A recession in 2020 is increasingly likely, as is a selloff in stocks.
Stock prices have been climbing despite weak earnings.
The impact of rate cuts by the Fed on the economy is diminishing.
While Cecchini sees a recession brewing in the manufacturing sector, he is not heartened, as are many other analysts, by consumer spending data and consumer confidence surveys that remain strong. He says that consumers typically keep spending until the onset of an economic downturn. "There's really not much room for improvement" in key indicators such as unemployment or consumer spending, he added.
"Lending standards are slowly beginning to tighten across the board," Cecchini noted, observing that consumer spending has been propped up by loose lending standards. Indeed, a large and increasing number of U.S. consumers are having difficulty paying their bills, including servicing their debt, per a survey by UBS.
Leading investment managers are also becoming increasingly bearish, per the latest release of the Big Money Poll conducted by Barron's. Among respondents, 31% are bearish on stocks, the highest level since the mid-1990s, while only 27% are bullish, less than half the proportion one year ago. Individual investors also polled by Barron's are similarly gloomy, with only 29% calling themselves bullish, and 42% believing that U.S. stocks are overvalued.
Stock prices have been climbing despite weak earnings.
The impact of rate cuts by the Fed on the economy is diminishing.
While Cecchini sees a recession brewing in the manufacturing sector, he is not heartened, as are many other analysts, by consumer spending data and consumer confidence surveys that remain strong. He says that consumers typically keep spending until the onset of an economic downturn. "There's really not much room for improvement" in key indicators such as unemployment or consumer spending, he added.
"Lending standards are slowly beginning to tighten across the board," Cecchini noted, observing that consumer spending has been propped up by loose lending standards. Indeed, a large and increasing number of U.S. consumers are having difficulty paying their bills, including servicing their debt, per a survey by UBS.
Leading investment managers are also becoming increasingly bearish, per the latest release of the Big Money Poll conducted by Barron's. Among respondents, 31% are bearish on stocks, the highest level since the mid-1990s, while only 27% are bullish, less than half the proportion one year ago. Individual investors also polled by Barron's are similarly gloomy, with only 29% calling themselves bullish, and 42% believing that U.S. stocks are overvalued.
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