Mar 29, 2019

Another recession indicator is flashing

In addition to the inverted yield curve, there's another recession indicator Americans should be watching, analysts say: the value of corporate equities that households and non-profits own.

Why it matters: While prices have largely climbed back, households are still holding off on buying. Much of 2019's pickup in stock prices has been driven by corporate buybacks.

Details: How much of corporate equities that households and non-profits own as a share of U.S. GDP fell from its highs at the end of the year. It dropped in the last quarter of 2018 as equity prices fell and households sold shares.

  • Analysts at Bank of America Merrill Lynch said institutions, hedge funds and private clients have been selling equities for 9 weeks straight.
  • Deutsche Bank this week said its clients were rotating into bonds and out of equity funds.

The bottom line: "Sharp upward spikes in household equity valuations have often preceded recessions," Karl Schamotta, chief market strategist at Cambridge Global Payments, tells Axios.

  • "The value of U.S. household investment as a share of GDP tends to peak just before a recession, meaning that the average person is over-invested at the top, and under-invested at the bottom of each cycle."

Go deeper: Will the yield curve lead to recession? It really is different this time

Go deeper

Warren sees bump in national poll following Nevada debate

Photo by David Becker/Getty Images.

Sen. Elizabeth Warren surged to 19% and second place in a CBS News/YouGov national poll released Sunday, trailing front-runner Sen. Bernie Sanders (28%) but edging out Joe Biden (17%) and Michael Bloomberg (13%).

Why it matters: The poll notes that only 42% of Democratic primary voters have made up their minds. While Warren underperformed in the first three states, her strong debate performance in Nevada last week may have given her campaign new life.

Pence aide says intel report of Russia helping Trump is "false information"

Marc Short. Screenshot: Fox News

Marc Short, chief of staff to Vice President Mike Pence, claimed on "Fox News Sunday" that the White House has not received intelligence that Russia is seeking to help President Trump win re-election, calling it "false information" that has been selectively leaked by Democrats on the House Intelligence Committee.

The big picture: Short and national security adviser Robert O'Brien both dismissed reports published in the Washington Post and New York Times last week about a briefing provided by top election security official Shelby Pierson, an aide to outgoing acting director of national intelligence Joseph Maguire.

Bernie's juggernaut

Sen. Bernie Sanders speaks in San Antonio last night with his wife, Jane. Photo: Eric Gay/AP

Sen. Bernie Sanders won so big in the Nevada caucuses that Democrats are hard-pressed to sketch a way he's not their nominee.

Driving the news: With 60% of precincts counted (slow, but better than Iowa!), Sanders is running away with 46% of delegates — crushing Joe Biden's 20%, Pete Buttigieg's 15%, Sen. Elizabeth Warren's 10% and Sen. Amy Klobuchar's 5%.