You can’t swing a cat without hitting a commentator discussing recession risk these days. And for good reason: there’s a growing list of potential threats to the economy. But forecasting a possible contraction in the future and monitoring events in real time are two different things and there’s always ambiguity about whether the two become one and the same. Hold that thought as we consider some of the evidence that while the potential for a new recession is lurking, the numbers published to date still indicate that the expansion is very much alive and kicking.

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* Russia warns that nuclear war risks should not be underestimated
* Central banks need to aggressively fight inflation, says Man Group’s CEO
* Treasury real yields moving closer to zero after extended run in negative terrain
* The case for a possible return of the bond bull market
* US consumers’ discretionary spending fell in March, consultancy estimates
* Potential for more China lockdowns raises risk for global supply chains
* Twitter accepts Elon Musk’s $44 billion takeover offer
* Dallas Fed Mfg Index continues to indicate softer growth in April
* US economy continued to grow at solid pace in March, Chicago Fed data shows:

Widespread selling in the major asset classes rolled on in last week’s trading through Friday’s close (Apr. 22), based on a set of ETFs. The upside outliers: US real estate investment trusts (REITs) and inflation-protected Treausuries.

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* Macron reelected as France’s president, defeating far-right candidate
* US officials, after visiting Ukraine, pledge more military support
* Covid-19 outbreak continues to roil China
* Rising mortgage rates could create housing shortage, advises economist
* Bond market’s pricing in faster rise in inflationary pressures for years ahead
* US labor market hints at possible easing of inflation pressure
* A new energy crisis is in full swing
* German economic sentiment stabilizes in April, posting slightly higher reading
* A recession in Europe has started, according to Sentix survey data in April:

● Inflation: What It Is, Why It’s Bad,
and How to Fix It
Steve Forbes, et al.
Summary via publisher (Encounter Books)
Inflation: What It Is, Why It’s Bad, and How to Fix It explains what’s behind the worst inflationary storm in more than forty years—one that is dominating the headlines and shaking Americans by their pocketbooks. The cost-of-living explosion since the COVID pandemic has raised alarms about a possible return of a 1970’s-style “Great Inflation.” Some observers even fear a descent into the kind of raging hyperinflation that has torn apart so many nations. Is this true? If so, how should we prepare for the future?

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Headwinds are building for the US economy, stoking forecasts that recession risk is rising. The labor market, however, remains resilient, suggesting that the economy will continue to expand for the near term.

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* Powell says 1/2 percent rate hike in May is “on the table”
* Eurozone growth accelerates in April, PMI survey data shows
* Will French presidential election on Sunday roil US-led policy on Ukraine?
* Florida passes bill to end Disney’s special self-governing status
* China’s zero-covid strategy triggers capital flight from country’s financial markets
* Philly Fed Mfg Index eased in April but continues to reflect growth
* Jobless claims in US continue to hold near 50-year low
* US Leading Economic Index points to economic growth through 2022:

China has long been a reliable source of growth for the global economy, but that reliability is looking increasingly shaky.

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* Is a cornered Russia more dangerous than ever?
* Food crisis threatens “human catastrophe”, warns World Bank president
* Rate hikes could trigger recession, says SF Fed head Mary Daly
* Will Fed’s Powell today offer new clues for 50-bps rate hike in May?
* Fed’s Beige Book: US economy shows moderate growth amid high inflation
* The rise in bond yields is starting to attract bargain hunters
* US 10-year yield above equivalent in China for first time in over a decade
* Will rising mortgage rates slow red-hot housing market?
* Existing home sales in US fell for a second month in March
* US home prices rose to a new record in March despite softer sales
* US Treasury market’s inflation forecast remains well below actual inflation:

Trends are among the most powerful forces in economics and finance, but every trend plants the seeds of its own reversal. If prices rise (fall) enough, the trend reverses. Forecasting these reversals is tricky, mostly because of the complication and chaos unleashed by the feedback loops that infuse markets and economies.

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