(Written by Bert Dohmen and Dion Dohmen, contains excerpts from our March 9, 2025 Wellington Letter)
Analysts in the media are puzzled right now and say they don’t see anything fundamentally wrong with the markets or economy. This shows their error of using gut feelings instead of smart deductive reasoning.
Yet, in our last article on ZeroHedge, “Bear Market & Recession Ahead,” we explained what is wrong with the stock market and touched on why the “strong” economy is actually in a recession.
Everyone seems to be looking into the future and the positive moves of the Trump Team. But that takes time transform the economy and end the horrible corruption of prior years.
While the team’s plans and actions will eventually be very positive, it’s important to take it one step at a time.
First is the economic contraction of “draining the swamp.” The trillions of dollars of fraud, waste, and corruption will be significantly decreased by the efforts of DOGE and the new administration, which reduces governmental spending, which is part of GDP.
Recipients of taxpayer money for “transgender surgeries of mice in foreign countries,” or the 140-year-old people who are still getting social security checks, among other frauds are just the first frauds to be discovered.
The reduction of perhaps 1 million jobs in Washington of people who get paid but don’t go to work will also dampen the economy for a while. The effect will be a temporary decline in credit growth. The thousands of guilty parties don’t want to be prosecuted.
Combine that with the phony economic states of the past 4 years, and you have a resulting recession.
In addition, the corrupt group that oppose the new White House team want the economy to look bad. Tariffs and other factors will be used to put the blame on the new administration.
As we mentioned earlier, the current recession has been hidden by false statistics for well over a year. Now it will be revealed with plenty of “revisions” to the false data reported by the Biden regime.
The “official” recession announcement will shock everyone except our loyal readers. That will produce giant allocation shifts by all the big institutions and smart money. The shift will be out of stocks and into bonds and fixed income.
At record overvaluation levels for stocks, that will produce big selling of equities in a highly leveraged environment where there is little to no liquidity for buying.
The agenda of the swamp creatures is to blame Trump for a recession, which we touched on in our last Wellington Letter. As always, such blame is intentionally false.
They will call it “The Trump Recession” and blame the Trump tariffs, although they have nothing to do with it. They will also blame the recession on the firing of non-working Federal employees by DOGE, shrinking the out-of-control bureaucracy, and cutting taxes, among other goals of the Trump Team. We’re already seeing articles saying these things.
All of these changes by the new administration will have wonderful long-term effects for the US. In fact, they may save the US from the “road to irrelevance” and insolvency along with other nations.
As our members know, the recession started well over one year ago and gave true statistics to confirm it. But the false political statistics produced by Washington agencies were designed to hide that.
The job numbers over the past couple of years were all falsified. Example: almost all job gains since 2018 were from “foreign born” people, not Americans. Many, if not most of these, are the illegal migrants. Is that why the US had open borders?
Therefore, the recession will actually be the “Biden recession.” But now the true numbers are being pushed into 2025 and will therefore be used to smear the efforts of the Trump Team.
We wrote in our last Wellington Letter (February 23 issue):
“There will be much more economic weakness ahead. It takes months for the disastrous Bidenomics policies to work their way through the economic pipelines. While economists and analysts are arguing about the dangers of future inflation, the true danger is DEFLATION. The scare story in the left MSM will be “recession ahead.”
But don’t worry. With luck, the recession should not last very long, but it could be sharp. It should be followed by a strong and healthy recovery unless something unexpected happens to the Trump Team.
That recovery will not be fueled by money “printing” but by genuine economic growth based on tax cuts and cuts in unnecessary and crazy regulations.
CONCLUSION: When something big needs fixing, there will always be adverse short term side effects. There is a lot of “deferred maintenance” in Washington.
Therefore, the near term economic and investment fundamentals are currently negative and should continue to be negative, at least until later this year.
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Wishing you successful investing,
Bert Dohmen, Founder
Dohmen Capital Research
Editor, The Wellington Letter
