| In addition, China's economy has more room for monetary and fiscal stimulus than ours. So far China hasn't made use of these tools; in fact, its deleveraging amounts to a form of tightening. I still hope the trade conflict can be worked out with a win-win solution. The U.S., in my view mistakenly, seems to see our relationship with China as a battle for world hegemony. However, I don't believe China is aiming for such hegemony or sees the world that way. I think China's intention is to make sure it won't be controlled by others. Note that recently it was able to close the South China Sea, airspace as well as water, without any pushback from the U.S., something you didn't see making headlines. China is close to accomplishing its goals, centered on a path to unfettered trade within the BRI and the Eastern world. It will be up to the U.S. to decide in what way it will interact with, or participate in, the BRI. As a new monetary system unfolds, we could face all kinds of potential scenarios, ranging from hyperinflation here to a more benign mutually beneficial outcome in which we become part of the new order. Many analysts are calling for a recession within the next 12-18 months. What's your take? In modern times, certainly since the early 1970s, recessions have been catalyzed by particular events. Prior to the 1970s, we used to have inventory recessions, when rising interest rates caused demand to fall short of inventories companies had built up, leading to less manufacturing. In an economy where services are far more dominant, inventory build-ups, when they occur, aren't enough to spark a recession. Instead, since then, causes have ranged from explosive gains in oil, as in 1973 and 1980, to the implosion of the tech bubble in the early 2000s to the Enron crisis to the 2008 financial crisis. In other words, you've needed a bubble in the economy, a misallocation of monetary resources, or the like. Those sorts of events are difficult to predict. Absent some out of the blue event, I think the U.S. at this point can ward off recession by making a deal with China and lowering interest rates further as needed. Describe a sector rotation strategy that makes sense now. Which sectors are most appealing to you now and why? Rather than talk about specific sectors, I have been emphasizing stocks that provide safety and value. In particular, when it comes to safety, I have been urging a group of five investments that I term low-risk hedges, which protect against a range of threats - inflation, deflation, and military threats. Not surprisingly, they include two gold investments. Along the same lines of safety and value, I also have been focusing on stocks with solid fundamentals whose PEGs - P/Es relative to growth - are below the S&P 500's. One area that has supplied these is health care, where PEGs in bellwether stocks have fallen to historically low levels while their fundamentals have remained strong. A trade deal that includes a reduction of tariffs would likely catalyze commodities, with a wide range of commodity-related stocks that could easily double or more in a fairly short period of time. Is there an under-the-radar investment theme that the financial media are missing? My candidate would be energy. Most of the world's surplus energy supply continues to come from fracking. Optimistic estimates of future oil supply all assume that oil production from fracking will grow at an accelerating rate. Yet the recent data on fracking paints a picture of production misses, rising costs, and sharp drops in rig counts. Combine this with the industry's history of total cash losses that now approach $200 billion and there are real questions about future growth in oil production from shale. If fracking falls short, it would put pressure on oil supplies, benefiting the energy industry. Of course, betting on energy assumes the world will avoid recession, which we think is the likely course. Editor's Note: My interview with Dr. Stephen Leeb was certainly informative, but when it comes to the expertise at Investing Daily, the above Q&A only scratches the surface. Which brings me to my colleague Jim Fink, chief investment strategist of Options For Income, Velocity Trader, and Jim Fink's Inner Circle. Jim has developed a proprietary investment method that consistently beats Wall Street at its own game, in markets that are going up, down or sideways. Now, Jim is making this bold promise: "If I don't deliver 24 triple-digit winners over the next 12 months…I'll happily give up $1,950." Want to learn about Jim's next trades? Click here now for details. | 
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