Few Financial Pundits See Recession on Horizon
Although many across the nation are wary of the possibility of a major market correction, only a few pundits are actively advertising for it, according to a recent Forbes report.
“The only ones seeing a recession now are uber bears, who live for major market corrections, and the financial pundits advertising for it on CNBC and Bloomberg,” writes Kenneth Rapoza, a senior contributor at Forbes.
One of the pundits preaching a recession is Bloomberg’s John Authers, who made this point Dec. 10: “If we look carefully, we can see that the last time pessimism reached such a crescendo and then collapsed, in early 2008, it was followed by the worst recession that most of us can remember.”
But Rapoza was quick to point out the major differences between now and 2008.
“Is there a mortgage-backed securities bubble being blown?,” he writes. “Is there a rebirth of the subprime lending market? Are people making $50,000 a year buying $350,000 homes in Florida with no money down?”
For now, most experts agree that while a recession in the U.S. may eventually come, it probably won’t be in 2020.
Further, a number of prominent financial voices have recently either said that the risk of recession is falling in 2020, or that there is no risk of recession in 2020. Those names include S&P Global Ratings, Barclays, Schroders, State Street and BlackRock.
Paul Gruenwald, S&P Global Ratings’ chief economist has given a recession a 25% to 30% probability in his most recent forecast, down from 35% probability in his prior prediction.
“Considering that the last time everyone was bullish and the market crashed it was because of the mortgage-backed-securities trade going bust, and seeing how there is no such thing like that in the market today, chances are high major investment firms are right: there will be no recession and no bear market in equities in 2020,” writes Rapoza.
“2020 is not a year of recession,” said Rick Lacaille, global chief investment officer at State Street Global Advisors. “We expect the global economic recovery to continue into 2020 against a backdrop of continued monetary easing, policy shifts and persistent pockets of resilience. There are clear risk factors but overall, we expect world real GDP growth to increase.”
For comments, questions or concerns, please contact David Cohen
- ◦Economy
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