The Fed Is Now Modeling a Recession: 1 FAANG Stock to Buy Hand Over Fist and 1 to Avoid

What a difference a year can make on Wall Street. In 2021, investors endured little pain, with the benchmark S&P 500 contending with no bigger than a 5% correction. In 2022, however, the S&P 500, along with the iconic Dow Jones Industrial Average and growth-focused Nasdaq Composite, all entered bear markets and produced their worst returns in 14 years.
This year, a new headwind has entered the picture. According to the minutes from the March Federal Open Market Committee (FOMC) meeting, the 12-member policymaking body that oversees open market operations is modeling a “mild recession” for later this year.
Image source: Getty Images.
Historically, recessions have been bad news for stocks, with the bulk of broad-market downside occurring after, not prior to, the declaration of a recession. But when volatility and uncertainty pick up on Wall Street, new and tenured investors tend to turn their attention to the FAANG stocks.
Investors flock to the FAANG stocks when there’s trouble
When I refer to the “FAANG stocks,” I’m talking about:
- Facebook, which is now a subsidiary of Meta Platforms
- Apple
- Amazon
- Netflix (NFLX 0.69%)
- Google, which is now a subsidiary of Alphabet (GOOGL 1.06%) (GOOG 0.84%)
The reason investors gravitate to the FAANGs is simple: They’re outperformers. Over the trailing 10 years (as of April 18, 2023), Netflix, Apple, Meta, Amazon, and Alphabet (Class A shares, GOOGL) have delivered respective returns of 1,330%, 1,090%, 748%, 689%, and 446%. By comparison, the S&P 500 is higher by 170%.
We’re also talking about a group of companies that are leaders within their respective industries and on the cutting edge of innovation.
- Meta Platforms is the company behind four of the most downloaded social media apps in the world (Facebook, WhatsApp, Instagram, and Facebook Messenger).
- Apple has been the world’s most valuable brand for 10 years running, per Interbrand, and is the leading provider of smartphones in the U.S.
- Amazon was expected to account for nearly 40% of U.S. online retail spending in 2022, according to eMarketer. That’s more than its 14 closest competitors, combined.
- Netflix is the domestic and international market-share leader in streaming services.
- Alphabet’s Google has a veritable monopoly in global internet search.
But even industry leaders can offer mixed returns during an economic downturn. If a U.S. recession does materialize later this year, one FAANG stock stands out as a surefire buy, while another would be best avoided.
The FAANG stock to buy hand over fist if the U.S. dips into a recession: Alphabet
If the FOMC is correct and the U.S. economy shifts into reverse in the second half of 2023, the FAANG stock that stands out as an incredible buy is Alphabet. It’s the parent company of Google, streaming service YouTube, and autonomous-vehicle company Waymo.
The biggest headwind Alphabet is dealing with is the advertising weakness that pretty much always accompanies economic uncertainty. Alphabet generates a sizable portion of its revenue from ads, so an economic downturn would be expected to weigh on sales and profit growth.
But as I’ve previously opined, this is a two-way street. Even though economic downturns are inevitable, every recession after World War II has lasted just two to 18 months. Comparatively, economic expansions are almost always measured in years. Since the U.S. economy spends a disproportionate amount of time expanding, ad-driven stocks tend to be smart buys during short-lived recessions.
Alphabet’s core operating segment continues to be Google. Since late 2018, Google has controlled no less than 91% of worldwide internet search share, per GlobalStats. With a 90 percentage-point lead over its closest competitor, Google typically commands excellent ad-pricing power.
However, the intrigue surrounding Alphabet has more to do with where the company is investing its abundant cash flow. For instance, Google Cloud has become the world’s No. 3 cloud infrastructure provider. Despite a challenging 2022, Google Cloud’s losses have narrowed, and the segment is generating in excess of $29 billion in annual run-rate sales.
YouTube is turning heads, as well. More than 50 billion YouTube Shorts are being watched daily — that’s up from around 30 billion during the first quarter of 2022 — which offers a potentially lucrative monetization opportunity. Further, YouTube is the second-most visited social platform in the world.
