buy bonds, sell stocks, recession fears still linger pic.twitter.com/HnkQHlTkfz
— Alastair Williamson (@StockBoardAsset) March 26, 2019
After a hope-filled rebound in February, Conference Board Consumer Confidence tumbled in March with Present Situation plunging to 11-month lows.
- Consumer confidence in March fell to 124.1 vs 131.4 in prior month (that is below the forecast range 125.44 to 136.5 from 57 estimates)
- Present situation confidence fell to 160.6 vs 172.8 last month
- Consumer confidence expectations fell to 99.8 vs 103.8 last month
This is the biggest monthly collapse in ‘Present Situation’ since October 2008 to its lowest since April 2018…
And this has happened as stocks pushed back to near record highs.
Most notable is the plunge in the Labor Differential – (Jobs Plentiful – Jabs Hard to Get) which tumbled from 34.3 to 28.3 – the biggest drop since Feb 2009.
Global trade has taken a sharp turn down, reinforcing the view that the world economy is in its worst state since since the financial crisis a decade ago.
Figures published Monday show trade fell 1.8 percent in the three months through January compared with the previous period. That’s the biggest drop since May 2009. On a year-on-year basis, trade posted its first decline in nine years in the three-month period.
- Fed funds futures were pointing to a quarter point in easing Monday, as traders said scary signals continued to emanate from the bond market.
- On Friday, there was a so-called inversion in the yield curve, meaning very short rates rose above longer 10-year note rates, a fairly reliable recession signal.
- Traders say the bond market may be overreacting, while stocks seem to be ignoring the recession warnings and fears the Fed will have to jump in with one or more rate cuts to stop the economy from rolling over.
The bond market doubled down on scary warnings Monday, signaling both a possible recession is looming and that the Fed could have to cut interest rates this year to stop it.
“People are starting to get fearful,” said Andrew Brenner of National Alliance. “It won’t last for long, but they’re getting fearful about a recession. You had a Fed that changed course 180 degrees and then added to it last week. That caught the market off guard.”