Stock markets are cheering the end of the Fed’s rate hike cycle. The policy pivot isn’t coming because things are going well, but quite the opposite. This warns that gains may be short-lived.

tastylive’s Head of Global Macro Ilya Spivak weighs up Wall Street’s blistering advance and considers the case for follow-through as global economic growth grinds to a standstill.

Ilya has over 15 years in trading strategy roles. He applies a top-down global macro approach to trading that seeks to take advantage of big thematic moves in G10 FX, commodities, rates and equity indices.

READ A SHORT SUMMARY OF THE ANALYSIS IN THIS VIDEO HERE:

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BREAKING: Recession News

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As the stock market continues to reach new highs, it can be easy to think that the economy is in great shape and that a recession is not on the horizon. However, this mindset could be dangerous as there are plenty of signs that a recession is still looming.

The recent surge in stock prices has been driven by a combination of factors, including low interest rates, corporate tax cuts, and strong corporate earnings. While these factors have certainly boosted the stock market, they do not necessarily reflect the overall health of the economy.

One key indicator of a looming recession is the inverted yield curve. This occurs when the yield on short-term government bonds exceeds the yield on long-term government bonds. Historically, an inverted yield curve has been a reliable predictor of an upcoming recession. The yield curve inverted in August 2019, and while it has since normalized, it is still a cause for concern.

Another concern is the ongoing trade war between the United States and China, which has created uncertainty for businesses and consumers alike. The trade war has already had a negative impact on global economic growth, and if tensions escalate further, it could exacerbate the risk of a recession.

In addition, economic data such as manufacturing activity and business investment have been showing signs of weakness. The latest data indicates a slowdown in manufacturing and business investment, which could be a precursor to an economic downturn.

It is also important to consider the impact of rising levels of household and corporate debt. As interest rates rise, servicing this debt becomes more expensive, which could lead to financial distress for many households and businesses.

While it is impossible to predict the exact timing of a recession, it is clear that the risks are increasing. Investors should not be fooled by the recent strength in stock prices, as the stock market is not always a reliable indicator of the overall health of the economy.

Rather than relying solely on stock market performance, investors should pay attention to a broader range of economic indicators and data. It is also important to have a well-diversified investment portfolio that can withstand market fluctuations.

In conclusion, while the stock market may be performing well at the moment, investors should not let it fool them into thinking that a recession is not a real possibility. By staying informed and keeping an eye on economic trends, investors can be better prepared for potential market downturns. It is always better to be safe than sorry when it comes to managing one’s investments.