Recession

The New York Times is reporting that the bond market is signalling recession warnings. Often times, the stock market follows the bond market. It’s been ten years from the market crash, and everyone wants to know if we are up for another financial crisis in 2019. No one can really tell when we will have a recession, but it’s less likely that will have a big crash as ten years ago.

Larry Berman on Market Outlook

David Rosenberg is his favouite economist on the planet and was his guest today. He is a forensic economist. He focuses on the yield curve. We have seen that the yield curve did not invert in two countries recently and yet they have gone into recession. It is the general increase of interest rates in the most indebted countries in the world that could tip it into a recession. The recession odds are one in three right now. Catalysts around recession are around trade. Since Trump put tariffs on goods, the markets are really down. His guest feels it is all about the FED. A global recession will be caused by liquidity. We will have massive fiscal policy withdrawal next year. When interest rates rise, the impact is down the road. We are transitioning away from the long term bull market.

Some countries whose yield curve didn’t invert have still gone into a recession. The danger of a recession comes form the rising interest rates in the most indebted countries and liquidity. Because of US tariffs markets have been down so we are far from a long-term bull market.