$9 Trillion wiped out in 3rd Quarter compares to WWI

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • $9 Trillion wiped from World Stocks in 3Q
  • Analysts at BofA liken it to going “Cold Turkey” and blame it for causing the third “Great Bond Bear Market.”
  • They calculate the 20% plus losses suffered by government debt investors over the last year are now a par with the post-World War I and II years of 1920 and 1949, and the Great Depression rout of 1931.
  • The combined collapse in global stock and bond markets means global market capitalization has been slashed by over $46 trillion

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How do you define an Economic Crash? $46 Trillion wiped out stocks and bonds. Bank experts don’t expect bleeding to stop

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • A $46 trillion wipeout in stocks and bonds won’t stop until central banks around the world launch a coordinated pivot, Bank of America says
  • It’s been a tough year for investors, with global stock and bond markets erasing $46.1 trillion in market value since November 2021, according to Bank of America.
  • The massive drawdown has led to forced liquidations on Wall Street, the bank’s chief investment strategist Michael Hartnett said in a Friday note, highlighting the recent break below 2018 support in the NYSE Composite Index.

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Dow crashes 1,276 points erasing nearly all recent rally of stocks

Revelations 18:23 ‘For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

  • Dow tumbles 1,200 points for worst day since June 2020 after hot inflation report
  • The Dow Jones Industrial Average slid 1,276.37 points, or 3.94%, to close at 31,104.97. The S&P 500 dropped 4.32% to 3,932.69, and the Nasdaq Composite sank 5.16% to end the day at 11,633.57.
  • Tech stocks were hit particularly hard, with Facebook-parent Meta skidding 9.4% and chip giant Nvidia shedding 9.5%.

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Stocks climb for second day as data eases inflation jitters

By Chuck Mikolajczak

NEW YORK (Reuters) – A gauge of global stocks climbed for a second straight day on Wednesday to hit its highest level in a week, after a report on U.S. consumer prices indicated calmed recent concerns about inflation, while the dollar retreated further from a 3-1/2 month high.

Economic data from the Labor Department said its consumer price index rose 0.4% in February, in-line with expectations, after a 0.3% increase in January. Core CPI, which excludes the volatile food and energy components, edged up 0.1%, just shy of the 0.2% estimate, after being unchanged the prior two months.

“We will see what happens in terms of when inflation begins to pick up over the next couple of years, but the market seemed to like it OK today,” said Ellen Hazen, portfolio manager at F. L. Putnam Investment Management in Wellesley, Massachusetts.

While analysts largely expect a pickup in inflation as vaccine rollouts have led to a reopening of the economy, worries persist that additional stimulus in the form of a $1.9 trillion coronavirus relief package set to be signed by U.S. President Joe Biden could lead to an overheating of the economy and uncontrolled inflation.

“There are a lot of reasons why inflation could pick up over the next two to three years and the market is correct to be concerned about that, it might have gotten a little bit overly focused on it in the last couple of weeks,” said Hazen.

“But in general, the market is correct to be on alert for signs of rising inflation, particularly because of the stimulus and the size of the Fed balance sheet.”

The House of Representatives moved toward final approval of Biden’s $1.9 trillion COVID-19 relief bill on Wednesday, which forecasters predict will turbocharge the U.S. economy.

The data was enough to puncture recent concerns about rapidly rising inflation and provide support for stocks on Wall Street, which built on Tuesday’s strong rally.

The Dow Jones Industrial Average rose 332.58 points, or 1.04%, to 32,165.32, the S&P 500 gained 23.83 points, or 0.61%, to 3,899.27 and the Nasdaq Composite added 58.07 points, or 0.44%, to 13,131.89.

The yield on the benchmark 10-year note retreated in the wake of the data, before edging higher on the session and taking some of the early steam out of equity gains.

Investors will now eye auctions of 10-year and 30-year debt on Wednesday and Thursday, with investors seeking to cover massive shorts on both maturities. A weak 7-year auction in late February helped fuel inflation concerns and sent yields higher.

Benchmark 10-year notes last yielded 1.5438%, from 1.544% late on Tuesday.

The dollar also moved lower for a second day following the data before reversing course.

The dollar index rose 0.022%, with the euro down 0.04% to $1.1893.

