Bond markets can be a great barometer of whether we’re recession bound or not. While its impossible to defend the argument that the economy has softened rapidly over the last two months, the bond markets with the exception of the Treasury market do not indicate a recession. However, if you’re unemployed or significantly underemployed this is merely a matter of semantics.
We’ve noted the appearance with deference to the Gloom and Doomers, Bob Prechter and Nouriel Roubini. I’m afraid the days of economists in tweed hunkered down in their academic offices are long past, not when the bright lights of media attention beckon. But Roubini is back and without a conscience just as he was in the Spring of 2009 predicting doom. Does he acknowledge being wrong in 2009? Hardly not, not when he can milk the media for his call in 2008.
But if Mr. Roubini is correct in his depiction of doom in the economy then why are Baa and High Yield corporate bond yields not rising sharply? Corporate bond yields are a great barometer of impending economic turns. Yields have risen before almost every recession. Baa yields have risen less than 20 basis points recently and High Yield which can get downright whippy have risen only about 100 basis points from 9% to 10%. Clearly the message of the bond markets is much smoother than the message of the equity markets.
Well, that was quick……………TSLA breaks thru the offer price!
There may come a day when we’ll consider Tesla as a candidate for investment but in order for this to happen we’d need to see significant balance sheet improvement along with real revenue and profits. In the meantime it remains a developmental stage company.
If Rush and Sarah can extrapolate the conclusion that Conservationists are to blame for the BP disaster (by forcing rigs to go farther out to sea which induces a higher potential for hazard). Then, couldn’t the Left state that the austerity measures being promoted by World governments including the Obama administration based on pressures imposed by the Tea Party Movement and similar organizations could impose a severe Double Dip recession as theorized by Paul Krugman?
Be careful out there
BP
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