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After only a minor lull,
our cheerleader-in-chief is back in action.
"Obama:
No 'Double Dip' Recession Likely" (UPI)
U.S. President
Barack Obama says the chances for another recession are not likely and he is
going all out to help create more jobs and economic growth.
Obama spoke to
CBS News senior business correspondent Anthony Mason Wednesday before and
after he held a town meeting in Atkinson, Ill., to wrap up a three-day bus
trip across the Midwest.
"I don't
think we're in danger of another recession but we are in danger of not having
a recovery that's fast enough to deal with what is a genuine unemployment
crisis for a whole lot of folks out there and that's why we need to be doing
more," he said during an interview scheduled for broadcast on the
network's "Sunday Morning" program.
Unfortunately
for the President, recent reports suggest otherwise.
"Treasury Yield Curve Flashes
Warning Of Recession Risk" (Dow
Jones)
The Treasurys market is flagging fears that recession could
be around the corner.
The yield
spread between the two-year and 10-year notes, a closely watched gauge of
market sentiment known as the benchmark Treasury yield curve, has shrunk
sharply this month and Wednesday the differential tightened to 191 basis points,
the lowest level in more than two years, down from 259 basis points late
July.
Typically when
investors are optimistic about the economy, they demand higher yields on
long-dated maturities to hedge against inflation and the curve steepens. That
was somewhat the case in February, when the two-year and 10-year yield spread
traded at a historic wide of 289 basis points as inflation fears gripped the
market. Yet when worries about the economy rise and inflation fears take a
back seat, investors demand a lower yield premium to hold long-dated bonds,
thus flattening the curve.
"It is a
clear indication of the market's deterioration in economic growth," said
Adrian K. Miller, senior fixed income strategist at Miller Tabak Roberts Securities LLC in New York.
"Philly
Fed Index Warns that Risk of Double-Dip Recession Is Growing"
(Telegraph)
The US economy
has sent its loudest signal yet that the risk of a double-dip recession is
growing, data which helped drive falls in global markets.
In a fresh
blitz of weak data, economists were particularly shaken after a survey of
confidence among manufacturers around the eastern city of Philadelphia
collapsed to its lowest level since 2009.
The main index
tumbled to minus 30.7 this month – against forecasts of a reading of
plus 3.7 – its weakest since the US was still mired in its last
recession during the first quarter of 2009, compared with a reading of plus
3.2 in July.
Manufacturing
has been a rare bright spot for the US over the last two years, but the news
from Philadelphia suggests that industry is suffering as consumers retrench.
"Junk-Bond
Spreads Pricing in ‘Mild Recession:’ BofA
Analysts" (MarketBeat)
We’ve
been warning here about the warning lights flashing on the credit-market
dashboard. Bank of America-Merrill Lynch credit strategists recently
suggested that one of those indicators is pointing to a recession.
Oleg Melentyev and Christopher Hays write:
The high-yield
index [of the spread between junk-bond yields and Treasurys]
has widened to 739 basis points as of close on Thursday, its widest level
since Nov 2009. With the spread normally peaking at 1,000bps in full
recessionary periods and bottoming at 250bp in times of strong economic
growth, the current level is pricing in an 80% probability of a full-blown
contraction in GDP, and a 100% chance of a mild recession.
"Consumers
Most Negative on U.S. Economy Since Recession" (Bloomberg)
The Bloomberg
Consumer Comfort Index Was Minus 48.3 for the Period to August 14
New York --
Consumer confidence in the U.S. economic outlook slumped in August to the
lowest level since the recession, raising the risk that spending will dry up.
The Bloomberg
Consumer Comfort Index’s monthly expectations gauge dropped to minus
34, the weakest since March 2009, from minus 22 in July. The weekly measure
of current conditions was minus 48.3 for the period ended Aug. 14 compared
with minus 49.1, which was the worst reading since mid-May.
The most
unstable market in the history of American stocks, wage gains that are
failing to keep up with inflation and unemployment hovering around 9 percent
may be causing Americans to lose faith that the economy and their financial
situations will soon improve. Applications for unemployment benefits climbed
last week to the highest level in a month.
Nope, no risk
of another downturn here.
Yeah, right.
Time for a Bronx cheer?
Michael J. Panzner
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