The cherry on the sundae for Alphabet is that, fundamentally, it’s the cheapest of all the FAANG stocks. Shares can be purchased right now for about 17 times Wall Street’s forecast earnings for 2024 and just 11 times estimated cash flow. Over the past five years, Alphabet has averaged a forward earnings multiple of 25.2 and a price-to-cash-flow multiple of 18.4. It’s simply never been this cheap as a publicly traded company.

Image source: Getty Images.
The FAANG stock to avoid if a U.S. recession arises: Netflix
On the other side of the aisle is the FAANG stock investors would be wise to avoid if the U.S. is headed into a recession: streaming-service behemoth Netflix.
In some ways, Netflix has impressed since the COVID-19 pandemic began. Most notably, the company has followed years of net cash outflows tied to its international expansion efforts by (finally) generating positive free cash flow. This was especially true during the first quarter, when Netflix produced a whopping $2.12 billion in free cash flow.
Netflix is also still the global leader in paid streaming memberships. As of the end of March, it had 232.5 million paid subscribers, which is a testament to the breadth of Netflix’s content library, as well as the intrigue of its original shows.
But it’s not all peaches and cream for the world’s top streaming service. One of Netflix’s biggest headwinds is the revenue it loses from password sharing.
The company previously announced plans to crack down on password sharing by introducing a paid sharing service that allows primary accounts to share their passwords with people outside their households — for a fee. Unfortunately, the handful of markets where this paid sharing service was tested initially resulted in net cancellations. Although the paid subscriber base in these test markets is now higher than when this paid sharing service began, the lesson seems like Netflix doesn’t have the pricing power it believes it does.
To build on this point, Netflix also lost subscribers last year after raising its monthly membership prices in the United States. While password sharing was a reason cited for this brief subscriber decline, it was a clear message from consumers that Netflix’s pricing power is waning, despite it being an industry leader.
Competition is another clear concern for Netflix. At the moment, its monthly subscription price point tends to be a bit higher than its competition. While this may not be a problem when the U.S. economy is firing on all cylinders, it could be a serious issue during a recession.
As a reminder, Paramount Global‘s Pluto TV ended 2022 with 79 million monthly active users and is a free, ad-supported platform. “Free” can be an extremely compelling price point if the U.S. economy shrinks.
Lastly, Netflix is a lot pricier than you might realize. On the surface, trading at 23 times forward-year earnings might not sound too bad. However, the FAANG stocks are known for aggressively reinvesting in their businesses, which is what makes cash flow a better measure of value for the group. Whereas Alphabet is cheaper than ever, based on Wall Street’s forward-year cash-flow estimates, Netflix is still pricey at 26 times next-year’s estimated cash flow.
With Netflix likely to lose market share as legacy TV networks expand their streaming offerings, smart investors should consider looking elsewhere if a recession arises.
Lee Hsien Yang faces damages for defamation against two Singapore ministers over Ridout Road rentals

SINGAPORE — The High Court in Singapore has directed Lee Hsien Yang to pay damages to ministers K. Shanmugam and Vivian Balakrishnan for defamatory statements made in Facebook comments regarding their rental of black-and-white bungalows on Ridout Road.
The court issued a default judgment favouring the two ministers after Lee – the youngest son of Singapore’s founding prime minister Lee Kuan Yew and brother of current Prime Minister Lee Hsien Loong – failed to address the defamation lawsuits brought against him. Lee had, among other claims, insinuated that the ministers engaged in corrupt practices and received preferential treatment from the Singapore Land Authority for their bungalow rentals.
The exact amount of damages will be evaluated in a subsequent hearing.
Restricted from spreading defamatory claims against ministers
Not only did Justice Goh Yi Han grant the default judgment on 2 November, but he also imposed an injunction to prohibit Lee from further circulating false and defamatory allegations.
In a released written judgment on Monday (27 November), the judge highlighted “strong reasons” to believe that Lee might persist in making defamatory statements again, noting his refusal to remove the contentious Facebook post on 23 July, despite receiving a letter of demand from the ministers on 27 July.
Among other things, Lee stated in the post that “two ministers have leased state-owned mansions from the agency that one of them controls, felling trees and getting state-sponsored renovations.”
