Recession

Fork In The Road

Dec 7, 2022 1 min read paid

It was another day of recession jitters in the stock market as the CEOs of Bank of America and Wells Fargo reported that they are seeing slowing consumer spending and borrowing. That may be so, but there wasn't any evidence of a slowdown in October's consumer credit data released by the Fed today. Total consumer credit rose $27.1 billion in October, up from a revised

Ed Yardeni

Yearend Jitters

Dec 6, 2022 2 min read

The stock market has the jitters as investors worry that the economy may be too strong and too weak at the same time. Yesterday the S&P 500 fell because November's non-manufacturing purchasing managers index was stronger than expected (chart). Investors concluded that the economy may be too strong requiring the Fed to raise interest rates still higher, increasing the risk of a recession. Today, stock prices

Ed Yardeni

Soft Landing

Dec 1, 2022 2 min read

The bears disparaged yesterday's stock market rally claiming that Fed Chair Jerome Powell's speech at the Brookings Institution was hawkish and didn't justify the market's bullish spin. We believe that the bulls correctly perceive that inflation peaked this summer and were relieved to hear Powell say that the Fed might be willing to let inflation subside without pushing the economy into a

Ed Yardeni

Most Widely Anticipated Recession Ever

Nov 28, 2022 2 min read

Our contrarian instincts give us more confidence in our “growth recession,” or “mid-cycle slowdown,” scenario. A recession next year would be the most widely anticipated downturn on record. Consider the following: (1) Philly Fed’s Anxious Index. The Philadelphia Federal Reserve Bank’s Survey of Professional Forecasters, which started during Q4-1968, includes the Anxious Index, which is the probability of a decline in real GDP (chart). The survey asks panelists

Ed Yardeni

Yield Curve Spread Signaling Rate Peak

Nov 27, 2022 2 min read

The yield curve spread between the 2-year US Treasury note and the 10-year US Treasury bond is a leading indictor of several cyclical financial and economic developments. It tends to invert (i.e., to turn negative) before economic downturns (chart). So it tends to predict recessions. We think that yield curve inversions actually predict that the Fed's monetary policy is getting too tight, which could trigger a financial

Ed Yardeni

Leading Indicators Seeing Recession Next Spring

Nov 23, 2022 1 min read paid

Ed Yardeni

Housing: Multi-Family Boom vs Single-Family Bust

Nov 22, 2022 1 min read paid

Single-family housing activity is falling into a recession. Single-family housing starts fell 29.5% ytd through October. Housing downturns have been major contributors to most recessions in the past. This time, though, strength in multi-family starts is offsetting some of the weakness in single-family starts. Single-family starts has accounted for only 51% of residential construction put in place over the past 10 years, down from close to 70% prior to

Ed Yardeni

Industry Analysts Cutting S&P 500 Earnings

Nov 9, 2022 3 min read paid Featured

The following is an excerpt from our November 9, 2022 Morning Briefing. Industry analysts have yet to get the recession memo. They are still estimating that S&P 500 revenues are growing. However, they’ve been reading the memo about the squeeze on profit margins from rising costs. As a result, many of them have been reducing their estimates for the profit margins of the S&P 500

Ed Yardeni

Small Business Owners Have Some Bad News

Nov 8, 2022 1 min read

The National Federation of Independent Business (NFIB) released its October survey of small business owners today. They remain pessimistic about the general business outlook. They are still struggling to find workers and to keep them. In any event, their labor costs are rising rapidly and forcing them to raise their prices. They've been sucked into the economy's wage-price spiral. During October, 32% of small business owners

Ed Yardeni

S&P 500 Earnings Estimates Are Falling

Nov 4, 2022 1 min read

Industry analysts who cover the S&P 500 companies are responding to the current earnings reporting season for Q3-2022 by continuing to cut their earnings estimates for Q4-2022 and all four quarters of next year (charts below). They've been doing so through the last week of October when several of the MegaCap-8 reported disappointing earnings. The 344 of the S&P 500 companies that have reported

Ed Yardeni

Another Weak Regional Business Survey

Oct 27, 2022 1 min read Featured

With the exception of the 2.6% (saar) increase in Q3's real GDP, the other more forward-looking economic indicators released today were on the weak side. That might explain why the 2-year and 10-year Treasury yields eased a bit this morning. In the stock market, some of the mega money that is coming out of the MegaCap-8 today is going into the DJIA-30. The former continue to miss

Ed Yardeni

The Housing Recession Deepens

Oct 19, 2022 1 min read paid

Fed officials have described the housing downturn as a "correction." For example, in an October 6 speech, Fed Governor Christopher J Waller said, "While this market correction could be fairly mild, I cannot dismiss the possibility of a much larger drop in demand and house prices before the market normalizes." He also said that "after mortgage rates stabilize, their drag on housing demand should ebb.

Ed Yardeni

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