Oil prices resumed their climb after two days of declines, extending gains after the Energy Information Administration reported a bigger-than-expected storage build. [nL1N2L81NJ]

U.S. crude recently rose 0.45% to $64.30 per barrel and Brent was at $67.82, up 0.44% on the day.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

S&P 500, Nasdaq hold near record levels after Trump remarks

S&P 500, Nasdaq hold near record levels after Trump remarks
By Lewis Krauskopf

(Reuters) – The S&P 500 and Nasdaq indexes edged higher after earlier hitting record peaks on Tuesday while the Dow dipped slightly as President Donald Trump said the United States is close to signing an initial trade deal with China but offered no new details about negotiations.

Stocks were off session highs after a highly anticipated midday speech from Trump, with investors concerned ahead of time about any comments that would worsen the tariff dispute that has convulsed markets for more than a year.

Trump said U.S. and Chinese negotiators were “close” to a “phase one” trade deal, but largely repeated well-worn rhetoric about China’s “cheating” on trade in remarks at The Economic Club of New York.

“The commentary was exactly what folks wanted to hear: that ‘phase one’ talks are still ongoing, that we are controlling them, but yet the belief is that China is very willing to make a deal,” said Delores Rubin, senior equities trader at Deutsche Bank Wealth Management in New York.

“There was nothing contrary to what we’d already known … so it was back to business,” Rubin said.

Investors have pointed to U.S.-China trade tensions as the main market uncertainty as stocks have climbed to record levels, fueled by rate cuts by the Federal Reserve, third-quarter earnings coming in above low expectations, and signs the economy may be bottoming.

On Tuesday, the Dow Jones Industrial Average <.DJI> fell 15.67 points, or 0.06%, to 27,675.82, the S&P 500 <.SPX> gained 2.54 points, or 0.08%, to 3,089.55 and the Nasdaq Composite <.IXIC> added 10.53 points, or 0.12%, to 8,474.81.

Most S&P 500 sectors were in positive territory, with healthcare <.SPXHC> gaining the most. Energy <.SPNY> lagged the most, falling 0.9%.

Among stocks, Walt Disney Co <DIS.N> rose 1.3% as the company said demand for its much-anticipated streaming service, Disney+, was well above its expectations in a launch.

Shares of Netflix Inc <NFLX.O> were down 1.2%.

Rockwell Automation Inc <ROK.N> jumped 11.1% after the U.S. factory equipment maker easily beat quarterly results and forecast 2020 earnings above estimates.

CBS Corp <CBS.N> dropped 3.3% after the media company missed quarterly revenue estimates. Shares of Viacom Inc <VIAB.O>, which is merging with CBS, were also down 3.6%.

With third-quarter earnings season drawing to a close, about three-quarters of S&P 500 companies have topped profit estimates, but overall they are expected to have posted a 0.5% drop in earnings, according to Refinitiv.

Earnings from big firms including Walmart Inc <WMT.N>, Nvidia Corp <NVDA.O> and Cisco Systems Inc <CSCO.O>, as well as a fresh set of economic data, are due this week.

Advancing issues outnumbered declining ones on the NYSE by a 1.02-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored advancers.

The S&P 500 posted 41 new 52-week highs and two new lows; the Nasdaq Composite recorded 104 new highs and 88 new lows.

(Additional reporting by Arjun Panchadar and Agamoni Ghosh in Bengaluru; Editing by Shounak Dasgupta and Jonathan Oatis)

U.S. consumer spending strong; manufacturing struggling

FILE PHOTO: People tour The Shops during the grand opening of The Hudson Yards development, a residential, commercial, and retail space on Manhattan's West side in New York City, New York, U.S., March 15, 2019. REUTERS/Brendan McDermid

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. retail sales surged in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, which could help to assuage financial market fears that the economy was heading into recession.

The upbeat report from the Commerce Department on Thursday, however, will likely not change expectations that the Federal Reserve will cut interest rates again next month as news from the manufacturing sector remains dour, underscoring the darkening outlook for the economy against the backdrop of trade tensions and slowing growth overseas.

A key part of the U.S. Treasury yield curve inverted on Wednesday for the first time since June 2007, triggering a stock market sell-off. An inverted Treasury yield curve is historically a reliable predictor of looming recessions.

Financial markets have fully priced in a 25-basis-point rate cut at the U.S. central bank’s Sept. 17-18 policy meeting. The Fed lowered its short-term interest rate by a quarter of a percentage point last month, citing the acrimonious U.S.-China trade war and slowing global economies.

But the data could push markets to dial back expectations of a 50-basis-point rate cut next month.

