levels since 2012.\u00a0<\/p>\n Student loans also look awful.\u00a0<\/p>\n More than 10% of all student loans are reported at more than 90 days delinquent.\u00a0<\/p>\n Debt pulls future buying into the present\u2026nd a dollar needed to service existing debts is a dollar not available to spend.\u00a0<\/p>\n That\u2019s a problem\u2026 particularly when prices are rising on basic necessities.<\/p>\n And about that\u2026<\/p>\n Today, the Bureau of Labor Statistics reported that core inflation \u2013 which filters out some of the month to month noise by removing energy and food prices \u2013 rose at 3.1% last month.\u00a0<\/p>\n Inflation remains stubbornly sticky.<\/p>\n Forecasting a Recession<\/p>\n You\u2019ve probably heard the old tongue-in-cheek joke that \u201ceconomists have predicted nine out of the past five recessions.\u201d\u00a0<\/p>\n Yeah. Their track record isn\u2019t great, and there are plenty of false alarms.<\/p>\n Unfortunately, the indicators that economists use to predict recessions have limitations\u2026 and they\u2019ve become less useful than usual over the past five years.\u00a0<\/p>\n Regardless, let\u2019s take a look at the Conference Board\u2019s Leading Economic Index (LEI), which has historically been one of the best forecasting tools for recessions.\u00a0\u00a0<\/p>\n Think of the LEI as a dashboard of gauges that try to predict where the economy\u2019s headed.\u00a0<\/p>\n It blends together ten different stats \u2013 things like new jobless claims, building permits, stock prices, and manufacturing orders \u2013 into one number.\u00a0<\/p>\n If the LEI is rising, it means the economy is likely to grow in the next few months. If it\u2019s falling, it\u2019s a warning sign that things could slow down.\u00a0<\/p>\n Right now, it doesn\u2019t look great.<\/p>\n Nine of the index\u2019s indicators were flat or negative in June.\u00a0<\/p>\n The only one that was positive was the performance of the S&P 500.\u00a0<\/p>\n And looking at the first half of the year, not a single one of the 10 indicators was robust. All were either flattish or significantly negative.<\/p>\n The LEI triggered a recession signal for the third consecutive month in June.\u00a0<\/p>\n That doesn\u2019t mean the economy falls apart tomorrow.\u00a0<\/p>\n It means we should be paying attention here.\u00a0<\/p>\n So here\u2019s the million dollar question\u2026<\/p>\n Why Aren\u2019t Stock Earnings Cratering?<\/p>\n If the world is crumbling, why aren\u2019t we seeing a reaction in the stock market?<\/p>\n Well\u2026 we actually are.\u00a0<\/p>\n Hypergrowth expert Luke Lango, recently broke down the numbers:<\/p>\n Take a look at the profit growth rates for the Magnificent 7 tech stocks (firmly in the AI Economy) and the S&P 493 (which comprises some AI Economy stocks, but also a lot of Everything Else Economy stocks)\u2026\u00a0<\/p>\n This quarter, the Mag 7 is expected to grow profits by 26%, versus just 2% growth for the S&P 493\u2026<\/p>\n Inflation is currently running north of [3%], so the S&P 493 will essentially have NEGATIVE real profit growth for the rest of the year. Ouch!<\/p>\n So, how are we to navigate this?<\/p>\n To start, we should be invested in the strongest companies that are thriving in this environment. Stick with what\u2019s working. For example, the Xtrackers Artificial Intelligence and Big Data ETF (XAIX,) a proxy for the AI economy. I recommended it in the\u00a0Freeport Investor\u00a0in December and it\u2019s up 44% from its April lows. That\u2019s a no brainer.\u00a0\u00a0<\/p>\n But don\u2019t fall in love with the narrative.\u00a0<\/p>\n Even strong stocks can get whacked in a real recession.\u00a0<\/p>\n The best thing to do is keep a little extra cash on hand and hang on to your hedges in gold and Bitcoin.\u00a0<\/p>\n In\u00a0Freeport Investor, we\u2019re sitting pretty in both assets. We hold three open gold positions, which are up 65%, almost 66%, and nearly 20%. And our two Bitcoin positions are in the green by 188% and 85%.\u00a0<\/p>\n These will remain in our model portfolio for the foreseeable future.<\/p>\n To life, liberty, and the pursuit of wealth.<\/p>\n Charles Sizemore P.S.\u00a0With \u201cthe economy\u201d on the rocks and a \u201credneck recession\u201d underway, caution is warranted. But it\u2019s still important to invest. You just need to be more selective. With the S&P 500 at nosebleed levels, and the Mag 7 pulling it higher, you\u2019d be better served finding other investment opportunities. InvestorPlace Senior Investment Analyst and macro investing expert Eric Fry has some suggestions for you about which stocks to buy instead.\u00a0He shares the details in this special broadcast.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"The headlines are glowing\u2026 the stock market keeps hitting new highs\u2026 and Nvidia and the rest of the…\n","protected":false},"author":2,"featured_media":89458,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101],"class_list":["post-89457","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/89457","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=89457"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/89457\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/89458"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=89457"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=89457"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=89457"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/investorplace.com\/wp-content\/plugins\/lazy-load\/images\/1x1.trans.gif\"){kind=spacer}
<\/a><\/p>\n<\/a><\/p>\n
Chief Investment Strategist, The Freeport Society<\/p>\n