You know that feeling? When the ground just feels
about shaky under your feet. Like that mix of
economic jitters and, well, political surprises.
It definitely feels like one of those times right
now. So for this deep dive, we're going straight
into the heart of it. We've got this really detailed
financial analysis from Schwab, their dominoes,
recession's history guide. Right. And we're putting
that alongside some sharp political insights
from electoral vote news. And our goal is, well,
pretty simple, really. Pull out the vital info
from these sources. We're looking at the potential
for a U .S. recession and also the recent political
twists and turns in Canada and the U .S. Yeah,
we want to give you that clear understanding
you need without getting totally bogged down
in endless details. Cut through the noise a bit.
OK, so let's unpack the big picture first. U
.S. economy. the looming question of recession.
The Schwab report, it makes a pretty strong case,
doesn't it? It does. Their main point really
is that the risk of recession isn't just sort
of there, it's elevated and the primary driver.
Policy uncertainty. Yeah. Especially, you know,
tariffs. Tariffs. That's the core argument. They
actually say a recession right now would largely
be a policy choice. Basically hinging on what
happens with those trade policy policy choice.
Yeah now they do mention a couple of potential
Counter -forces like deregulation and maybe extensions
to the 2017 tax cuts, okay But their analysis
suggests these might only well partially cushion
the blow from the tariff situation So Schwab's
view is really that the vulnerabilities we see,
they aren't necessarily inherent weaknesses,
but they stem from these, you know, deliberate
policy decisions, mainly trade. OK, that makes
sense. And here's where it gets really interesting
for me. They talk about this idea of tariff front
running. Apparently this like rush to import
goods before potential tariffs kick in. It's
probably making some of the current economic
numbers look, well, better than they really are.
Exactly. It's like this temporary artificial
boost in activity that doesn't necessarily reflect
the underlying strength. So it could be masking
weakness. It could. And that creates this sort
of precarious situation where, you know, the
good -looking data might lull people into a false
sense of security, maybe delaying action, if
things really do weaken underneath. Gotcha. Now,
shifting gears a bit to the labor market, the
Schwab report flags some trends that historically
have been pretty significant signals for recessions.
Like the full -time employment rollover? They
talk about that, right? They do. The data they
show points to a, well, a recent dip in the percentage
of people working full -time. Okay. And their
point is, historically, when you have those mid
-cycle slowdowns, you know, the economy cools
but avoids a full recession. Yeah. You typically
don't see a big drop in full -time work then.
It's usually the recessions that really bring
that number down. So fewer people in permanent
full -time jobs. That's a... Definitely a worrying
sign. Precisely. You know, a dip in temporary
hiring might just mean employers are being cautious,
but a drop in full -time work suggests something,
well, maybe more fundamental is weakening. It's
an interesting distinction they're drawing. Yeah,
it is. And connecting to that, the report points
to the University of Michigan survey. It shows
a significant jump in consumers expecting higher
unemployment ahead. How big a jump? Two -thirds.
Two -thirds of people surveyed now think job
losses are coming. Wow, two -thirds. They actually
say that level is very clearly in recession territory
based on past patterns. It gives you a stark
sense of how folks are feeling about their job
security. OK. And it's really crucial to grasp
their perspective on unemployment itself. They
stress that unemployment, it's a lagging indicator.
Right. We always hear, you can't be in a recession
until unemployment spikes. Exactly. But Schwab
kind of flips that. They argue that recessions
happen first, and then unemployment rises sharply
because of it. Ah. So if you're waiting for that
big jump in unemployment to confirm a recession,
well, you might have already been in the downturn
for a bit. The dominoes have already started
falling by then. Right. OK. Now, they also shared
some pretty eye -opening anecdotes, stuff about
plunging traffic in the U .S. economy. Yeah,
a couple of striking examples. The first is this
dramatic collapse in container traffic from China
to the U .S. A collapse. That's the word they
use. well, a direct consequence of all the trade
tension. As tariffs loom and uncertainty hangs
there, the flow of goods is just slowing way
down. And the consequences. Potentially substantial,
as the report details. You can see empty shelves
for consumers, shortages for U .S. businesses
needing parts from China, and, of course, rising
inflation expectations because while China exports
so much globally. And the jobs impact. They mentioned
huge numbers, right? Huge. Nine million people
in trucking -related jobs, 16 million in retail.
