Keith Wade, chief economist at Schroders │ The yield curve has been a reliable element in the prediction of US recessions over the last four decades. With only one exception, every time the curve has inverted, the US economy has entered into recession within 18 months.
By Sara B. Potter, CFA | Signs are multiplying of an industrial activity slowdown. Now that the current U.S. economic expansion is on record as the longest in post-war history (10 years and counting), we are seeing an uptick in the predictions of an inevitable recession.
Shaun Riordan │Many of us are already enjoying our summer holidays. Others are packing now, looking forward to relaxing on the beach, or in the mountains. Wherever we are taking our holidays we should make the most of them. A perfect storm is brewing which could hit Europe hard in the autumn, with devasting economic and political consequences.
Pablo Pardo (Washington) | The last two decades have not been too good for the idea that companies should list in the stock market. Above all since 2008, the overabundance of practically free capital has allowed many companies to ignore equity markets. Until 2019 arrived and things changed.
J. P. Marín-Arrese | US Federal Reserve Chairman Jerome Powell faces the dilemma of choosing the right path, confronted with conflicting data and forecasts. While the US economy grew at a booming 4% rate in the first quarter, inflation trails far behind the Fed’s objective and salaries fail to pick up despite historically low levels of unemployment. Moreover, the trade tug-of-war with China is denting confidence in consumers and investors alike. Should the conflict turn worse, the economy might suffer a harsh blow.
DWS | How should a hedge fund have positioned itself if it had known the U.S. Federal Reserve’s (Fed’s) decisions and press release a day ahead of the market? Until lunchtime on Wednesday noon its staff might have reasonably concluded that the material contained preciously little actionable information. On paper, it would have all looked exactly as expected, leaving limited scope for any meaningful market reaction. This is not, of course, how things actually turned out.
Justin Irving | The word “boom” evokes some temporary period of above-average economic growth. The Roaring 20s, the plentiful 50s and 60s and the Dot Com era. Because booms are characterized by unexpected levels of economic growth, asset prices, which had not priced in the growth, rise sharply. Is this what is going on US economy today? Not quite.
The interest on the US 10-year bond has reached 3%, its highest level in 10 years (blue line). There is nothing exceptional about this given that, as we can see in the graphic, expected inflation has also taken off.
While the EU statistics office Eurostat said on Tuesday GDP in the eurozone rose 0.6% quarter-on-quarter in the three months to September and 2.5% year-on-year, the EC revised yesterday its growth forecast for the region to 2.2%, markedly higher for this and next year. Therefore, this Commission’s expectation in 2017 is well justified, based on published data from Eurostat.
Ever since December last year, when it reached its low point, almost at parity with the dollar, the euro has not stopped rising. And the European economy is doing much better than that of the US.