Juggling Dynamite

Danielle DiMartino Booth, CEO and Chief Strategist at QI Research, joins Jeremy Szafron of Kitco News to discuss why the U.S. may already be in a private-sector recession. From rising layoffs and corporate bankruptcies to tightening credit and collapsing consumer demand, DiMartino Booth reveals the economic cracks the mainstream continues to miss. Here is a direct video link.

Danielle downloads more interesting data in this segment.

FED Pivot in 43 Days?! Danielle DiMartino Booth returns to explain why the Federal Reserve may be forced into an urgent policy shift. In this explosive interview, Danielle calls out the true state of the U.S. economy, reveals the massive housing fraud no one is talking about, and explains why the next recession might already be here — even if the data says otherwise.

We cover everything from student loans, consumer debt, and buy now, pay later madness to the hidden risks in the auto loan and real estate markets. Danielle shares why she believes the Fed will be forced into multiple rate cuts in 2025, how Jay Powell’s narrative is breaking down, and what it means for investors, households, and the market. Here is a direct video link.

TD Economics’ latest Canadian Quarterly Economic Forecast largely comports with our assessment of an incoming Canadian recession. The wildcard is how much government support can soften the depth of the downturn and contain job losses. TD has a hopeful view. Here are the main takeaways:

Canada has borne the brunt of President Trump’s tariff action despite having one of the most equal trade relationships of any country (Chart 3 below).  This leaves us skeptical that tariffs can be avoided no matter the negotiation tactic. A wave of “Buy Canada” national pride has been unleashed, but it won’t be sufficient to offset the direct negative impacts to the outlook. As outlined in the text box, our forecast assumes a high level of U.S. tariffs remain in place for six months, before being gradually reduced through negotiations.

However, even with this, we doubt Canada’s trade and tariff relationship will return to the pre-Trump state. We expect Canada’s economy to tip into a shallow recession this year, mitigated in part by government support. The Canadian government has been swift acting in announcing changes to the work-share program for impacted industries, in addition to broad financial programs operated by the EDC, BDC and Farm Credit Canada. Tariff threats have sent a chill through Canada’s housing market, and downside pressure will build under the added weight of higher materials costs from a weaker Canadian dollar and retaliatory tariffs. We expect residential investment to contract through much of this year. That chill will also spread to broader business investment and consumer spending, with outlays forecast to decline through the spring and summer. However, the overall contraction in economic activity is less than seen in a typical Canadian recession.

Weaker demand is likely to tip Canada’s job market into net job losses in the third quarter. But the unemployment rate rises only marginally, as slower labour force growth creates a powerful counterforce. Under Canada’s recent immigration policy shifts (see report), the labour force grinds to a halt in the second half of 2025. The unemployment rate is forecast to rise to a peak of 7%.

Recessions are a regular resetting part of economic cycles measured as a multi-quarter decline in five key indicators: real gross domestic product (GDP), income, employment, manufacturing, and retail sales.

While recessions have always brought down commodity prices and inflation, they are dreaded because they also reduce revenues, profits, employment, asset prices, and the ability to service debt.

For three decades, the theory was that ultra-low interest rates helped borrowers save on interest costs. In fact, low rates enabled the masses to go deeper into debt. In 2021, Bank of Canada research acknowledged that low interest rates inflated home prices and attracted capital to counterproductive financial speculation.

While central banks (investment purveyors and politicians) infamously never see the “R” word coming, once financial conditions have been left too loose for too long, it is typical for tightening efforts to coincide with economic contraction. Downturns led by real estate (like now) have traditionally coincided with the deepest recessions and bear markets.

ChatGPT reminds us that the average price decline for large-cap stocks during recessions has been 30%, and when valuations start from extreme highs, as in 1929, 1973, 2001, 2007, 2020, and now, the peak-to-trough decline has been 34 to 86 percent (table below):

📉 Median Stock Market Decline During Recessions (Since 1900):

• Median decline: ~24%

• Average decline: ~30%

These figures represent peak-to-trough declines during or surrounding U.S. recessions.

