Recession risk remain on minimal level

FED Recession Index



The biggest question among traders since yesterday is "Is this a recession?". A large number of traders are wondering what has changed so much, to lead to this fall. The answer of economists, most of which monitoring the fundamental data coming from developed countries, is "Nothing". To a large extent, this is true.

"Recessions are preceded either by consumers or business, and in rare cases by both groups of economic agents." The recession occurs when one or both groups can not sustain their costs, "said Dubravko Lakos-Bujas, a strategist at JP Morgan.

As the future of the stock market is in the hands of the Fed, it is certain that members of the Monetary Committee will try to calm investors, claiming they do not see overheating of the economy. Looking at the Fed Recession Index makes it clear that traders have nothing to worry about. The value of the index is at times farther from that observed before the crises in 2008 and the Dot-com bubble in 2000. The other thing that is observed is that the index is currently rising sharply, unlike before the crisis in 2008.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

 Varchev Traders

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