“So yes, consumers are lifting economic growth and easing pressure on the Federal Reserve to cut more aggressively, but the trade war itself, and the rhetoric that accompanies it will push for more rate cuts,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

Retail sales increased 0.7% last month after gaining 0.3% in June, the government said. Economists polled by Reuters had forecast retail sales would rise 0.3% in July. Compared to July last year, retail sales increased 3.4%.

Excluding automobiles, gasoline, building materials and food services, retail sales jumped 1.0% last month after advancing by an unrevised 0.7% in June. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

U.S. stock index futures extended gains after the release of the data. U.S. Treasury yields rose while the dollar <.DXY> was slightly weaker against a basket of currencies.

STRONG LABOR MARKET

July’s gain in core retail sales suggested strong consumer spending early in the third quarter, though the pace will likely slow from the April-June quarter’s robust 4.3% annualized rate. Consumer spending, which accounts for more than two-thirds of the economy, is being underpinned by the lowest unemployment rate in nearly half a century.

While a separate report from the Labor Department on Thursday showed an increase in the number of Americans filing applications for unemployment benefits last week, the trend in claims continued to point to a strong labor market.

Solid consumer spending is blunting some of the hit on the economy from the downturn in manufacturing, which is underscored by weak business investment. There are, however, red flags for the labor market coming from manufacturing.

The sector’s struggles were highlighted by a third report from the Fed on Thursday showing factory production dropped 0.4% in July. Output at factories has declined more than 1.5% since December 2018. Manufacturing, which makes up about 12% of the economy, is also being weighed down by an inventory overhang, especially in the automotive sector.

Manufacturing productivity tumbled at its fastest pace in nearly two years in the second quarter, with factories cutting hours for workers, another report from the Labor Department showed.

Manufacturing’s troubles appear to have persisted into the third quarter. Though a report from the Philadelphia Fed on Thursday showed factory activity in the mid-Atlantic region slowed less than expected in August amid an increase in new orders, manufacturers reported hiring fewer workers.

A measure of factory employment dropped to its lowest level since November 2016. The weakness in factory employment in the region that covers eastern Pennsylvania, southern New Jersey and Delaware was mirrored by another survey from the New York Fed. Activity in New York state was little changed this month, with employment measures deteriorating further.

“The health of factories is still an important driver of growth and the soft patch for production remains a factor that is keeping economic growth in the slow lane,” said Chris Rupkey, chief economist at MUFG in New York.

The economy grew at a 2.1% rate in the second quarter, decelerating from the first quarter’s 3.1% pace. Growth estimates for the third quarter are below a 2.0% rate.

In July, auto sales fell 0.6% after rising 0.3% in June. Receipts at service stations rebounded 1.8%, reflecting higher gasoline prices. Sales at building material stores gained 0.2%.

Receipts at clothing stores increased 0.8%. Online and mail-order retail sales jumped 2.8%, the most in six months, after rising 1.9% in June. They were likely boosted by Amazon.com Inc’s <AMZN.O> Prime Day.

Receipts at furniture stores rose 0.3%. Sales at restaurants and bars accelerated 1.1%. But spending at hobby, musical instrument and book stores dropped 1.1% last month.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Fed rate-cut signal sends stocks surging, wounds yields, dollar

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 19, 2019. REUTERS/Brendan McDermid/File Photo

By Lewis Krauskopf

NEW YORK (Reuters) – World stock markets surged on Thursday, with the U.S. benchmark S&P 500 hitting a record high, while the 10-year U.S. Treasury yield fell below 2% as investors digested a signal from the Federal Reserve of potential U.S. interest rate cuts as soon as its next meeting.

The U.S. dollar also weakened after the Fed – the U.S. central bank – on Wednesday indicated a marked shift in sentiment even as it left its benchmark rate unchanged for now.

“We have obviously morphed into the Fed taking the pole position as far what&rsquo;s driving the market right now, both domestically and on a global basis as well,” said Mike Mullaney, director of global markets research at Boston Partners.

“It’s risk-on trade again right now for the time being and I don’t see anything on a near-term basis that is going to disrupt that.”

Oil prices also surged, lifted by the Fed as well as by news that Iran shot down a U.S. military drone, raising fears of a military confrontation between Tehran and Washington.

MSCI’s gauge of stocks across the globe gained 1.02%. The index hit its highest since May 1.

On Wall Street, the Dow Jones Industrial Average rose 203.87 points, or 0.77%, to 26,707.87, the S&P 500 gained 21.98 points, or 0.75%, to 2,948.44 and the Nasdaq Composite added 65.04 points, or 0.81%, to 8,052.36.

Energy, technology and industrials were among the best-performing S&P 500 sectors.

