JPMorgan's Recession Odds Hit New Cycle Highs

Financial markets are raising risks of recession. Equities continue to slide and volatility has spiked, but the alarm bell is loudest in rates markets, where the yield curve inverted the most since just before the start of the financial crisis.

Not all indicators are as bearish as the yield curve, however. While equities have sold off rapidly since last week, the sell-off late last year was much larger only to recover just as rapidly.

More importantly, while the economic data highlight elevated recession risk, the likelihood of a downturn in the coming 12 months is still below 50%. Within the economic data, the near-term indicators are even less downbeat than the lower frequency signals coming from the low unemployment rate and recent decline in the profit margin.

Bottom line, we are more concerned than we were last week that economic momentum is slowing but not as concerned as the alarm bolting through rates markets. While recognizing economic data can be too backward-looking during times of rapid change, we stick with our macro indicators and see the odds of US (and global) recession in the coming 12 months closer to 40% (the average of our near-term and medium-term indicators).

At the same time, we continue to flag downside risk to our modal growth outlook as the latest data and likely hit to sentiment from the recent trade war escalation and financial market moves suggest global growth running below our forecast of 2.5% in 2H19.

Commenti

Post popolari in questo blog

Fwd: The Looming Bank Collapse The U.S. financial system could be on the cusp of calamity. This time, we might not be able to save it.

After months of living with the coronavirus pandemic, American citizens are well aware of the toll it has taken on the economy: broken supply chains, record unemployment, failing small businesses. All of these factors are serious and could mire the United States in a deep, prolonged recession. But there's another threat to the economy, too. It lurks on the balance sheets of the big banks, and it could be cataclysmic. Imagine if, in addition to all the uncertainty surrounding the pandemic, you woke up one morning to find that the financial sector had collapsed. You may think that such a crisis is unlikely, with memories of the 2008 crash still so fresh. But banks learned few lessons from that calamity, and new laws intended to keep them from taking on too much risk have failed to do so. As a result, we could be on the precipice of another crash, one different from 2008 less in kind than in degree. This one could be worse. John Lawrence: Inside the 2008 financial crash The financial...

Continua a leggere

3 Reasons Why Gold Will Outperform Equities And Bonds

3 Reasons Why Gold Will Outperform Equities And Bonds https://www.forbes.com/ 3 Reasons Why Gold Will Outperform Equities And Bonds For centuries, gold has played a major role in human history and has become interwoven into the financial fabric of society. Beyond its investment following, gold has become synonymous with wealth. Historically, gold's early use cases revolved around money – a form of "medium of exchange". After the second world war however, several countries and their respective currencies, started to shift away from the gold standard and migrated towards a fiat currency system. Today, gold remains largely a "Store of Value", and due to its unique properties and large number of use cases, it has managed to distance itself from other asset classes in terms of correlation, demand / supply drivers, and investment purpose. Gold's idiosyncrasies function as a double-edged sword, as it is challenging to predict ...

Continua a leggere

China Market extends fall on talks of less stimulus

Headline indices of the Mainland China equity market closed down for second straight day on Tuesday, 23 April 2019, as profit booking selloff continued after a flurry of comments from policymakers signaled they're less comfortable about adding stimulus. At closing bell, the benchmark Shanghai Composite Index declined 0.51%, or 16.45 points, to 3,198.59 The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 1.32%, or 23.05 points, to 1,728.86. The blue-chip CSI300 index shed 0.16%, or 6.60 points, to 4,019.01. Top-ranking policymaking bodies including the Politburo, the State Council, the central bank and the Central Financial and Economic Affairs Commission have all held meetings in the last two weeks. China should fine-tune monetary policy in a pre-emptive way based on economic growth and price changes, according to a top-level meeting reports chaired by President Xi Jinping. Monetary po...

Continua a leggere

Faber News Flow

Cerca nel blog