I’m not the only wonk in the family. My wife Carole, a former staffer at the Kiplinger financial media company, also follows economic trends.

Lately in the mornings, I’ve noticed that she’s been making what she calls “recession coffee.” Instead of throwing out a pot of coffee after it has gotten cold and starting a fresh batch, which is her norm, she’s been pouring the stale brew into a saucepan to reheat it on the stove.

An anecdotal indicator, for sure. (And it tastes lousy.) But Carole is not alone in her fears of impending economic hard times.

Perhaps it’s time to wake up and smell the coffee. The combination of Federal Reserve tightening, worsening inflation, inverted yield curves, and sanctions spawned by the Russia-Ukraine war are prompting an increasing number of analysts to warn of recession.

The economic news had been encouraging this year and warranted at least cautious bullishness, until a “black swan” in the form of a war in Eastern Europe wreaked havoc with forecasts.

Indeed, Russian President Vladimir Putin has released a whole flock of black swans. Russian-perpetrated atrocities against Ukrainian civilians, and the West’s response with stepped-up sanctions, have prompted recent downgrades in projected global economic growth.

The gathering storm…

Deutsche Bank (NYSE: DB) this week became the first big global bank to forecast a U.S. recession for next year.

The Deutsche Bank report, released Tuesday, stated that “the U.S. economy is expected to take a major hit from the extra Fed tightening by late next year and early 2024.”

The Federal Reserve’s rate increase in March was the first since 2018. Deutsche Bank’s analysts expect the federal funds rate to be gradually lifted beyond 3.5% by the middle of 2023, which would be at the upper limit of projections given by the Federal Open Market Committee (FOMC) last month. The median projection provided by FOMC members for 2023 was 2.8%, versus the current target range of 0.25% to 0.5%.

Minutes from the latest FOMC meeting, released Wednesday, show that the central bank intends to reduce its balance sheet by an aggressive $95 billion per month. The minutes also reveal that the Fed is considering bigger rate hikes than its typical 25-basis-point (quarter point) increments.

The economic horizon is darkening. A Bloomberg Markets Live survey, conducted between March 29 and April 1 with 525 respondents, found that 48.4% of investors expect the U.S. to lapse into a recession next year (see the chart for a breakdown of investor expectations).

Fed Chief Jerome Powell and his colleagues are striving for a monetary policy that strikes a balance between tightening and protecting economic growth. However, past history suggests that a “soft landing” is unlikely. If the Fed follows through on its intended tightening cycle, the risk of recession will only increase.

Read This Story: The Fed’s Hawks Take Flight; Should You Worry?

Adding to investor anxiety have been yield curve inversions, which in the past have served as reliable recession indicators.

On Wednesday, the main U.S. stock market indices declined as follows: the Dow Jones Industrial Average -0.42%; the S&P 500 -0.97%; the NASDAQ -2.22%; and the Russell 2000 -1.42%.

The 10-year Treasury yield has been rising and currently hovers at 2.57%, a three-year high. Crude oil prices are on a downward trajectory as investors expect sputtering economic growth to lessen energy demand.

In pre-market futures trading Thursday, the major U.S. equity benchmarks were little changed. Investors are waiting for the next shoe to drop.

Recession protection…

How can you brace your portfolio for the threat of recession, but still tap growth? For starters, avoid the story stocks you see breathlessly touted on CNBC. Investing fads and memes are more dangerous right now than ever. Emphasize “boring” defensive and value plays.

During downturns, shares of large-cap companies with robust, steady cash flows and dividends tend to outperform economically sensitive stocks. Smart sectors now include health care and consumer staples. High-yield bonds tend to lose value in a recession, whereas gold appreciates.

For exposure to the Midas Metal, I prefer gold miners. Looking for the best gold mining stock? My colleague Dr. Stephen Leeb, a renowned commodities expert, is recommending a gold miner that belongs in any portfolio.

You won’t see this gold stock touted on television, and that’s a good thing. It’s flying under-the-radar and yet, it’s positioned for recession-defying gains. For details about Dr. Leeb’s favorite gold play, click here now.

John Persinos is the editorial director of Investing Daily.

Subscribe to John’s video channel: