2 Hedges And An Investment For An Increasingly Likely Recession

May 18, 2022 1:49 PM ETJPM.PM, XRT28 Comments
Jeremy Blum profile picture
Jeremy Blum


  • Investors and experts increasingly fear a recession is likely in the next year.
  • Ten major headwinds have emerged, making economic growth more difficult going forward.
  • In addition to inflation and rising interest rates, there is another large headwind not being discussed but every bit as damaging.
  • Two hedges and an investment that should do well in a recession are discussed. These are Fed Funds futures, shorting the XRT and buying JP Morgan preferred at a discount.

The Rolling Stones Play The Knebworth Fair

Evening Standard/Hulton Archive via Getty Images

"Here it comes, here it comes"

From 19th Nervous Breakdown by the Rolling Stones

In this article I will start by discussing why the risk of a recession in the next 12-18 months is

Fund manager corporate profit expectations

BofA Global Fund Manager Survey

Economic Surprise Index chart


Labor market conditions

Kansas City Fed

Oil prices, Fed Funds and recessions


Contribution of fiscal policy to economic growth

The Hutchins Center on Fiscal and Economic Policy

Stimulus spending by year

Congressional Budget Office, Goldman Sachs Global Investment Research

Consumer sentiment over time

University of Michigan

Companies mentions of weak demand over time

BofA Global Research

Traffic of Prospective Buyers

National Association of Home Builders

U.S. Dollar strength

The Daily Shot

Fed Funds Futures curve

The Daily Shot

Changes in Fed Funds futures contractrs based on changes in the futures


XRT price chart


Retail sales versus trend line

U.S. Census Bureau, Bureau of Labor Statistics, Macrobound, The Daily Shot

This article was written by

Jeremy Blum profile picture
Tipranks.com currently has me ranked in the top 1% of all Seeking Alpha and similar sites writers.  I was the Credit Manager for a mid-sized publicly traded bank and retired early in 2013. Despite never working in the industry, I took and passed the CFA Level 1 exam. I usually only write about companies that are my best ideas and I have a position in. I traditionally have invested in and written about small and micro cap deep value stocks. As an investor you can get an edge in researching and talking to management of small and micro cap companies that have little or no analyst coverage. About 50-75% of my portfolio are deep value stocks, primarily microcaps. That is historically where I have had the best returns.

Disclosure: I/we have a beneficial short position in the shares of XRT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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