RBC's Lori Calvasina: Markets have only overlooked recession signs once in the past

Lori Calvasina, RBC Capital head of U.S. equity strategy, joins 'Fast Money' to discuss the signs she's seeing in the recession data with CNBC's Melissa Lee and the Fast Money Traders. For access to live and exclusive video from CNBC subscribe to CNBC PRO: » Subscribe to CNBC TV: » Subscribe to CNBC: Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide. Connect with CNBC News Online Get the latest news: Follow CNBC on LinkedIn: Follow CNBC News on Facebook: Follow CNBC News on Twitter: Follow CNBC News on Instagram: #CNBC #CNBCTV ...(read more)

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Title: Markets Much Ignored Recession Signs Once Before: RBC's Lori Calvasina Introduction The global economy has always been a perplexing web of interconnections, where indicators and signals may sometimes be overlooked or downplayed. In the midst of economic uncertainty, investors and markets are usually quick to respond to warning signs, exhibiting caution and adjusting strategies accordingly. However, one notable exception occurred in the past, highlighting the selective deafness of markets when it comes to impending recessions. Lori Calvasina, Head of U.S. Equity Strategy at RBC Capital Markets, sheds light on this intriguing subject, revealing insights into why markets have a tendency to overlook certain recession signs. The Oft-Accurate Alarm Bells Over the years, economists and financial institutions have developed various indicators that provide crucial information about the health of an economy. These indicators can range from GDP growth rates, unemployment rates, consumer sentiment, purchasing managers' indices, and yield curve inversions. Historically, these signs have been reliable predictors of impending recessions, prompting investors to reevaluate their positions and potentially shift towards defensive strategies. The Exception: 1998 However, there was one instance where these warning signs largely went unnoticed. It was the year 1998, and the markets seemed to disregard the gathering recession clouds. Lori Calvasina highlights this event as a peculiar anomaly that offers valuable lessons for investors and policymakers alike. During 1998, various indicators flashed red lights, suggesting an economic downturn was imminent. The yield curve had inverted, where long-term interest rates began to fall below short-term rates, a classic signal of impending recession. Additionally, industrial production was declining, earnings estimates were being revised downward, and consumer confidence was on the decline. Yet, the markets fervently continued their upward trajectory, seemingly deaf to the storm brewing on the horizon. Calvasina explains that the markets' selective negligence can be attributed to several factors: First, there was a unique confluence of events during this period, particularly the Asian financial crisis and Russia's default. These events diverted attention away from domestic concerns, leading to a perceived disconnect between the U.S. economy and international events. Secondly, the rise of technology companies, particularly the dot-com bubble, had captivated the attention of investors. The stock market's relentless ascent, fueled by soaring technology shares, created an atmosphere of euphoria that overshadowed traditional recession signals. Lastly, the Federal Reserve's intervention played a significant role. In response to the emerging global crises, the Federal Reserve lowered interest rates, providing a tailwind that supported continued market optimism and temporarily masked the underlying risks. Lessons Learned The case of 1998 serves as a reminder that markets can occasionally disregard recession signs, driven by specific events or market sentiment. It emphasizes the importance of remaining vigilant and cautious, not solely relying on historical indicators as foolproof predictors of economic downturns. Investors and policymakers must recognize that market behavior does not always align with economic fundamentals. Emphasizing a holistic understanding of economic and geopolitical forces can help identify the factors that may sway market sentiment, thereby allowing for a more informed decision-making process. Conclusion Lori Calvasina's insights shed light on the exceptional case of 1998, when markets largely ignored recession signs despite ample warning indicators. This historical anomaly serves as a reminder that markets can sometimes be driven by unique circumstances, prevailing narratives, and external events that overshadow traditional economic signals. Investors and policymakers must be cautious about relying solely on established indicators, recognizing the need to consider a broader range of factors that can influence market sentiment. By maintaining this comprehensive approach, one can better navigate the treacherous waters of economic uncertainty and potentially mitigate the risks associated with a possible recession. https://inflationprotection.org/rbcs-lori-calvasina-markets-have-only-overlooked-recession-signs-once-in-the-past/?feed_id=108585&_unique_id=648de12fa45b7 #Inflation #Retirement #GoldIRA #Wealth #Investing #breakingnews #businessnews #cable #cablenews #CNBC #FastMoney #financenews #financestock #financialnews #money #moneytips #newschannel #newsstation #stockmarket #stockmarketnews #Stocks #usnews #worldnews #RecessionNews #breakingnews #businessnews #cable #cablenews #CNBC #FastMoney #financenews #financestock #financialnews #money #moneytips #newschannel #newsstation #stockmarket #stockmarketnews #Stocks #usnews #worldnews