There is plenty of talk that 2020 we are finally gonna see this big recession that will take us back to the great depression, the government will have no choice but to revert back to the Gold Backed Standard (GBS) well because its the only thing that “worked”, hundreds of millions will die or be broke and only those who have been hoarding gold for the last 20 years will make it. Or something like that!
In this article I will talk about the looming 2020 recession and the reasons why I think we won’t see it! We are on the cusp of many many things happening and it would appear that things are moving much faster then before, so the cycles I don’t think will take as long as we have seen before.
Right now there are similarities to Nixon’s era with the space race 1.0, then what came out of that 20-30yrs later was the birth of the interenet. That timeline for that past cycle I feel is going to be much faster this time around as we are already seeing this “new technology” that will continue to completely revolutionizes how we live in the next 10 yrs or less.
Now to be clear, I am still preparing my portfolio and cash flow as if it does happen sometime next year because I could be wrong and there are a lot of variables outside of my control. I like to focus on what I can control and just keep an eye on all those variables I cannot.
Here is the current odds of a 2020 recession
You see there is about a 38% chance of recession currently in August 2020. Now there are plenty of charts out there and data out there that shows the downside we are facing, between the yield curve inversion– now spread, retail closures, rich saving more than spending, RV spending drops, decent job numbers but looming negative interest rates and USD possibly stripped as global reserve currency– we are facing a good fight here over the next 2 years. A few charts to help visualize that…
Here is the first bit of hopium I have for you on this 2020 recession and that is
2020 Recession Breakdown
The biggest factors to look at outside of what I cover below if there is this recession is that money and lending will dry up. That means ALL R&D budget will dry up, all charitable donations will all but dry up, school funding, roads- you name it and it will tighten up! Now earlier in this article I talked about how there was essentially this one disruptor before which was the Internet, which one could argue that that tech led to advancements in many other markets.
The things I am about to cover you will really love because each one of them are huge disrupting markets by themselves but like the internet boom fuel each other and are connected. I am not sure if there has ever been such a point in human history that we know of where so many disruptors were all advancing so fast at the same time.
Space Race 2.0
This is a topic I have talked at length about and even shot a video discussing all the recent funding and timelines for that up against the 100 yr S&P chart. Shameless plug but the video is really the best consolidation of this data I have currently.
This is an area that is completely new to me and actually found out about this unfortunately through its Jeffrey Epstein ties but the tech is both insanely impressive and Orwellian, reminding me that Minority Report was telling us the future. We have two of the bigger companies to talk about here today, both of which are highly controversial because of their integration into the intelligence communities in both the US and Israel. We have Palantir and Carbyne911.
Both are under fire because the tech again is scary and the intelligence its gathering is a privacy concern for people, specifically Palantir has a $49 Million dollar contract with ICE and since illegal immigration is such a woke topic right now you better believe everyone is labeling them the devil. Palantir is a US based start up backed by Peter Thiel, a contractor for the US intelligence community and has a branch in Israel. This is significant because as with Carbyne there seems to be a lot of ex-Israeli intelligence working and staffed throughout both companies.
Israels Prime Minister Benjamin Netanyahu who is a big question mark in my mind has made it very public that placing Unit 8200 (Israeli intelligence) in top positions in multinational tech companies is a deliberate policy, meant to ensure Israels role as a dominate player in this new cyber war.
Carbyne is an Israeli tech-startup that promises to revolutionize how calls are handled by emergency service providers, as well as governments, corporations and schools ensuring total takeover. Carbyne was getting funding from Jeffrey Epstein and Peter Thiel is a founder here too. I wonder if this is what Trump was talking about when ht asked tech companies to “detect mass shooters before they strike”, Peter Thiel (a Trump campaign contributor) already seems to have perfected with his company Palantir. You can read about all the odd connections to Trump, Barak, Netanyahu and intelligence agencies here.
This to me will be a billion dollar market in the next 2yrs and probably trillions by 5 yrs. Its moving fast and countries seem to be eating it up with all the mass shootings that are going on. It does make me wonder if the mass shootings are being leveraged in a nefarious way to increase adoption, which sounds messed up but we have seen worse.
This is another topic that will have to get a quick graze over as there is just too much here. We have moved well out of the days of cool auto cars driving around a Google campus, into the real world testing phase. The first phase of this from what I can tell was the Google Maps cars that used to map streets, then we had Tesla cars with the auto driving feature, and now what comes next is testing in cities of fleets of cars, trucks, buses, taxi’s, delivery vehicles and more and literally dozens of companies worldwide jock for position to be the first and lock in more big funding.