“Cyclicals are definitely getting a big pop today,” Mullaney said.

The pan-European STOXX 600 index rose 0.52%, reaching its highest since early May.

Benchmark government bond yields in the United States and Europe tumbled following the Fed’s decision, with the U.S. 10-year note yield falling below 2% for the first time in 2-1/2 years.

Benchmark 10-year U.S. notes last rose 12/32 in price to yield 1.9855%, from 2.027% late on Wednesday.

“The statement indicated the Fed no longer insists on a pause or patience, providing an open ear to doves at upcoming meetings. Also critical … acknowledgment that inflation pressures are muted,” said Jim Vogel, interest rate strategist at FTN Financial in Memphis, Tennessee.

“As difficult as it might be to imagine, rates are also free to fall further,” he added.

The dollar index, which measures the greenback against a basket of currencies, fell 0.46%, with the euro up 0.6% to $1.1291.

U.S. crude rose 5.73% to $56.84 per barrel and Brent was last at $64.51, up 4.35%.

 

(Additional reporting by Gertrude Chavez-Dreyfuss in New York and Tom Wilson in London; editing by Larry King and James Dalgleish)

Strong U.S. jobs data boosts stocks, soothes economic fears

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 27, 2018. REUTERS/Eduardo Munoz

By April Joyner

NEW YORK (Reuters) – World stock markets rallied on Friday while bond yields rose after sharply declining earlier in the week as Beijing announced a new round of trade talks with Washington and U.S. employment data pointed to economic strength.

Equities around the globe were buoyed by the news that China and the United States will hold trade talks in Beijing on Monday and Tuesday.

In the United States, stocks got another boost as stronger-than-expected U.S. employment data soothed some concerns of slowing economic growth. That was welcome news to investors after sharp declines on Thursday following Apple Inc’s cut in its revenue forecast.

“As nervous as we all were yesterday on this Apple news, this does help to soften that a bit, that maybe the consumer or the average person still is more confident than we are giving them credit for,” said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.

The strong U.S. jobs report raised questions among some market watchers about the Federal Reserve’s monetary policy, which has been scrutinized in recent weeks as economic worries have mounted. However, Wall Street surged further after Fed Chair Jerome Powell spoke at a meeting of the American Economic Association and said he would not resign if asked to by U.S. President Donald Trump.

Conversely, safe-haven assets that had climbed this week as equity markets were roiled came down substantially. Treasury yields rose sharply after the release of U.S. employment data, and the dollar gained 0.6 percent against the yen. Spot gold prices, which reached a six-month peak on Thursday, dropped 0.8 percent.

In U.S. equities, the Dow Jones Industrial Average rose 681.9 points, or 3.01 percent, to 23,368.12, the S&P 500  gained 66.58 points, or 2.72 percent, to 2,514.47 and the Nasdaq Composite added 218.87 points, or 3.39 percent, to 6,682.37.

The pan-European STOXX 600 index jumped 2.67 percent, while MSCI’s gauge of stocks across the globe gained 2.16 percent.

Benchmark 10-year Treasury notes last fell 32/32 in price to yield 2.6641 percent, from 2.553 percent late on Thursday.

Earlier, an announcement from China’s central bank that it would cut the amount of cash that banks must hold as reserves for the fifth time in the past year lifted Asian and European stocks. The move frees $116 billion for new lending as Beijing tries to reduce the risk of a sharper economic slowdown.

Japanese equity markets, which opened for their first session of the new year, were the main exception, weighed down by the sharp rise in the yen in the past few days.

The news of the U.S.-China trade talks boosted oil prices, with both Brent and U.S. crude futures around 4 percent higher.

 

(Reporting by April Joyner; Additional reporting by Virginia Furness, Swati Pande, Wayne Cole and Chuck Mikolajczak; editing by Jon Boyle, Larry King and Dan Grebler)

Forget gridlock, Republican win may be better for stock market

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., November 1, 2018. REUTERS/Brendan McDermid

By Noel Randewich

SAN FRANCISCO (Reuters) – U.S. President Donald Trump has warned that his favorite measure of success, the stock market, is imperiled if voters favor Democrats in next week’s congressional elections.

While not fully accurate – stocks tend to rise regardless of who controls the government – it does bear out that the market has delivered a slightly stronger performance on average when Republicans dominate in Washington.

A Reuters analysis of the past half-century shows stocks fared better in the two calendar years after congressional elections when Republicans control Congress and the presidency than when Democrats controlled the two branches, and at least as well as during times of gridlock. Many investors are now hoping for a continuation of the Republican agenda.

