We're already in recession ... here's what to do, says economist who called the last bubble
Stock markets are looking like hard work for the day ahead, thanks largely to escalating tensions between the U.S. and Iran.
“I think we’re probably already in a recession, but I think [it will] probably be a run of the mill affair, which means real GDP would decline 1.5% to 2%, not to 3.5% to 4%, you had in the very serious [past] recessions,” said the president of money manager A. Gary Shilling & Co. He also lays claim to having forecast a global inventory glut that led to the 1973 to 1975 U.S. downturn.
He also predicts the 10-year Treasury yield will drop to 1%, if that type of recession is borne out along with lower inflation. The yield on the 30-year T-bond would drop to 2%. “Actually, if that happens on a 30-year coupon bond, you make about 20% on your money,” he said. The chart While the Dow inches closer to a record, some have noted weakness for the small-cap Russell 2000 index RUT, -1.26% and the Dow Jones Transportation Average DJT, -1.50% which makes airlines, package delivery and railways, for example. Weakness for domestically driven smaller companies and those transport firms, seen as indicators for an economy, can spell trouble.Our chart of the day stacks up the performances of the Russell and transport stocks relative to the S&P 500.
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