Podcast: What All Investors Should Know About Trade Deficits and Recessions

• (1:00) - Breaking Down The Trade Deficit
• (8:00) - Recession Signals: When Should You Get Out?
• (14:15) - Summary Statistics: Nonfarm Payroll
• (20:05) - Where To Invest During Volatile Market Conditions
• (27:25) - Episode Roundup: XOM, DEO, GSK, MU, AMN

Welcome to Episode #126 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by John Blank, Zacks Chief Equity Strategist and the Editor of the Large Cap Trader newsletter, to discuss the economic issues facing investors right now including the trade deficit and trade war talk and worries about a recession.

Are All Trade Deficits "Bad"?

John, a PhD economist, discusses why we have trade deficits in the first place.

If you're wondering what all the fuss is about, it's worth tuning in to get some straight economic talk on trade deficits, what fuels them, and how they can be dealt with.

We'll Get a Recession Soon Right?

There have been a lot of doom and gloomers on Twitter in 2018. The longer the US economy goes without a recession, and it has now been 9 years, the louder the bears get that one is imminent.

And that means stock investors should also be paying attention because historically the stock market has corrected during recessions.

Signals of a Coming Recession

Because investors don't want to be caught with their hands in the cookie jar at the start of a recession, they have been trying to gauge when the next recession may hit.

There are a lot of different "signals" out there but one that Tracey recently saw on Twitter was the Federal Reserve Bank of St. Louis FRED chart of the Passenger Car Registrations for the US.

The gray bars indicate a recession. The number of registrations spiked into the negative just before the recessions hit. It's been in the negative for the last couple of years as well.

Does that mean a recession is coming?

John discusses what he thinks about "signals" and then gives his #1 recessionary signal that all investors should know.

Investment Ideas for 2018

What stocks are John and Tracey looking at as the first quarter earnings season gets underway?

1.      Exxon Mobil Corp. XOM, the energy giant, trades with a forward P/E of just 15.5 with WTI crude near 3-year highs. Earnings are expected to rise 33.7% in 2018. It also pays a dividend yielding 4.1%.

2.      Diageo plc DEO is one of the world's largest producers of spirits. It owns Smirnoff, Johnnie Walker, Baileys and Guinness brands, among others. Earnings are expected to rise 18.8% in fiscal 2018 and it too pays a dividend, yielding 2.4%.

3.      GlaxoSmithKline plc GSK is a London-based drug company with a forward P/E of just 13.7. It pays a juicy dividend, currently yielding 6.3%.

4.      Micron Technology MU continues to be dirt cheap. The semiconductor maker is trading with a forward P/E of just 4.3. Are investors missing the story here?

5.      AMN Healthcare AMN is a mid-cap medical staffing company. Tracey likes it as it is likely immune from any trade war worries. Earnings are expected to jump 27% in 2018. Shares recently hit 5-year highs.

What else should you know about investing in volatile times?

Tune in to this week's podcast to find out.

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