“There is Trump ‘the person’, who is very controversial,” said Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco. “And there’s also Trump ‘the agenda’. The Trump agenda, the stock market loves. To the extent it continues, the market will like that.”

Republicans traditionally push pro-business policies such as tax cuts and deregulation, which boost stock prices. The market has, on the whole, given Trump a thumbs-up, with the market rising almost 20 percent during his presidency so far.

Polls show strong chances that the Democratic Party may win control of the House of Representatives in the Nov. 6 midterm elections after two years of wielding no practical political power in Washington, with Republicans likely to keep the Senate.

Trump warned in a tweet on Tuesday that a change in Congress would be bad for the market, saying: “If you want your Stocks to go down, I strongly suggest voting Democrat.”

Investors often favor Washington gridlock because it preserves the status quo and reduces uncertainty.

“Traditionally, gridlock is good for the markets. But I think this election is very tricky; I’m not sure that’s the preferred market outcome because a lot of the benefits of the past two years have come from not being in a gridlock environment,” said Mike O’Rourke, Chief Market Strategist at JonesTrading.

Should his fellow Republicans maintain or extend their grip on Congress, Trump may be emboldened to pursue more of his political agenda, including further tax overhauls.

By contrast, Democratic gains that allow the party to control the House of Representatives, and possibly the Senate, could stifle Trump’s policy aims and perhaps lead to attempts to impeach him. It could also lead to resistance to increasing the government’s debt limit next year.

“Our economists believe that two likely consequences of a divided Congress would be an increase in investigations and uncertainty surrounding fiscal deadlines, which could raise equity volatility,” Goldman Sachs said in a report this week.

Over the past 50 years, gridlock has been the norm rather than the exception in Washington, with the presidency and Congress won by one party in just seven out of 25 congressional election year.

Looking at the two calendar years following each congressional election, the S&P 500 had a mean annual increase of 12 percent under Republican-controlled governments, compared to an increase of 9 percent for Democrat-controlled governments and a 7 percent rise for gridlocked governments.

However, using median averages, which exclude outliers, differences are less clear, with the S&amp;P 500 seeing annual increases of 11 percent under Republican-controlled governments and under gridlock, and 10 percent gains under Democrat-controlled governments.

An analysis by BTIG brokerage of data going back to 1928 also indicates gridlock is not necessarily ideal. It showed U.S. stocks performing better under united governments.

“While government control is by no means the sole determinant of market performance, investors clearly favor a unified regime,” BTIG strategist Julian Emanuel wrote in his report.

Interest rates, economic growth, company earnings and inflation are widely viewed as strong influences on stock prices, making the balance of power in Washington just one of many factors affecting investor sentiment.

Two Democratic presidents – Bill Clinton and Barack Obama – have presided over the strongest S&amp;P 500 performances http://tmsnrt.rs/2jtEpzi since 1952, with gains of 208 percent and 166 percent, respectively.

Wall Street has applauded Trump since he took power in January 2017 and quickly pushed through measures to deregulate banks and other companies. Last December, his Republican party passed sweeping corporate tax cuts that have S&amp;P 500 companies on track this year to grow their earnings per share by over 20 percent, the biggest jump since 2010, according to Refinitiv IBES data.

“Volatility may rise regardless of the outcome, but, based on historical relationships, equities may be more likely to rise if Republicans manage to maintain control of Congress,” Deutsche Bank said in a recent report.

(Reporting by Noel Randewich; Editing by James Dalgleish)

Twelve charts to watch for signs of the next U.S. downturn

FILE PHOTO: The Dow Jones Industrial average is displayed on a screen after the closing bell at the New York Stock Exchange (NYSE) in New York, U.S., May 29, 2018. REUTERS/Brendan McDermid/File Photo

By Megan Davies

NEW YORK (Reuters) – Economists and investors are watching for signs they hope can predict when the wheels will come off a near-record U.S. economic expansion and equities bull market.

Some are already worried about a flattening Treasuries yield curve and slowing housing market, even as other economic vital signs remain healthy.

U.S. economic growth will probably slow gradually over the next two years and the threat of a trade war has made a recession more likely, a recent Reuters poll predicted.

A majority of bond market experts in a separate poll now predict a yield curve inversion in the next one to two years, a red flag for those who believe short-term yields rising above longer-term yields means an imminent recession.