Just this month we have self-driving trucks being tested out in Virgina, China based company Didi Chuxing launched a robot taxi experiment in Shanghai and much more. This last week we also saw more push for regulation on this whole new market of AVs, citing all new kinds of risks with this tech and how it should be handled. Right now that is causing roadblocks but if we look at the amount of money Uber and Lyft alone are dumping into an AV side of their brands, its safe to assume its not going anywhere. There is an amazing piece here on top 20 countries based on AV readiness
Once successfully adopted, autonomous vehicles will save the U.S. economy $1.3 trillion per year, which will come from a variety of sources including:
- $563 billion: Reduction in accidents
- $422 billion: Productivity gains
- $158 billion: Decline in fuel costs
- $138 billion: Fuel savings from congestion avoidance
- $11 billion: Improved traffic flow and reduction of energy use
Artificial intelligence (AI) is a branch of computer science that aims to create intelligent machines that can mimic human decision-making processes. There is also Machine Learning (ML) and Deep Learning (DL) we could add into the general topic of AI.
- By 2030, Artificial Intelligence will add $15.7 Trillion to the global economy!
- Worldwide spending on AI systems reached over $19 Billion in 2018, a 54% increase over 2017
- AR and AV spending totaled over $17 Billion in 2018, which is 95% increase from 2017
- Forrester Research estimates that cognitive computing technologies (platforms based on AI) will be worth $1.2 Trillion by 2020
- The global chatbot market (automated support/sales support on websites) is expected to reach $1.25 Billion by 2025
- The Internet of things (IOT) global market will be $1.7 Trillion in 2020, according to new research from IDC
- Big data which most consider a part of IOT is estimated to be over $203 Billion in 2020
- Statista predicts that Augmented/Virtual reality will be worth $215 Billion by 2021
- AI startups experienced their best year ever in 2018, raising a record $9.33 Billion, which is 10% of 2018 total VC investments. This is a 72% increase compared to 2017
AI should affect these 4 sectors the most..
- Professional services which is estimated to be a $7.5 Trillion base market by 2035, will see a $9.3 Trillion market cap with AI
- Financial services which is estimated to be a $3.4 Trillion base market by 2035, will see a $4.6 Trillion market cap with AI
- Manufacturing which is estimated to be a $8.4 Trillion base market by 2035, will see a $12.2 Trillion market cap with AI
- Wholesale & Retail markets which is estimated to be a $6.2 Trillion base market by 2035, will see a $8.4 Trillion market cap with AI
Now we didn’t even talk about robots and their effects or the shift in global emissions and power we see happening and how this will fit into the future landscape but I am sure its clear by now that there is an absolutely huge amount of money being poured into many areas right now that are building the future, the big question I leave with you… Is that enough to fight off a global recession or not?
January 2020 Update!
Since we published this article, a few things have changed and I wanted to make sure you were updated with literally the most up-to-date information. The peak of 2020 recession fears hit around August of 2019, even Google Trends data was maxed out at that time, see below image.
Those fears seem to have subsided, even though the FED ended up pumping about $3 trillion into the overnight interbank markets as an indirect QE4, because there is still strong GDP data and yield curve reverted back, many including Goldman Sachs think we are out of the woods.
The NY FED is putting recession odds at about 24.6% now at a November 2020 date, as you can see this has changed quite a bit since the data brought up earlier in this article.
Stocks are still looking heavily inflated, currently at about a 14x multiple of estimated value to EBIDTA and global liquidity is closely mirroring stock market performance, its unclear if that causality or confluence at this point.
There is more to cover, be on the lookout for an updated post on this soon! Subscribe to our email newsletter so you don’t miss out!
2020 Recession FAQ
Will there be a recession in 2020?
2020 recession fears peaked around summer of 2019 as did Google Trending data for “recession term”. As of Q4 2019 data, US treasury data went down to about 23% from 37% and Global CFO data is still at 52% odds.
Will the stock market crash in 2020?
We have been enjoying a 10.7 year period without a 20% or more drawdown on the S&P 500, the Nasdaq closed out 2019 by hitting multiple all time highs, yield curve inversion believers are calling this our blow off top, but economists have been calling for a stock market crash since 2016.
How long do recessions last?
Removing the Great Recession, recessions since WWII have lasted 6 months-16 months, averaging 10.4 months.
How do you prepare for a recession?
Pay down your debt, setup a backup fund of $1,000-$5,000, cut back on spending/seek higher proficiency in your spending, build new skills.