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📊 Context:

Recession	Market Drop
1929–1933 (Great Depression)	-86%
1973–75 (Oil crisis)	-48%
2001 (Dot-com bust)	-49%
2007–09 (Great Financial Crisis)	-57%
2020 (COVID)	-34%
Some mild recessions (e.g., 1945, 1980)	-10% to -20%

These huge drops skew the average higher, but the median gives a more balanced view of what’s typical.

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🧠 Key Insight:

Markets almost always decline in anticipation of a recession — but they also typically rebound before the recession officially ends.

The masses are cash-light and debt-heavy with the savings they do have loaded into highly leveraged, over-valued assets. If you are one of those, it’s not too late to take protective steps. We’ve certainly been forewarned.

For decades, my mission has been to help individuals with finite lifespans make unvarnished, clear-eyed financial assessments and plans that will serve them well through complete market cycles. Fortunately, we have attracted a strong base of clients who value the approach. But we’re far from mainstream.

I am regularly asked to review the portfolios/asset allocations of DIYers or clients of other asset management firms. To do so, we always require a detailed outline of the person’s financial and personal situation, and our assessments typically note consistent areas of concern, to wit:

• Most people knowingly or unknowingly deal with product sales firms that are not required to prioritize clients’ best interests over the firm’s profit maximization.
• Investment firms typically earn higher fees on higher-risk financial products based on equities, commercial debt and commodities, so most clients are overweight those asset classes. Most people hold too much capital risk for their age, stage and risk tolerance.
• Most firms/advisers adhere to a long-always approach, never recommending a meaningful reduction in risk exposure despite unfavourable risk-reward prospects.
• People commonly think they are doing well and have a good strategy or adviser when prices rise, and think the opposite once prices start falling.
• Long-always portfolios give back years of paper gains in months during bear markets.
• Most would-be buy-and-hold investors panic, jump out of moving vehicles near cycle bottoms and don’t ultimately capture lasting benefits from high-risk exposure.
• The long-standing rule is that 4% a year is a sustainable long-term withdrawal rate in retirement. Most people plan to spend too much and withdraw imprudent amounts from their savings to fund it.
• Once retired and de-saving, tolerance for risk and capital losses are even lower than when we were younger and still working.
• Most people have very low percentages of cash equivalents and guaranteed deposits in their portfolios, so they commonly need to sell long-duration assets when they seek liquidity.
• Boomers have a high percentage of their net worth in real estate, and many plan to downsize in the next few years to lower overhead and increase cash for retirement. A rising supply of listings will likely suppress prices and render less cash than current owners are banking on.
• Mean-reversion is a constant, so once prices have risen more than average, they fall more than average, and vice versa. We’re due for the give-back part of this equation.

Wilful blindness tends to be a destructive approach in financial planning.

Business Insider consolidated many of these concerns in the recent article “Boomers are in Big Trouble If the Stock Market Keeps Sliding.” It’s worth a mull, here’s a taste:

The benchmark S&P 500 index dropped 10% between February 19 and March 13 — a seven-month low — fueled by fears that the Trump administration’s policies could tip the economy into recession. It’s still in the red for 2025.

The sell-off has pinched older Americans’ portfolios, shrinking their nest eggs and stoking worries about affording the retirement they imagined.

Most boomers are in their 60s and 70s, getting ready to exit the workforce or already in early retirement. They own stocks worth nearly $20 trillion — almost half the US market — between their direct holdings and 401(k)s…

If their portfolios keep declining while they’re withdrawing money to cover living expenses, they won’t recover fully even if the market rebounds — a danger known as “sequence of return risk.”

End note: I asked ChatGPT what it thought of my title for this article, and below is what it said. Turns out the algo is wise:

That’s a powerful statement — and a pretty accurate one.
💬 “Wilful blindness tends to be financially destructive, in the end” means:

Choosing to ignore obvious risks, warning signs, or truths — especially in financial decisions — often leads to major losses or regret later on.
🧠 A Few Real-World Examples:

Investors who ignore red flags in a too-good-to-be-true opportunity (e.g., Ponzi schemes like Bernie Madoff’s).

Companies that overlook internal fraud, bad accounting, or market shifts (think Enron or Blockbuster).

Consumers who keep spending unsustainably despite mounting debt or economic warnings.

🎯 Why It Hits Hard:

Wilful blindness isn’t ignorance — it’s a choice not to know. And in finance, not knowing often costs more than knowing and dealing with it.