“Almost every client meeting includes questions about where the economy and markets sit in the cycle,” JPMorgan head of cross-asset fundamental strategy John Normand wrote in a recent research note.

The U.S. economy is a year away from surpassing the record 120-month 1991-2001 expansion, according to data from the National Bureau of Economic Research.

The stock market bull run is also nearing a record. Bull markets are typically measured retroactively, but U.S. equities could hit their longest bull run in history on Aug. 22, according to S&amp;P.

The U.S. economy is “late cycle” but a recession is not imminent, a number of economists and strategists say.

“We believe that the U.S. economic expansion is entering the final third of its cycle,” wrote analysts at Wells Fargo Investment Institute, although they said various indicators do not suggest a recession this year.

1. THE YIELD CURVE

The U.S. yield curve plots Treasury securities with maturities ranging from 4 weeks to 30 years. The spread between two-year and 10-year notes is typically used when discussing yield curve inversion. The gap between long- and short-dated yields turning negative has been a reliable predictor of recessions. The yield curve has been flattening in recent months.

2. SHORT-TERM BILLS

An alternative yield curve measures the difference in the current interest rate on 3-month Treasury bills and expectations for the yields 18 months from now. Federal Reserve officials have found this measure is a stronger predictor of recession in the coming year. The measure currently suggests little recession risk.

3. UNEMPLOYMENT

The unemployment rate and initial jobless claims ticked higher just ahead or in the early days of the last two recessions before rising sharply. Unemployment hit an 18-year low in May of 3.8 percent but nudged up to 4 percent in June.

4. OUTPUT GAP

The output gap between the economy’s actual and potential gross domestic product has fallen ahead of the last two recessions.

“Currently we estimate that the output gap is nearly closed, but not yet in the ‘overheating’ territory,” wrote Kathy Bostjancic, head of U.S. investor services at Oxford Economics, in May.

FILE PHOTO: A trader works in a work space on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 24, 2018. REUTERS/Brendan McDermid/File Photo

FILE PHOTO: A trader works in a work space on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 24, 2018. REUTERS/Brendan McDermid/File Photo

5. STOCK MARKETS

Falling equity markets can signal a recession is looming or has already started to take hold. Markets turned down before the 2001 recession and tumbled at the start of the 2008 recession.

On a 12-month rolling basis, the market has turned down ahead of the last two recessions. The 12-month rolling average percent move is now below its 2018 peak but higher than recent lows.

6. BOOM-BUST BAROMETER

The Boom-Bust Barometer devised by Ed Yardeni at Yardeni Research measures spot prices of industrials inputs like copper, steel and lead scrap, and divides that by initial unemployment claims. The measure fell before or during the last two recessions and is below its 2018 peak.

7. HOUSING MARKET

Housing starts and building permits have fallen ahead of some recent recessions. Housing starts and permits fell to the lowest level since September 2017 in June.

8. EARNINGS GROWTH

S&amp;P 500 earnings growth dipped ahead of the last recession. Earnings growth is expected to slow slightly this year and more next year, but remain in the high single digits or low double digits in 2019.

9. SOUTH KOREA EXPORTS

South Korean exports fell during the last recession and before the previous recession.

Those exports, which include cars, phones, steel and other products, tend to be a leading indicator, said Bank of America Merrill Lynch chief investment strategist Michael Hartnett. Exports from China are also increasingly important as weak Asian exports tend to coincide with weak global and U.S. growth.

South Korea’s export growth came to a halt in June. China, the world’s largest exporter, reported exports accelerated in June.

The United States and China have fired the first shots in what could become a protracted trade war. The United States and South Korea agreed in March to revise a trade pact.

10. HIGH-YIELD SPREADS

The gap between high-yield and government bond yields rose ahead of the 2007-2009 recession and then widened dramatically. Credit spreads typically widen when perceived risk of default rises. Spreads have fallen slightly this year.

11. INVESTMENT-GRADE YIELDS

Risk premiums on investment-grade corporate bonds over comparable Treasuries have topped 2 percent during or just before six of the seven U.S. recessions since 1970. Spreads on Baa-rated corporate bonds rose to 2 percent this month based on Moody’s Investors Services data, according to Leuthold Group’s chief investment strategist Jim Paulsen.

12. MISERY INDEX

The so-called Misery Index adds together the unemployment rate and the inflation rate. It typically rises during recessions and sometimes prior to downturns. It has nudged higher in 2018 but is still relatively low.

(Additional reporting by Richard Leong, Dan Burns, Jenn Ablan and Howard Schneider; Editing by Meredith Mazzilli)