In this episode, Scott Becker discusses key market trends, including a sharp decline in the S&P and NASDAQ, concerns over reduced government spending potentially leading to a recession, and the political dynamics influencing economic policy.
Chapter 1: What are the key market trends discussed?
This is Scott Becker with the Becker Private Equity and Business Podcast. We're going to discuss this morning four quick stories today that helped driving the markets early this week. So first, The markets point decidedly down today. The S&P is down 2 plus percent. The Nasdaq is also down significantly. Let's hope that changes some throughout the day.
Chapter 2: What is the current state of the S&P and NASDAQ?
I'm not expecting that it will very much too quickly. Second, Wall Street, this is a Bloomberg article, starts to rethink lofty S&P forecast for 2025. Forecasters are starting to predict less upside this year. The larger question that runs through a lot of this is will reductions in government spending lead us into a recession? And I think there's significant concern that's the case.
Chapter 3: Could reduced government spending lead to a recession?
So the third point really relates to this. Yes, sort of government spending helped keep us out of a recession. Tremendous amount of government hiring, tremendous amount of government spending. We, in fact, spent $2 trillion more than we brought in last year. If we reduce government spending and cut that deficit, we're likely to end up in a recession.
Chapter 4: How much government spending was there last year?
Most leaders don't want to do this under their own administration, even though cutting deficit spending is an absolute imperative. You've got a situation where the far right is applauding – is it plotting this reduction in spending, even if it leads to recession, because they feel like we're so inflated spending over the last couple years.
Chapter 5: What political dynamics are influencing economic policy?
President Trump this weekend said he refused to rule out letting the U.S. economy enter into a recession this year, telling Fox News there's going to be a period of transition because what we're doing is very big. And if cutting the deficit is that, it is going to lead to some sort of a recession. Now, one of the fascinating points about this is President Trump and J.D.
Vance have been on Chairman Powell to reduce rates. And Chairman Powell can't reduce rates as long as the job market steady and inflation is high. By President Trump taking a bit of an ax to government spending and to essentially what's kept us out of a recession. And I'm not giving a value judgment that saying out of a recession the deficit spending is good. I don't think that it is.
But what's fascinating here is you're going to spot where President Trump and J.D. Vance ultimately forced Powell's hand by leading us down into a slower growth situation because a lot of the growth we've had the last couple of years has been inflated growth. I think it's an absolutely fascinating situation. Fourth, Bitcoin has dropped down to 82,000 after being above 100,000 not very long ago.
So really a set of fascinating things that you see, a potential slowing economy based a lot on slowing federal government spending. And that's a good thing and a bad thing, but just a fascinating thing to look at as we watch the economy and the markets tank in reaction to a softening of the U.S. economy. Fascinating to watch.
Thank you for listening to the Becker Private Equity and Business Podcast. Thank you very, very much.
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