We now have had three months of a 3-mo/10-yr yield curve inversion. The track record this has had in predicting recessions: 100%.
— David Rosenberg (@EconguyRosie) August 27, 2019
"A deeper inversion is sending a stronger statement that a meaningful slowdown is coming," said Brian Rehling, co-head of global fixed-income strategy at Wells Fargo Investment. "A recession is a possibility in the next 12 to 18 months, but it's not a done deal." pic.twitter.com/GOv9rAoZPs
— Alastair Williamson (@StockBoardAsset) August 29, 2019
US 30-year bond yield falls to record low under 2%
As global recession fears grow. key part of the U.S. yield curve inverted even further Wednesday morning, exacerbating fears of an impending recession.
New Recession Warning: The Rich Aren’t Spending
From real estate and retail stores to classic cars and art, the weakest segment of the American economy right now is the very top.
$RUT pic.twitter.com/i3rCOyW0BX
— VIX Squared (@vixsquared) August 27, 2019
$spx $vix pic.twitter.com/44d814VqJH
— VIX Squared (@vixsquared) August 25, 2019
Since financial engineering via buybacks/tax cuts has produced earnings growth on a per share basis it should also be pointed out that corporate profits actually peaked in 2014 and have trended down since.
You are paying a lot more for lesser profits in aggregate. pic.twitter.com/LCgYrXhyIo— Sven Henrich (@NorthmanTrader) August 28, 2019
S&P 500 median price to sales ratio:
2000 2.0
2007 2.0
2019 2.6
Stock market value vs GDP ratio
2000 146%
2007 137%
2019 145%— Sven Henrich (@NorthmanTrader) August 28, 2019
Holy Mackerel. "Chief investment officer of Calpers said earlier this year that the expected return over the next 10 years would be 6.1%, down from a previous target of 7%." I'm guessing that's gonna be off by roughly 6.1%. t.co/72kTzta5hK via @markets
— John P. Hussman (@hussmanjp) August 28, 2019
Moody’s Downgrades Outlook for Global Investment Banks
According to Moody’s, global investment banks could see their profitability come under greater pressure over the next 12 to 18 months.
The inverted yield curve, according to Moody’s, is another risk for banks.
The research further states that slow economic growth and high levels of corporate debt could lead to higher costs for investment banks.Ratings firm Moody’s downgraded its outlook for global investment banks (GIB) Tuesday from “positive” to “stable” citing the slowdown in growth, and lower or negative interest rates.
According to Moody’s, these GIBs — which includes the likes of Goldman Sachs, J.P. Morgan, HSBC and Deutsche Bank — will see their profitability come under greater pressure over the next 12 to 18 months. They will also witness low client activity due to global uncertainties, Moody’s said.
“The stable outlook for the global investment banks reflects our expectations that profitability for the GIBs may have peaked for this economic cycle,” Ana Arsov, managing director at Moody’s, said in the research.
Many central banks around the world have performed U-turns with their monetary policy, cutting interest rates in order to boost lending in their economies. Lower interest rates, however, restrict a bank’s ability to make profits. Rising rates, meanwhile, are good for banks as they allow them to lend money to investors with a profitable rate of interest.
‘Eventually It Just Snaps’: Strain Worsens on U.S. Profit View
“There’s a negative feedback loop that’s starting to develop. You can absolutely see hints of it,” Calvasina said in an interview. Companies “are being cautious.”
Germany has negative rates..PMI is at 43..and they are on the brink of a technical recession …
— 𝕮𝖍𝖎 🛢️ (@chigrl) August 28, 2019
global energy sector at christmas lows pic.twitter.com/Fv94ymkb4k
— Alastair Williamson (@StockBoardAsset) August 29, 2019
28 Aug – 07:35:00 PM [RTRS] – FED'S DALY SAYS HEADWINDS INCLUDE UNCERTAINTY, GLOBAL GROWTH SLOWDOWN pic.twitter.com/fpwFAORtCW
— Alastair Williamson (@StockBoardAsset) August 28, 2019