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A key indicator says a recession is guaranteed in 2023 — and Bill Ackman, Nouriel Roubini, and others are warning of trouble ahead

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Summary

The Federal Reserve's latest rate hike indicates more rate hikes could be coming this year, but markets are expecting something else. A key bond market indicator is suggesting a recession is all but guaranteed in 2023 and investors such as Bill Ackman and Nouriel Roubini are warning of economic trouble ahead. Meanwhile, Deutsche Bank shares fell sharply early Friday due to a spike in credit default swaps, and other companies such as Smiths PLC, Xiaomi, and Block are reporting. The SEC has been clamping down on cryptocurrency and Donald Trump's NFTs have seen an increase in sales. Financial expert Richard Bernstein Advisors suggests investing in international stocks due to the chaos in US markets, and investor Jonathan Hirtle has shared what he is holding onto right now.

Q&As

What is the key indicator that suggests a recession is guaranteed in 2023?
The key indicator that suggests a recession is guaranteed in 2023 is the spread between the yield on three-month Treasury bills and their expected yield in 18 months' time.

What did Jerome Powell say about the indicator last year?
Jerome Powell said last year that the spread between the yield on three-month Treasury bills and their expected yield in 18 months' time has "100% of the explanatory power of the yield curve."

What warning did Bill Ackman issue regarding the economy?
Bill Ackman warned that the economy is on track for more pain due to the higher cost of debt and deposits due to rising rates.

What risks did Nouriel Roubini say the US is facing?
Nouriel Roubini said the US is facing a "Bermuda Triangle" of risk with policymakers set on tightening policy.

What did short-seller Hindenburg Research indicate about Block's user numbers?
Hindenburg Research indicated that Block has "wildly overstated" genuine user numbers and obfuscates its volume of Cash App customers.

AI Comments

👍 This article is a great way to stay informed on the current state of the economy and the financial turbulence that could be ahead.

👎 The article is too wordy, and seems to unnecessarily complicate the information with market jargon.

AI Discussion

Me: It's discussing a key indicator that suggests a recession is guaranteed in 2023 and how Bill Ackman, Nouriel Roubini, and others are warning of trouble ahead.

Friend: Wow. That's really concerning. What are the implications of this article?

Me: Well, it means there could be a lot of economic disruption in the coming years. It also means that investors will have to be more cautious with their investments and that the Federal Reserve will have to adjust their policies accordingly. It also means that businesses will have to be even more mindful of their finances and plan ahead for potential downturns.

Action items

Research the yield curve and the Treasury indicator to understand how it is used to predict recessions.
Follow the news and developments in the ongoing bank crisis to stay informed of potential risks.
Monitor the Federal Reserve's target rate and CME's FedWatch tool to track the markets' expectations for the future.

Technical terms

Rate Hike: An increase in the interest rate set by a central bank, such as the Federal Reserve, which affects the cost of borrowing money.
Bank Crisis: A situation in which a financial institution is unable to meet its obligations due to a lack of liquidity or solvency.
CME's FedWatch Tool: A tool used by the Chicago Mercantile Exchange (CME) to track the probability of future Federal Reserve (Fed) rate hikes.
Yield Curve: A graph that plots the yields of bonds with different maturities.
Basis Points: A unit of measure used to describe the change in the yield of a bond. One basis point is equal to 0.01%.
Yield Spread: The difference between the yields of two different bonds.
Three-Month Treasury Bills: Short-term debt securities issued by the U.S. government with a maturity of three months.
Inverted Yield Curve: A situation in which the yield on short-term bonds is higher than the yield on long-term bonds.
Credit Default Swaps: A type of financial derivative that provides protection against the risk of default on a loan or other debt instrument.
Non-Fungible Tokens (NFTs): A type of digital asset that is unique and cannot be replaced by another identical asset.