More reasons to recession-proof your portfolio

The street seems to be betting the Fed will pause in rate hikes at the next meeting. While some metrics still imply that core inflation is high, employment numbers, while high at the moment, are showing signs of future softening as we witness declines in part time work demand, along with a recent slowing in wage growth. So, tightening appears to be working – leading into a softer economy. How soft? Well…. proof will be in the landing…

Whether its a “hard landing” or “soft landing” – certain stock sectors do better than others during the recession or slower economic phase of the cycle. I have discussed these sectors in past blogs, and I wanted to bring your attention back to them.

Please read this blog: Recession resistant stocks – ValueTrend

And this blog: Luxury stocks can outperform during recession – ValueTrend

Here’s why I am suggesting you start thinking of “recessionising” your portfolio

A few sources I have read have noted a large increase in mortgage and loan debt coming due in Canada & the USA this year. As these loans are rolled into rates that are effectively double their original rates, this could influence economic contraction.

US office space – vulnerable in 2023:

 

Meanwhile, defaults are beginning in the USA – I don’t have data on Canada, but I’d have to think its similar:

Speaking of Canada…

Canada is particularly vulnerable: Canadian consumer debt hit an all-time high, reaching $2.32 trillion in Q1 2023. It doesn’t help that household debt levels in Canada are the highest in the world (!!!!), making the country more vulnerable to an economic shock than the US, according to a new report.

Tiff Macklem (BOC Governor) recently noted that mortgages rolling this year will see up to 44% increases in mortgage costs from 2020-21 – a period when many bought into the rampantly escalating housing market.

The quick n’ dirty summary

I wasn’t going to write an in-depth report today, as much of this material has been covered in past blogs. However, I did want to poke and prod you into reviewing those past two blogs (noted at the top of this blog) for recession resistant portfolio ideas. Now is the time to start thinking of protecting and profiting in what is likely to be an economic contraction in NA. Remember I’ve got your back!

FYI: For those who have been patiently waiting: We are planning to announce the TA course discount next week. Technical difficulties came up, but it should be available soon. Stay tuned.

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