A report released by the Corrupt Practices Investigation Bureau in June concluded that no wrongdoing or preferential treatment had occurred concerning the two ministers. However, Lee continued referencing this post and the ongoing lawsuits, drawing attention to his remarks under legal scrutiny.
Justice Goh emphasised that the ministers met the prerequisites for a default judgment against Lee. The suits, separately filed by Shanmugam, the Law and Home Affairs Minister, and Dr Balakrishnan, the Foreign Affairs Minister, were initiated in early August.


He failed to respond within 21 days
Lee and his wife, Lee Suet Fern, had left Singapore in July 2022, after declining to attend a police interview for potentially giving false evidence in judicial proceedings over the late Lee Kuan Yew’s will.
His absence from Singapore prompted the court to permit Shanmugam and Dr Balakrishnan to serve him legal documents via Facebook Messenger in mid-September. Despite no requirement for proof that Lee saw these documents, his subsequent social media post on 16 September confirmed his awareness of the served legal papers.
Although Lee had the opportunity to respond within 21 days, he chose not to do so. Additionally, the judge noted the novelty of the ministers’ request for an injunction during this legal process, highlighting updated court rules allowing such measures since April 2022.
Justice Goh clarified that despite the claimants’ application for an injunction, the court needed independent validation for its appropriateness, considering its potentially severe impact on the defendant. He reiterated being satisfied with the circumstances and granted the injunction, given the continued accessibility of the contentious Facebook post.
Lee acknowledges court order and removes allegations from Facebook
Following the court’s decision, Lee acknowledged the court order on 10 November and removed the statements in question from his Facebook page.
In the judgment, Justice Goh noted that there were substantial grounds to anticipate Lee’s repetition of the “defamatory allegations by continuing to draw attention to them and/or publish further defamatory allegations against the claimants.”
The judge mentioned that if Lee had contested the ministers’ claims, there could have been grounds for a legally enforceable case under defamation law.
According to Justice Goh, a reasonable reader would interpret Lee’s Facebook post as insinuating that the People’s Action Party’s trust had been squandered due to the ministers’ alleged corrupt conduct, from which they gained personally.
While Shanmugam and Dr Balakrishnan were not explicitly named, the post made it evident that it referred to them, and these posts remained accessible to the public, as noted by the judge.
Justice Goh pointed out that by choosing not to respond to the lawsuits, Lee prevented the court from considering any opposing evidence related to the claims.
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Tauranga judge orders Team Chopper Facebook pages taken down due to ‘threatening’ online communciations

Helen Fraser’s son Ryan Tarawhiti-Brown with Chopper, the dog at the centre of an attack on Tauranga vet Dr Liza Schneider.
The son of the woman whose Rottweiler dog attacked and seriously injured a Tauranga vet has been ordered to disable two Facebook pages that contained threats towards the vet and her business.
Ryan Tarawhiti-Brown (AKA Ryan Brown) ran and promoted a Facebook page called Team Chopper in support of his mother Helen Fraser’s legal battle to save her dog Chopper.
Chopper was euthanised following a court order handed down on August 21 by Judge David Cameron after he convicted Fraser of being the owner of a dog that attacked and seriously injured Holistic Vets co-owner Dr Liza Schneider.
The attack happened in the carpark of her Fraser St practice on October 14, 2022.
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Schneider was left with serious injuries after Chopper bit her arm, including a broken bone in her forearm, and deep tissue damage and nerve damage.
She required surgery and her arm took several months to heal.
Following Fraser’s conviction, Schneider sought a takedown order after she told the court she and her practice had been the subject of constant online harassment and threats since October 2021.
Schneider said comments posted on the Team Chopper Facebook page included threats, harassment and derogatory and abusive comments.
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In an affidavit, Schneider said her Google account had also been bombarded with fake reviews which she alleged were incited by the Team Chopper page.
Court documents obtained by the Bay of Plenty Times confirm an interim judgment was made by Judge Lance Rowe on August 30 which ordered the page be taken down and any references to Schneider removed. She also asked for a written apology. This order was previously suppressed.
During a second court hearing on October 25, Tarawhiti-Brown’s lawyer Bev Edwards told Judge Cameron it was accepted her client had not complied with this order to take down the page.
