There\u2019s a nearly 40% chance of a recession… the question is when.<\/p>\n
Mixed messages are making it really hard to define, but it does look like a\u00a0recession is on the way. The labor market remains strong and low interest rates have helped stocks\u00a0but recent weak economic data has some investors questioning how long this decade’s expansion will continue.<\/p>\n
Stocks are currently having their worst start to a quarter since 2016. Last week, ISM said the US services sector grew at the slowest clip since August 2016, while September\u2019s manufacturing reading was the worst in a decade.<\/p>\n
That news has chilled sentiment among execs, who definitely don\u2019t mean it when they say \u201cI\u2019m fine.\u201d Last month, a Duke survey found optimism among CFOs was at a three-year low. Plus one Federal Bank of New York measure currently suggests there\u2019s a nearly 40% chance of a recession over the next year, the highest\u00a0 probability so far in the current bull market.<\/p>\n
Furthermore, a Bank of America Merrill Lynch survey recently showed that\u00a0recession concerns are at the highest point in a decade.<\/p>\n
But we haven\u2019t hit dealbreaker territory yet. September\u2019s jobs report wasn\u2019t the best, but it still 1) showed the economy adding jobs at a steady rate, and\u00a02) confirmed unemployment is near multi-decade lows.<\/p>\n
As such, we\u2019re still playing wait and see.<\/p>\n
Earnings season kicks off next week with\u00a0analysts expecting them to have fallen about 4% in Q3. They\u2019ve also lowered expectations for all 11 sectors in the S&P.<\/p>\n
Nevertheless, the Fed could buoy markets with another rate cut at its meeting later this month. Investors are penciling in up to two more rate cuts through December, and you can thank Powell & Co. for a big chunk of the stock market\u2019s gains this year.<\/p>\n
Most economists and four out of five dentists agree that the eventual nosedive won\u2019t be as gnarly as the financial crisis. But it will happen… the question is when.<\/p>\n","protected":false},"excerpt":{"rendered":"
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