Fears of a recession and a stagflationary economy akin to the 1970s have gripped Wall Street and investors this week, as various reports reveal that recession warnings have become more pronounced. Investors are “recalibrating their portfolios for a predicted era of high inflation and weaker growth,” according to Reuters, as oil and commodities prices rise.
While Wall Street is concerned about stagflation, one analyst believes that “global markets will collapse” this year.
A flurry of headlines this week have suggested that fears of a 1970s-style stagflation economy have risen, and that economic repercussions is on the way. U.S. investors are afraid of a hawkish central bank, rising oil costs, and the present war in Ukraine, according to Reuters author David Randall. Anders Persson, Nuveen’s chief investment officer of global fixed income, told Randall that stagflation isn’t quite here yet, but it’s getting close.
“Our base case is still 1970s stagflation,” Persson said, “but we’re getting closer to that ZIP code.”
Various news outlets reported on Saturday that energy equities, precious metals, and global commodities were all breaking market records. On the same day, Pentoshi, a prominent Twitter account, warned of an impending “greater depression.” The tweet has been retweeted 69 times and has nearly 1,000 likes as of this writing. Pentoshi tweeted to his 523,500 followers:
This year’s most interesting event. Will there be a collapse of global markets? Any market that trades above 0 is considered excessive. This will be dubbed “the larger depression,” and it will be ten times worse than the Great Depression.
‘Recession Concerns Are Showing Up More Prominently,’ according to the US Treasury Yield Curve.
“Recession concerns are showing up more strongly in the U.S. Treasury yield curve,” Reuters author Davide Barbuscia wrote the next day. The “closely studied difference between yields on two- and 10-year notes stood at its tightest since March 2020,” according to Barbuscia’s report.
Increasing oil and commodity prices are often correlated with a looming recession, according to a number of financial magazines. In addition, according to recent disclosures, Warren Buffett’s Berkshire Hathaway owns a $5 billion holding in Occidental Petroleum. Berkshire Hathaway has also increased its exposure to Chevron by a factor of two.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.