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Democratic vs. Republican: Economy on the Front Line
Pinnacle Digest writes: 3 months without retail sales growth is very rare in the United States. In respect to core retail sales, which exclude auto and gasoline sales, 3 months with no growth signifies the onset of a recession. Although this is where the US economy finds itself, Paul Ebeling and his team at Live Trading News do not believe we are headed for a recession, at least not yet.
As the data continues to worsen there is a likelihood of more negative sentiment and recession forecasts from market analysts and financial pundits. Our team at Pinnacle has discussed many headwinds facing the US economy, which could derail the lacklustre recovery, most notably rising interest rates. Ebeling believes a recession is unlikely to occur, due to two major factors.
1. Recessionary 'jitters' as he likes to call them will be met with aggressive stimulus measures by the Federal Reserve.
2. From a historical standpoint when economists give up, growth tends to surprise and deliver stronger numbers. It's easy to impress when growth numbers are already at historic lows.
The US bond market is also telling us there is 0 risk appetite in the markets. 10-yr US Treasury yields have fallen below 1.5%; a year ago they sat at almost 3%. As they near a bottom, money will be forced into other assets.