Bank Of America: The U.S. Economy Is In For A Recession Shock

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In 2019 —and previously during 1995 and 1984, as well as in the 1960s— the Federal Reserve switched from raising interest rates to lowering interest rates to prevent an economic slowdown from turning into a full-blown recession.

Also, the yield curve inversion has not been a good “sell signal” for stocks and credit in the past. The previous expansion ended due to the impact of the COVID-19 crisis and not due to an economic deterioration predicted by the yield curve.

If the rate hikes happen as expected, the U.S. economy will have all the hallmarks of a late cycle and will not have a large cushion to guarantee GDP growth, TwentyFour AM associate Mark Holman explains.

“This is the typical late-cycle position that investors face,” he concludes.

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Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver.