I don't think that's a conspiracy theory at all. We know for a fact that the Fed unleashed QE right before Obama's second term election. The economy was falling rapidly and stocks were weakening and everyone thought Romney would win. All the polls said so. Then QE3 hit and stocks went soaring and Obama got re-elected.
This Powell has me confused, though. He may not be in the bag for the liberals the way Yellen was. But I think there is a huge likelihood we get a recession before the election. I think Powell is more in thrall with banishing the business cycle than anything else, which means lots of lowering of rates and QE. So I think he might come across as trying to help Trump.
As to the other recession signs, we've already seen an inversion. We have had 2s and 5 yrs inverted for a very long time. The 3mos and 10 yr inverted for a period twice in the last few months. Then now, the yield curve UNinverted. That is the ultimate signal in my opinion. A lot of people think the inversion is what triggers the recession call, but actually in all prior recessions, the yield curve first inverted, then UNinverted, then we got recession. So I think we're now perilously close to recession. However, as you pointed out, Oil is rising, but not peaking and hasn't been high for long enough to cause problems for consumers. There will continue to be a long oversupply situation, which will hurt frackers. Housing does look like we're at the peak right now to me. With rates so low for so long, housing just has to be in bubble territory right now, but you know more about that than me. So I'll defer to you on that one.
So it's a bit of a mixed bag, but I'm betting on recession. |