A slowdown in goods coming in. It directly hits
those sectors. Potential for significant layoffs
there. Yeah, it's sobering to think about the,
you know, the real human impact of these big
economic shifts. Absolutely. It's all interconnected,
isn't it? Disruptions in one place just ripple
outwards. And the second... traffic anecdote
they flag is this really significant drop in
US tourism, almost 12 % down compared to last
year. 12%. That's massive. And they said, what,
outside the pandemic, that's the biggest drop
since the global financial crisis. That's right.
Excluding the pandemic lockdowns. Yeah. It paints
a picture of weakening demand, potentially less
economic activity across all those sectors that
rely on tourism. Hospitality, restaurants, entertainment.
They don't feel that. You think so, yeah. The
report doesn't break it down sector by sector
within tourism, but those are the obvious ones.
And the broader effects could be less investment
in those areas, maybe more downward pressure
on jobs too. So both goods traffic and people
traffic are pointing down. Seems that way. Both
pointing towards a cooling economy, which reinforces
that elevated recession risk they talked about
earlier. OK. Let's pivot to corporate earnings
then, another key indicator they track. Right.
Beyond those direct activity measures like trade
and tourism, the outlook for corporate profits
gives us more clues. And they mentioned Citi's
earnings revisions index. took a notable plunge,
I think they said. Yeah, and it's now close to
what they'd consider recessionary levels, just
looking at the data since 2000. So basically,
analysts are getting less optimistic about how
companies are going to do. That downward revision
trend, it's significant. It suggests companies
themselves might be anticipating weaker results
and the analysts are adjusting their forecasts
that often, you know, precedes or happens alongside
broader economic downturns. OK. And then, of
course, the stock market, how does that fit in?
They looked at the S &P 500 around. past recessions,
right? It did. Both before and after the NBER,
that's the National Bureau of Economic Research,
the folks who officially date U .S. recessions
before and after they started dating them. And
the really interesting takeaway is that the market
bottom, the lowest point, often happens during
the recession itself. Not necessarily before
it starts or after it ends. Exactly. Not always
before, not always after, often right in the
middle of it. That's a crucial point for investors,
I guess. Trying to time the bottom is... Tricky.
Notoriously difficult, yeah. History suggests
the worst of the market downturn can actually
coincide with the period when the economy is
officially you know, in recession. Did they look
at specific sectors? Like, do some do better
than others during recession? They did, going
back to 1990. And it looks like, well, defensive
sectors think consumer staples, healthcare they
tend to do relatively better, yeah. But there's
no, like, strong, consistent pattern every single
time. It's a bit of a mixed bag. So maybe it's
not just the sector, but the specific companies
within it? or other industry things going on?
That's a very insightful question. And yeah,
it's likely a mix. Broad trends matter, of course,
but these specific strengths or weaknesses of
individual companies, unique industry dynamics,
they can definitely play a huge role in how they
perform during a downturn. Which kind of leads
us to what Charles Schwab is recommending now,
right? Right. Because of all this policy uncertainty
we've been talking about, they've outfully neutralized
their sector recommendations, meaning they don't
have any outperform or underperform ratings right
now, zero, which is a pretty cautious stance.
They mentioned the only other time they did this
was way back in the early days of the pandemic.
So that tells you something about the level of
uncertainty they're seeing now. OK, so wrapping
up the economics part then. The big takeaway
from Schwab is recession is a very real possibility,
and it's really tied closely to where tariff
policy goes. The uncertainty there is fueling
the risk. That's the gist of it. A policy -driven
risk, primarily. Precisely. OK, let's shift gears
now. Let's dive into the political side, starting
with that recent Canadian federal election, as
reported by Electoral Vote News. Right. So as
pretty much expected, the Liberals under Mark
Carney won. They'll likely form the next government.
