America’s economy is in a precarious position 14-months before the 2020 re-election.
Many experts believe the state of the economy could be an indicator of whether President Donald Trump is re-elected. Trump himself frequently brags about low unemployment and stock market growth during his time in office.
A recession could disrupt Trump’s message on a key issue.
“Yields have fallen off a cliff since the beginning of the year as investors scared of a slowdown have poured into bonds. And yet equities are up double digits, seemingly immune to the risk aversion pervading the fixed-income market,” Business Insider explained.
“To further his recession argument, Pal reiterates the nefarious action he’s seeing in corporate debt. A phenomenon he refers to as a ‘doom loop’ — and one he thinks has the power to seize up the entire fixed-income market in one fell swoop,” the publication noted. “Pal believes that if economic conditions continue to deteriorate, pension funds — which own a great deal of this debt — will be forced to sell as rating agencies downgrade a significant portion of it to junk. This would result in a deluge of supply, and limited buyers to sop it up. It’s a situation that could result in catastrophe.”
He said he believes the economy is now at a “tipping point.”
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