The “Small Businesses Optimism Index” Is a Good Recession Indicator This is not the perfect recession indicator, but when the Small Businesses Optimism Index falls below 100 or more likely below 95, then the risk of a recession remains high. And when the Small Businesses Optimism Index hits an all-time high, a recession may occur…
Why Is “Small Businesses Planning to Hire” a Good Recession Indicator? When the percentage of Small Businesses Planning to Hire, falls from a high level to less than 10%, then the risk of a recession remains high. That’s not the case today, there is no recession coming. Image: National Federation of Independent Business (NFIB)
What Is the Recession Probability In the Next 12 Months? The New York Fed’s recession probability model suggests that there is a 27% chance of a recession in the next 12 months. Image: Deutsche Bank Global Research
Why Are U.S. Banks Healthier Than Ever? U.S. banks are much stronger than ever. They have more capital and should withstand the next recession. See Fed’s annual stress test (Dodd-Frank Act Stress Tests): “The capital levels of the firms after the hypothetical severe global recession are higher than the actual capital levels of large banks…
When Is the Next Recession Coming? If history helps us to predict the future, a recession can occur when: Wage Growth minus Fed Funds Rate is below -1%. Why? Because the Fed is too tight at that moment. Since 1965, a recession has never occurred until Wage Growth minus Fed Funds Rate was below -1%…
Howard Marks on market’s record highs, potential risks Howard Marks speaks about market’s record highs and doesn’t see a lot of euphoria. However, we are in a Fed-induced bubble due to ultra low rates.
Why the Current Business Cycle Can Continue? Even if we are in a late business cycle, real Fed funds rate is near zero, the Fed remains “patient” at the moment and has little influence on the long end of the yield curve. The 30-Year Treasury Rate minus 10-Year Treasury Rate spread has a normal upward…
How’s the U.S. Economy Doing Now? The real GDP Nowcast relies on soft data such as consumer and business surveys and hard data such as retail sales and industrial production. It forecasts the growth of real GDP. At full employment, GDP returns to the level of potential GDP. If a recession were to occur today,…
Is Trump Right to Criticize Powell? We don’t think so, because: – Interest rates are still near zero in real terms and below real GDP – The rise in Fed rates has very few visible negative effects in the USA – And at full employment, GDP returns to the level of potential GDP
Why Allianz’s Mohamed El-Erian is not concerned about a recession Mohamed El-Erian is the chief economic adviser at Allianz. He shares his view about the economy, the Fed and the markets. https://www.youtube.com/watch?v=QS9DsaqVHlU
Here are Blackstone vice chairman Byron Wien’s predictions for 2019 Byron Wien, vice chairman at Blackstone, talks about the Fed and his prediction for the US market in 2019. https://www.youtube.com/watch?v=h7UPX4N3wi0