Even as media outlets are fomenting recession fears by citing the recent yield-curve inversion, the benchmark 10-year U.S. Treasury note soared to a three-year high last week.
This flies in the face of recession fears.
The last seven recessions, dating back to 1967, were preceded by a yield-curve inversion. However, the latest inversion was short-lived.
“The yield on the benchmark 10-year Treasury note was higher to 1.84%, while the yield on the 30-year Treasury bond was also higher at 2.31% on Friday,” CNBC reported. “The 30-year bond yield is up nearly 32 basis points for the week, also its largest increase since autumn 2016. Bond yields rise as prices fall.”
Traders say the yield curve inverted last month amid escalating US-China trade tensions. However, the outlook has improved somewhat for September — which historically is the worst month of the year for the stock market.
Europe and China are experiencing significant economic downturns.
But the booming U.S. economy has remained largely unaffected by the spiraling effects of their cratering economies, said Raymond James financial adviser Kevin Giddis.
“Even though growth around the world is struggling, even though the tariffs impacted the U.S. and Chinese economies, the U.S. economy seems to have shrugged a lot of it off, without the negative effect of inflation,” Giddis said in an investor note.
That said, the U.S. economy is affected by slowdowns in Europe and China, and that’s why the U.S. economy is poised for an eventual slowdown.
However, Wall Street veterans dismiss the media-fomented hype over an impending recession — calling them overblown and manufactured.
Byron Wien is the vice chairman of Blackstone Advisory Partners, a subsidiary of the Blackstone Group (assets under management: $472 billion). Wien told CNBC (see video) that he doesn’t foresee a near-term recession, so everyone needs to calm down.
“The situation right now is very favorable” for the stock market and for economy, Wien said. However, he added that “it could change abruptly,” but underscored that “right now, we’re in pretty good shape.”
Wien added: “I think the stock market is fine. This is a 70% consumer economy. And the consumer is spending. Unemployment is low and wages are rising.”
As BizPac Review reported, Trump-haters like comedian Bill Maher are openly rooting for a recession because they think it would ruin Trump’s chances at reelection.
Do anti-Trumpers realistically think that a Democratic socialist could steer the United States through a recession?
Maher was doubling-down on a similar statement he had made just days earlier. “I’ve been hoping for a recession,” he said. “People hate me for it, but it would get rid of Trump.”
One of his guests disagreed, saying, “Recessions are really bad! People lose their jobs and homes and we shouldn’t wish for it.”
Maher, a multi-millionaire, cavalierly quipped: “I know. It’s worth it.”
That’s easy for Maher to say since he’s rich. It won’t be that easy for many Americans to weather a recession. Does Maher think that none of his viewers would be hurt by a recession?
Bill Maher has been desperately hoping for a US recession for the past year. In June 2018, he said he wishes the economy would crash and people would lose their jobs — just to get rid of President Trump.
People forget that if the U.S. economy tanks, so will the rest of the world. In other words, if the United States sneezes, Europe and Asia catch colds. So be careful what you wish for.
Top 10 Biggest World Economies by GDP
1. United States – $19.39 trillion
2. China – $12.24 trillion
3. Japan – $4.87 trillion
4. Germany – $3.67 trillion
5. UK – $2.62 trillion
6. India – $2.60 trillion
7. France – $2.58 trillion
8. Brazil – $2.05 trillion
9. Italy – $1.93 trillion
10. Canada – $1.65 trillion