Boom Bust Season 2 Episode 148 Rickards: Borderline US Recession Will Mean Euro Short Covering

Boom Bust season 2 episode 148 features an insightful analysis by James Rickards, the author of ‘The New Case for Gold’ and a renowned economic commentator. In this episode, he shares his perspective on the possibility of a recession in the United States and its impact on the eurozone.

According to Rickards, the signs of a looming recession in the US are quite evident. The inverted yield curve, which is a key indicator of an economic downturn, has already manifested itself. Moreover, the US gross domestic product (GDP) figures for the second quarter of 2019 showed a significant decline compared to the first quarter. This, coupled with slowing job growth and declining consumer confidence, suggests that the US economy could be heading for a recession.

If a recession does occur, it will have a significant impact on the global economy. One of the outcomes of a recession in the US could be a strengthening of the dollar. This, in turn, could cause the euro to weaken. As a result, investors who hold short positions in the euro would be forced to cover their positions. This could lead to a significant short-covering rally in the euro and a corresponding rise in its value.

In addition to this, Rickards also points out that the European Central Bank (ECB) is already under pressure to introduce further stimulus measures to boost the eurozone economy. If the US does enter into a recession, this pressure will only increase. In such a scenario, the ECB would most likely introduce measures such as a rate cut or further quantitative easing to stimulate the eurozone economy.

Against this backdrop, Rickards suggests that there are two potential outcomes for investors. The first is to buy gold as a way to hedge against the potential recession. Gold has historically performed well during times of economic uncertainty, and it could provide a safe haven for investors looking to protect their investments.

The second outcome is to invest in the euro. While the euro is currently experiencing a decline, a potential short-covering rally could lead to significant gains for investors. Investing in the euro could be a good opportunity for those looking to take advantage of the potential short-term gains from a recession in the US.

Overall, Rickards offers a unique perspective on the potential impact of a US recession on the global economy. He highlights the potential short-covering rally in the euro as a key opportunity for investors looking to take advantage of the situation. His insights provide valuable information for investors looking to make informed decisions about their investments during times of economic uncertainty.