Mar 29, 2019

Another recession indicator is flashing

Dion Rabouin, author of Markets

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

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George Floyd protests: Unrest continues for 6th night across U.S.

A protest near the White House on Sunday night. Photo: Alex Wong/Getty Images

Most external lights at the White House were turned off late Sunday as the D.C. National Guard was deployed and authorities fired tear gas at hundreds of protesters nearby, per the New York Times.

What's happening: It's one of several tense, late-night standoffs between law enforcement and demonstrators in the United States over the death of George Floyd and other police-related killings of black people.

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Coronavirus dashboard

Photo Illustration: Sarah Grillo/Axios. Photos: Noam Galai, Jamie McCarthy, Josep Lago/AFP, Alfredo Estrella/AFP, and Narayan Maharjan/NurPhoto, all via Getty Images

  1. Global: Total confirmed cases as of 5 a.m. ET: 6,181,781 — Total deaths: 372,136— Total recoveries — 2,646,874Map.
  2. U.S.: Total confirmed cases as of 5 a.m. ET: 1,790,191 — Total deaths: 104,383— Total recoveries: 444,758 — Total tested: 16,936,891Map.
  3. Public health: Black Americans' competing crisesCoronavirus looms over George Floyd protests across the country.
  4. 2020: AIPAC conference in March 2021 canceled.
  5. Economy: What U.S. workplaces may look like next — Both part of America's unfinished businessFuture of mobility in post-pandemic world.
  6. World: Former FDA commissioner says "this is not the time" to cut ties with WHO — White House sends 2 million doses of hydroxychloroquine to Brazil, 1,000 ventilators to come.

Your guide to comparing climate change and coronavirus

Illustration: Eniola Odetunde/Axios

Climate change and the coronavirus have a lot more in common than the letter C, but their differences explain society’s divergent responses to each.

Why it matters: The Internet is full of comparisons, some from biased perspectives. I'm going to try to cut through the noise to help discerning readers looking for objective information.