FAST FIVE: The Risk Of A Liquidity-Driven Event Is Rising
The Risk Of A Liquidity-Driven Event Is Rising Authored by Lance Roberts via RealInvestmentAdvice.com, Over the last few days, the internet has been abuzz with commentary about the spike in interest rates.
However, that rate of growth is on the decline which we can see clearly in the RIA Economic Output Composite Index (EOCI). All of these surveys (both soft and hard data) are blended into one composite index which, when compared to GDP and LEI, has provided strong indications of turning points in economic activity. (See construction here)” “When you compare this data with last week's employment data report, it is clear that recession” risks are rising.
One of the best leading indicators of a recession are “labor costs,” which as discussed in the report on “Cost & Consequences Of $15/hr Wages” is the highest cost to any business.
This is a strong impediment for economic growth as funding costs are distorted and the price of exports are elevated.
As Doug Kass noted on Monday, roughly 80% of loan issuers have no public securities (which serves to limit financial disclosure) and 62% of junk issuers have only 144A bonds.