Markets Are Signaling Higher Odds of a 2019 Recession
The acceleration in the timing of a downturn is reinforced by the speed with which financial assets have slumped.
A recession is coming sooner that expected.
Photographer: Drew Angerer/Getty Images North AmericaFor investors attempting to adjust their portfolios in anticipation of a recession by the end of 2020, recent economic indicators carry a message: They may have to prepare for the downturn to start as early as 2019, despite stocks enjoying a recent “dead-cat bounce.” Bloomberg News reports that a Federal Reserve Bank of New York gauge puts the chances of a recession at almost 16 percent a year from now, the highest since November 2008.
The acceleration in timing of a downturn is signaled by the speed with which markets have moved, with the most important being the plunge in oil prices. Despite an agreement early last month between OPEC and Russia to reduce oil output by 1.2 million barrels per day starting this month, the price of West Texas Intermediate crude has fallen more than 40 percent from its high for the year in early October. This is because the demand for energy is expected to fall even more than the reduction in production that the OPEC+ countries will implement.