Greetings,
The United States: How close is the next recession? Credit Suisse says we are nowhere near the end of the cycle.
• This expansion has been quite long by historical standards. However, given how slow the recovery has been, the cycle could end up extending further (potentially creating even bigger asset bubbles?).
• While the yield curve has flattened significantly, it has not inverted.
• Here is what the key metrics looked like prior to the previous six recessions.
The Eurozone: The EUR-USD cross-currency swap basis is widening. It suggests tighter dollar funding conditions for European banks that don’t have access to US deposits.
Emerging Markets: Romania’s government hasn’t raised any debt this month, blaming “unacceptable” yield levels. Those greedy debt markets – how dare they demand a higher interest.
Equity Markets: Has regulation taken a toll on IBM and Microsoft? What does it mean for the current leading tech firms who could be facing fresh regulatory scrutiny?
Credit: CLO volume has spiked this year (a big portion of the increase has been all the refinancing deals).
Rates: Credit Suisse sees the tax-reform driven bond selloff as premature. Given the deteriorating budget deficit (see #3 here), any significant tax cuts that could justify the “reflation trade” are unlikely.
Food for Thought: Ivy league degrees at various institutions.
Edited by Joseph N Cohen
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Thanks to Josh Marte (@joshdigga), Matt Garrett (@MattGarrett3), Joseph Cohen (@josephncohen), Ycharts.com, S&P Global, and Moody’s Investors Service for helping with the research for the Daily Shot.
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