A recession is triggered when the economy contracts for two consecutive quarters. One or two negative readings about GDP may make little sense. But when it is various key indicators which are beginning flash red for a prolonged period, the image becomes clearer and more significant. In opinion of D. Spence y J. Franz, this moment has still not arrived in the US.
AXA IM outlook for the US economy, which was below consensus back in November, was a herald of subsequent market fears. Since the relationship between the recession risk and the market sell-off goes both ways, the question was whether market events had overtaken the economic outlook and threatened an even sharper slowdown in activity. Now, they have updated our probabilistic model of US recessions.
Pablo Pardo (Washington) | Although the world’s prime economic power has grown for 114 consecutive months, Wall Street has spent the whole year in a saw teeth configuration. If stock market uncertainty was not enough, now fixed incomes have joined the chorus of anxiety. Since the summer, the yield curve has been flattening, in what appears to be the clearest sign of a recession in sight.
On the few occasions the Fed’s former chairman Ben Bernanke speaks in public, which makes him feel physically sick- , he resorts to metaphors. It is what he did in May when he declared that “in 2020 the coyote is going to leap off the precipice and is going to look down”. Bernanke was referring to Wile E.Coyote, the coyote in the Roadrunner, a series of Warner cartoons which ran in the 50s and 60s.
The improving macroeconomic backdrop and continued rise of the middle class as well as high private health spending, make Brazil a potentially “attractive” investment destination. However, AXA IM analyst Manolis Davradakis point that “the emerging market’s poor ranking in terms of ease of doing business and international competitiveness, plenty of risks remain.
There is a statistic link between profits and investment, in the US, so a drop in the former determines a recession in the following quarter. But the Trump effect is likely to mean another imminent recession will have to wait.
BoAML | After Brexit, we followed through on our scenario analysis, penciling in a full-blown UK recession, cutting 0.5% off of Euro Area growth and slicing 0.2% off of US and global growth. Events since Brexit have not changed our call. The pound has plunged more than 11% since the vote, and both consumer and business confidence have tumbled.
Julius Baer | Argentina is back on the radar in the fixed-income space. This could be the blueprint for every economic restructuring in emerging markets for decades to come. We hope the speed and efficiency in transforming the economy will be held up by the Macri government. Any chances of Brazil becoming the next Argentina anytime soon? Not yet. But new elections and a shift in leadership could open similar dynamics in 2017.
UBS | Brazil is arguably facing its deepest recession since the 1930s. However, the recent improvement in investors’ perception of the country, combined with data suggesting economic activity is stabilizing, raises the critical question of whether Brazil has reached an inflection point.
James Alexander via Historinhas | Despite all the pessimism the Euro Area nearly caught up with US NGDP growth in Q4. Now that Italy and Spain have finally reported their Nominal GDP figures Eurostat shows that 4Q15 NGDP growth for the Euro monetary region as a whole was almost as fast, year-on-year, as the US.