A Recession is On the Way

An article in Financial Advisor magazine argues that a recession—and maybe a bear market—are on the horizon, predicting a “two-thirds probability” for a business downturn starting this year. The article cites the following recessionary indicators: Tighter monetary policy; Near-inversion in the Treasury yield curve; The “swoon” in stocks at the end of last year; Weaker housing activity; Soft consumer spending; The “tiny” 20,000 increase in February payrolls compared to the 223,000 monthly average gain last… Read More

Powerful Recession Signal Getting Wall Street’s Attention

The yield curve—the difference between short-term and long-term government bond yields—is “perilously close to predicting a recession—something it has done before with surprising accuracy,” says a recent article in The New York Times. The article explains that in a healthy economy, the rate on longer-term bonds will typically be higher than that on short-term notes. “The extra interest is to compensate, in part, for the risk that strong economic growth could set off a broad… Read More

U.S. Recession in the Offing?

A recent Bloomberg article reports that an economic contraction could be coming as soon as next year, citing the Fed, the flattening yield curve, corporate leverage and tariffs as contributing factors. “Other than in the most abstract way, there aren’t a lot of people talking about a coming U.S. recession,” the article states. But the fact that policy makers are raising rates and are reducing the central bank’s balance sheets reflects a more aggressive stance.… Read More

Ray Dalio Says Recession Risks on the Rise

Billionaire Ray Dalio recently said that the Fed’s response to strong economic data and increased fiscal spending could lead to an “economic slowdown.” This according to a CNBC article. Dalio, founder of Bridgewater Associates, argues that we are in a stage of the economic cycle in which “the central banks’ getting monetary policy right is difficult,” and that “the risks of a recession in the next 18-24 months are rising.” He says that, while most… Read More

Sonders Says Recession Risk is Low

Although there are those that believe the U.S. is on the brink of recession, Liz Ann Sonders, Charles Schwab’s chief investment strategist, says the risk is low. This according to CNBC’s report on her commentary at the Morningstar ETF Conference in Chicago earlier this month. While Sonders says there are no clear buy signals at present, the market “could continue to grind higher, but not without drama. An ongoing secular bull market is still a… Read More

Billionaire Sam Zell Sees Recession Next Year

Billionaire real estate investor Sam Zell, who profited from selling just before the 2008 crisis and buying just after, predicts that global forces will lead to a U.S. recession next year. “I’m not being pessimistic, I’m being realistic,” he said. He also noted that Nigeria cut its economic growth projection for 2016 nearly in half, commenting “for an emerging market like that, it’s a disaster, and that’s happening all over the world.” He continued: “So,… Read More

Is the Weakness in High Yield Signaling a Recession?

  The Wall Street Journal notes that U.S corporate high-yield bonds are down 2% this year, which would be only the fifth annual loss on a total-return basis since 1995. High-yield bonds are issued by heavily indebted companies that are more likely to default, and declines in their value can signal a coming downturn. George Bory of Wells Fargo Securities sees a “meaningful disconnect between equities and high yield.” Defaults on such bonds jumped from… Read More

Recession Over? Top Strategist Says ‘Yes’ — Cautiously

Liz Ann Sonders, the chief investment strategist for Charles Schwab & Co. — who accurately called the start of the current recession in December 2007 — says she thinks the recession is now over. But, she adds, don’t confuse that wiith “runaway optimism” about the economy. “I’ve been asked a lot, ‘please tell me when you think the turn has come,’” Sonders told 620WTMJ Radio of Wisconsin yesterday. “And I think the turn has come.… Read More