Displaying items by tag: recession

(New York)

Asset manager Guggenheim just put out a big call. The money manager’s strategists think that the economy is headed for a recession and markets are headed for huge declines. Their call is more interesting than the usual prognostications though. They point out that while this recession looks likely to be shallow because of a lack of underlying issues in the economy, the losses the market will suffer are likely to be severe. Scott Minerd of Guggenheim points out that “Our work shows that when recessions hit, the severity of the downturn has a relatively minor impact on the magnitude of the associated bear market in stocks”. Instead, it is the loftiness of valuations prior to the downturn that has a greater impact on how markets behave during a recession.


FINSUM: This argument makes total sense to us—there is no big fundamental problem with the economy, so a shallow recession, but equity prices are hefty right now, which means big losses.

Published in Eq: Total Market
Tuesday, 09 April 2019 13:12

Why This Bull Market Can Keep Going and Going

(New York)

Every investor seems to assume that this bull market is nearing its expiration date. Good things must come to an end, after all. However, Barron’s is arguing (rather adamantly) that this bull market could perhaps go on for another ten years. Reminding us of the old adage that bear markets don’t die of old age, Barron’s says there is just no sign of real weakness. “As far as the U.S. economy is concerned, there is no obvious sign that it has deteriorated”, says the publication. What about the yield curve? They say that is just an adjustment to tighter monetary conditions and not predictive of a recession in this case.


FINSUM: There is undoubtedly an element of superstition/intuition which is making investors feel like this bull run must come to an end soon. But the reality is that the underlying conditions for that to happen may not be in place.

Published in Eq: Total Market
Friday, 05 April 2019 13:29

US Economy Showing Positive Signs

(Washington)

Is the US economy breaking out of its short-term data tailspin? Maybe. This week has seen some improved news, none more so than new hiring data released this morning. US hiring in March was much better, with the economy creating 196,000 jobs, significantly higher than forecasted and up hugely from February’s barely positive numbers. Wage growth decreased slightly in pace, but was solid at 3.2%. The unemployment rate remained steady at 3.8%.


FINSUM: This could mean the weak data recently was just a blip and things are still on course. The data is lining up to show this might have been a big bond market overreaction…

Published in Eq: Total Market
Thursday, 04 April 2019 13:45

Recession Watch: Positive Data!

(New York)

The whole market has been on recession watch mode lately. The Fed has gone seriously dovish and weak economic data seems to be emerging by the day. However, some good news, at last: US jobless data just clocked in at the lowest level in 50 years, showing that the labor market is still tight. The numbers were in contrast to economists’ estimates for higher claims. Claims have fallen this far recently, but been revised higher later.


FINSUM: This is good news but it may not be indicative of much as this data could be slightly behind the hiring numbers, which have been weak recently.

Published in Eq: Total Market
Wednesday, 03 April 2019 12:28

Recession Watch: More Bad Hiring Data

(New York)

The economic picture is growing increasingly gloomy for the US. While there has been sporadically good data, the general trend is downward across many areas. Today, more information on the labor market is signaling a further deterioration. ADP hiring data has been released and it shows that sector hiring has fallen to an 18-month low. The private sector hired 129,000 new workers, missing expectations. “The job market is weakening”, says Moody’s Analytics, bluntly.


FINSUM: The job market seems like a good leading indicator right now. Company’s may be tightening purse strings, which could be a sign that everything is slowing.

Published in Eq: Total Market
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