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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsStocks Nosedive Amid Fears of a Trump-Induced Recession
Donald Trump is currently running for reelection on the strength of the economy, which he believes will outweigh all the racism, corruption, cruelty, incompetence, white supremacy, and obstruction of justice. Yet that pitch is going to become a bit more difficult if the president tips the economy into a recession, the odds of which grow stronger each day, and which todays market sell-off appears to be foreshadowing.
As of noon on Wednesday, the Dow Jones Industrial Average was down a whopping 620 points, or 2.36%. The S&P 500 dropped 2.37%, the Nasdaq Composite declined 2.75% and the Cboe Volatility IndexWall Streets fear gaugespiked to a high of 22. Most alarmingly, the yield on the benchmark 10-year Treasury note fell below the 2-year rate, a bond market phenomenon that historically signals a coming recession. The yield on U.S. 30-year bonds also dropped to an all-time low; the fact that both occurred at the same time indicates investors are concerned and bracing for a slowdown in the U.S. and global economy. Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from 6 to 18 months from today which will drastically, and negatively, shift our medium-to-longer term outlook on the broader markets, Tom Essaye, founder of the Sevens Report, wrote in a note on Wednesday.
While its possible investors fears are overblown, Arthur Bass, managing director of fixed income financing, futures, and rates at Wedbush Securities, told CNBC he wouldnt count on it. I have to yield to the historical evidence and note that the phrase this time is different usually doesnt work, he said, noting the Trumpian headwinds were facing. Its a very unusual time period: We havent had tariff issues like were dealing with currently in about 80 years. Its about dealing with negative rates in most of the European countries and Japan. Again, I have respect for the inverted yield curve as a signal that recession is ahead.
Also rattling investors is an apparent recession in Germany, which generates a sizable portion of its GDP from trade, and which may be a bellwether for how Trumps tariffs are weighing on the global economy. Per CNBC:
Investors are increasingly worried about a global economic slowdown as weaker-than-expected data in China deepened the gloom in the worlds second-largest economy. Official data published Wednesday showed growth of Chinas industrial output slowed to 4.8% in July from a year earlier, the weakest growth in 17 years.
https://www.vanityfair.com/news/2019/08/trump-sell-off-recession?utm_source=nl&utm_brand=pol&utm_campaign=aud-dev&utm_mailing=Thematic_Ballot_08142019&utm_medium=email&bxid=5be9f8cb24c17c6adf0e5d24&cndid=25394153&utm_term=Thematic_Ballot_Subscribers
SWBTATTReg
(22,156 posts)may occur, but the person in the WH will do too little way too late, if he does anything. Events and happenings will happen way too fast and thus, before you know it, boom! rump's incompetence will be clearly shown to all but the utmost 1% of his diehard fans. His incompetence will make the recession or the like worst too.