Let’s start by defining what a recession actually is. Google’s dictionary defines it as ‘a period of temporary economic decline during which trading and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters’. In short, we’re looking for some sustained contraction in GDP. So... Show More
Looking at news headlines, there seems to be a growing consensus of an impending recession by 2020. To support this view, many have pointed towards a flattening yield curve. But James Sweeney, chief economist at Credit Suisse says otherwise. “My view is that we're not likely to have a new... Show More
Much has been made over whether the flattening of the yield curve is signalling an increased risk of recession in the US. Yet the key is not whether the yield curve is flattening but, as events in the 1990’s demonstrated, whether a central bank is ahead or behind the inflation... Show More
GDP surprised to the downside in the September quarter; despite consensus expectations of 0.3% quarter-on-quarter (QoQ) growth, the actual result was -0.5%. According to FactSet, economists are more bullish this quarter, with consensus estimates sitting at 0.8%. But a recent slew of poor data could be calling this into question. Show More
The risk of a US recession next year is rising fast. Early warning indicators from US 'flow of funds' data point to an incipient squeeze, the long-feared capitulation after five successive quarters of declining corporate profits. Yet the Fed has set the course for a rise in interest rates in... Show More
Steen Jakobsen, Chief Economist at Saxo Bank, says tightening monetary policy has created a 60% chance of a US recession in 2016. Contrary to popular understanding, he says monetary policy has been tightening since 2014. A counter-intuitive example of this comes from negative interest rates. “I live in one of... Show More
Risky assets including equities have surged following the U.K. electorate's historic vote to leave the European Union, but government bonds have also rallied; two things that ought to suggest different outlooks for economic growth. Analysts are pointing to the flattening U.S. yield curve as evidence of slowing expectations of economic growth. A model maintained by Deutsche Bank AG's Steven... Show More
Are you fretting that we could be poised to slump into a recession? No one will blame you as both equities and credit markets are pricing in a strong probability that Australia’s golden 29-year recession-free run is coming to an abrupt end. The S&P/ASX 200 is threatening to slip into... Show More
We have written at length about the US Federal Reserve attempting to hike rates and the flow on effects that a series of hikes would unleash. We suggested that the Fed would be forced to firstly pause on any further rate hikes, and then ultimately reverse course. This is exactly... Show More
There is no shortage of bad omens for the global economy at the moment. To name a few: plunging commodity prices, wobbly equity markets, weak world trade, reduced profit forecasts for American companies and lower long-term inflation expectations. In recent weeks, a new one has joined the list: rising corporate-bond... Show More
