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.
Former hedge fund manager Raoul Paul warned that analysts are looking at the wrong indicators during an interview on The Meb Faber Show, Business Insider reported Saturday.
"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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