Edwards said her client had instead changed the nature of the page to help promote the rights of cats and dogs, and no criticism or abuse of Schneider or Holistic Vets was made by her client in those posts.
Tarawhiti-Brown had filed an affidavit to similar effect, court documents show.
Schneider argued the change in tone had not prevented others from posting derogatory comments about her.
This included posts on September 23, which stated she should be “prosecuted for negligence”, “sucked” at her job and should lose her licence.
Edwards also submitted that Schneider was prepared to use social media to her own advantage when it suited, her and cited an online article published in June.
In Judge Cameron’s written judgement, dated November 13, Tarawhiti-Brown, who lives in Australia, was ordered to immediately disable or take down his two Facebook pages.
The judge ruled the digital communications on the Facebook pages had been “threatening” to Schneider and “amount to harassment of her”, and also caused her “ongoing psychological harm”.
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Judge Cameron also ordered Tarawhiti-Brown to refrain from making any digital communications about Schneider or identifying her or her business directly or indirectly, and not to encourage any other person to do so.
The judge said it was accepted by Schneider removal orders against Facebook/Meta were “fraught with difficulties”, including jurisdictional ones, and discontinued the takedown application against those organisations.
The judge did not order Tarawhiti-Brown to apologise to Schneider and lifted the suppression orders by consent of both parties, who had to pay their own legal costs.
Schneider and the NZ Veterinary Association, which has been supporting her, declined to comment on these court orders.
Tarawhiti-Brown was also approached for comment.
Sandra Conchie is a senior journalist at the Bay of Plenty Times and Rotorua Daily Post who has been a journalist for 24 years. She mainly covers police, court and other justice stories, as well as general news. She has been a Canon Media Awards regional/community reporter of the year.
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Facebook group helps creative director uncover mystery behind photo of father

A creative director who “didn’t really have any memories” of his father who he died when he was just two was able to “build a persona” of him thanks to an old photo and a local Facebook group.
Lee Williamson’s father, Ian, died at the age of 23 in a car crash and, without many ways of finding out more about him due to personal reasons, he uploaded one of the few photos of the pair together, from 1983, to a High Wycombe Facebook group in the hope someone could help.
“I wasn’t quite sure where it was taken, but I just knew it was from High Wycombe somewhere, so one of my friends – who lives in High Wycombe – said to leave it with a couple of his friends but they weren’t sure,” the 42-year-old, who now lives in Lanesborough, Co Longford, Ireland, told the PA news agency.
“So, I posted it in a Facebook group and lots of people started interacting with it.
“I had no idea that was going to happen.”
Liz Parry, 62, who used to babysit Mr Williamson, happened across the post and from there, a phone call was set up between the pair on Friday.
Ms Parry, who now lives in Iver, Buckinghamshire, and is retired, told PA that as soon as she saw the picture, she recognised both Mr Williamson and his father as she lived next door to them on Hylton Road, High Wycombe, for about two to three years.
“I used to help the family out by babysitting them and we’d spend time together at games evenings or would have drinks together,” she said.
She said Mr Williamson’s late father was always on the lookout for a “good deal to give the family a good home”.
She added when Mr Williamson was a baby, he was “lovely”.
“He was always happy and laughing and smiling and wanting to play,” she added.
“He was a really happy little baby.”
She said the conversation with him on Friday was a “lovely” way to catch up after so many years.
“That little baby that I used to look after is now in his 40s and has his own children,” she said.
“It’s nice to see how well he is doing now as well because I wondered what happened to the family after they left (the area) after Ian’s passing.”
Mr Williamson said: “The chat on the phone was nice.
“I found out he was a bit of a Del Boy character, he was always looking for a way to make a business and was only 23 when he died.”
“I didn’t really know that he was my father until I was 10 – when I stumbled upon a bunch of documents in the attic while playing with a Scalectrix car toy – and so I didn’t really have any memory of him to be able to build a persona of who my father used to be.
“I have two of my own kids now, so can talk to them about stories about their grandad – it just gives you a sense of closure.”
Mr Williamson said it was “nice” to see Facebook lead to something “positive”.
“Everyone who replied was very encouraging and it showed that High Wycombe is a very nice place to be and the people that lived there had fond memories.”
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