But not a majority. Looks like they'll need a
coalition partner. Probably the NDP seems the
most likely fit. Okay. But what's really fascinating
here, or at least what the newsletter highlights,
isn't just the result, but the reported influence
of someone who wasn't even on the ballot, Donald
Trump. Ah, yes. Electoral Vote News makes a pretty
strong argument that Trump's own statements,
his actions leading up to the election, actually
gave the liberals a significant boost. Oh. Specifically,
they pointed to Trump's social media posts suggesting
Canada should become the 51st U .S. state. Oh,
right. I saw that headline from the newsletter
of something like F. Trump, eh? Wasn't it? That
was it. They clearly saw his comments as a Well,
a major plunder that backfired spectacularly
on anyone hoping for a conservative win. Can
you remind us what he actually said? I remember
it being pretty out there. Yeah, he talked about
cutting Canadian taxes in half, getting increased
military power for free, quadrupling the size
of Canadian businesses. With zero tariffs or
taxes, he wrote, if Canada becomes the cherished
51st state of the United States of America, he
called the border an artificially drawn line
and finished with it was meant to be. Caps and
all yikes and the key thing is how that landed
in Canada, right? It wasn't seen as like a friendly
offer Not at all widely viewed as you know tone
-deaf, maybe even disrespectful Yeah, especially
given that the whole backdrop of trade tensions
and terrorists the Trump administration had already
imposed So Electoral Vote News basically argues
Carney and the liberals couldn't have scripted
a better assist to rally anti -Trump feelings.
That's exactly their take. They argue it energized
that sentiment, which was already there because
of tariffs and other policies. Did they compare
it to anything historically? They drew some pretty
dramatic parallels, actually. Mentioned Hitler's
actions potentially helping FDR's third term
bid or Ho Chi Minh's influence on LBJ's decisions
back in 68. Wow, those are heavy comparisons.
Very. But they did emphasize that Trump's impact
felt much more immediate and direct, generating
significant anger in Canada, almost out of thin
air, as they put it, in just a short time. Just
thinking about why that reaction was so strong,
obviously keeping neutral here, maybe it's that
sense of national identity, like suggestions
of annexation, especially framed like that, just
hit a nerve. That's likely a big part of it,
yeah. That strong sense of Canadian sovereignty.
And plus, given the recent trade disputes, His
comments might have just sounded disingenuous
or maybe even like a veiled threat to some. It
probably fueled a lot of negative reaction. So
the expected outcome now, according to the newsletter.
A liberal -led government in Canada that will
likely keep a largely hostile stance toward the
Trump administration for the rest of his term.
Which suggests, you know, potentially more friction,
more challenges in the U .S.-Canada relationship
ahead. Seems likely. based on their analysis.
OK. Now turning our attention fully back to the
U .S. political scene, electoral vote news keeps
highlighting some deeply concerning things. These
crazy pants deportations, as they call them.
Yeah. This refers to some really disturbing reports.
U .S. citizen children, including, tragically,
one child with stage four cancer. apparently
being deported, along with their non -citizen
mothers, during what were supposed to be routine
immigration check -ins. That sounds awful. The
allegations are serious. denial of access to
lawyers, preventing the kids from being placed
with other family members already in the U .S.
It's truly appalling. And didn't a federal judge
get involved? Yes, a judge in Louisiana ordered
the administration to appear in court. The judge
stated a strong suspicion that the government
just deported a U .S. citizen with no meaningful
process. Wow. They even cite one case where a
woman and her two citizen kids were apparently
put on a plane while their lawyers were literally
trying to get into court to stop it. Unbelievable.
And then there's this memo from the attorney
general. Right. The newsletter brings attention
to a memo reportedly from AG Pam Bondi. It allegedly
authorizes ICE agents to potentially disregard
constitutional protections. Like what? Specifically
mentioning entering homes without warrants based
just on a reasonable belief that someone inside
has alien enemy status. Alien enemy status. Yeah.
