Warnings are plenty, nowadays, across both mainstream and financial media that a recession is looming. You can check out this Bloomberg article, https://www.bloomberg.com/view/articles/2018-03-08/the-next-recession-may-come-as-a-surprise its a bit old but says it all.
However, this has been the case since the 2009 recovery. Just after 2009, analysts were predicting a double-dip or what they call a ‘W’ recession. Then came 2011, Eurozone debt crisis, 2013 emerging markets turmoil, 2014/15 oil price slump and energy companies crisis. But the fact of the day was that the stock markets continued their march and so did the economic recovery, not just in the U.S. but globally.
This time could be different, right?
The well-known bond fund manager Bill Gross was the latest to warn, who says that Fed should not hike more than once or twice in the next 12 months or we hit a recession.
The declining yield curve spread between shorter and longer-term maturities is widely being used as an evidence of a looming recession since it has been one of the most reliable indicators of predicting a recession. Check out the Zerohedge article, https://www.zerohedge.com/news/2018-06-27/yield-curve-flattens which explains a lot.
It is possible that this time is different and the U.S. would face a recession soon but that
Leaves more questions than answers -
Will this recession be as bad as the 2008/09 crisis? Will it be a global recession? Will it be like 'recoveryless jobs' after so many years of 'jobless recovery'? Will China be in recession first, which might trigger a U.S. recession...So many more!
We have no answer to them all. But we believe that one of the reasons the yield curve is flattering could be the possibility of a sharp slowdown in China, which could be devastating for global commodity markets, that in turn means deflation ahead. In addition to that, a slowdown in China would have a knock-on effect on both global growth and stock earnings.


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