And crucially, the memo reportedly claims that
this determination whether someone is an alien
enemy is not subject to review by the courts.
That sounds legally questionable. They mentioned
the Bivens case, right? Could you just briefly
explain what that is? Sure. The Bivens case,
it's a Supreme Court ruling. It basically established
that in certain situations, people can sue federal
officials directly. personally for violating
their constitutional rights. OK. So the relevance
here is it raises the possibility that ICE agents
carrying out orders that are later found to be
unlawful could actually be held personally liable
for damages. Gotcha. So it underscores the seriousness,
the potential legal fallout for the agents themselves.
Exactly. It highlights the potential risks involved
for those executing these policies. OK. And finally,
electoral vote news gets into Donald Trump's
apparent interest in. a third term. Yeah, the
appearance of Trump 2028 merchandise, you know,
with that slogan, change the rules. It certainly
suggests he's, well, at least floating the idea.
But changing the constitution for that seems.
Unlikely. Oh, extremely unlikely. The newsletter
quickly dismisses a constitutional amendment
as virtually impossible. The hurdles are just
way too high. So are there other ways people
are speculating about? They briefly touch on
some other, you know, highly speculative and
legally dubious ideas like running for VP and
hoping the president steps aside or the Speaker
of the House somehow ascending to the presidency
in a convoluted scenario, mostly seen as far
-fetched. Right. But their main argument isn't
really about whether he could get a third term.
It's about the effect this talk is having now
on the Republican Party. How so? What's the effect?
Well, the newsletter argues it essentially freezes
the GOP's 2028 nomination process. Creases it.
Yeah. As long as Trump is hinting he might run
again, other potential Republican candidates
are likely going to hesitate, right? They won't
want to challenge him directly yet. Ah, OK. So
it stalls things for everyone else. Exactly.
Which hinders the party's ability to cultivate
new leaders, plan effectively for the future
election cycle. But it benefits Trump personally.
Seems that way. It keeps him in the spotlight,
helps fill his campaign bank account through
selling that Trump 2028 merch, maintains his
influence. But according to this analysis, it
leaves the Republican Party itself kind of stuck
in limbo, unable to fully plan ahead. Right.
They even included that wild 100 days Billy Joel
style satirical lyric thing, didn't they? They
did sort of a snapshot, really, of the intense
negative feeling some people have about a hypothetical
second Trump term, listing out a whole catalog
of criticisms in a, well, memorable format. Definitely
memorable. It certainly captures a particular
viewpoint on what another Trump presidency might
look like. OK. So as we sort of. draw this deep
dive to a close, we can see some pretty clear
and maybe concerning connections emerging here.
Absolutely. We've gone through Schwab's analysis,
highlighting these significant U .S. recession
risks, really driven by policy choices. They
always shifted to that fascinating Canadian election
story, how U .S. rhetoric seemed to play such
a big role. Yeah, the Trump effect. And finally,
we looked at some of these concerning political
developments here in the U .S. as reported by
Electoral Vote News, the deportations, the third
term talks. Absolutely. It really feels interconnected.
You have this elevated economic risk in the U
.S., heavily influenced by policy. Then you see
how U .S. policy and rhetoric directly impacted
maybe even decisively an election in Canada.
Right. And meanwhile, you've got these ongoing
controversial political actions happening here
that raise serious legal and ethical flags. Understanding
how these pieces fit together, how economic certainty
in one place and political shifts can influence
each other across borders, it gives you a much
clearer, well, maybe more complex, but definitely
clear picture of what's going on. It does. So
maybe here's a thought to leave you with. How
might these economic jitters and these evolving
political scenes in both the US and Canada, how
might they continue to interact and influence
each other in the coming months? What sort of
unexpected ripple effects might we see? That's
a great question. It's definitely a time that
demands close attention and some critical thinking.
We really encourage you to maybe explore these
topics further, look into the sources if you
get a chance, and just think about the implications
for your own understanding of the world around
us.