Consumer lifts market | Recession signal fires again | Powell's golf game

WED, AUG 21, 2019

EVENING BRIEF

AS OF WED, AUG 21, 2019 • 04:55 ET

DJIA		26202.73
		+0.93%	+240.29

S&P 500		2924.43
		+0.82%	+23.92

NASDAQ		8020.21
		+0.90%	+71.65

Most Active

DOW
NAME	LAST	CHG	%CHG
AAPL	212.64	+2.28	+1.08%
CSCO	48.77	+0.84	+1.75%
PFE	34.87	+0.26	+0.75%

S&P 500
NAME	LAST	CHG	%CHG
GE	8.16	-0.22	-2.63%
BAC	26.93	+0.21	+0.79%
TGT	103.00	+17.47	+20.43%

NASDAQ
NAME	LAST	CHG	%CHG
AMD	31.70	+0.98	+3.19%
AAPL	212.64	+2.28	+1.08%
CSCO	48.77	+0.84	+1.75%

EDITOR'S NOTE

We can't have a recession because we're not ready for a recession.

"If we have a recession, we're going to have a hard time getting out of it," Blackstone executive and longtime market strategist Byron Wien told CNBC on Wednesday.

With the Federal Reserve's key interest rate pegged at 2% to 2.25%, the central bank doesn't

have the firepower it had when it almost single-handedly pulled the U.S. economy through the 2008 financial crisis.

And for its part, the U.S. government has nearly $23 trillion in debt. With this load, it may not be able to pull off the bailouts and stimulus packages that might be needed to fight a significant downturn in the economy.

"The one thing the world can't afford right now is for the U.S. not to continue its growth cycle," Bank of America's CEO Brian Moynihan said on CNBC's "Squawk Box" on Wednesday "It would be the exact wrong time for the U.S. to have a problem."

Unfortunately, recessions are never convenient.

Moynihan, for one, says he doesn't see one coming. He pointed out that consumers are strong enough to keep the U.S. economy humming amid the ongoing trade war and a slowing global economy.

But Morgan Stanley, in a report it released this week, said the risk of a global recession is high and warned that the U.S. might not be immune.

"Rising tariffs will likely exacerbate the existing downward pressures on corporate margins and profitability," said Chetan Ahya, the bank's chief economist. "Hence, corporates could soon move to the next stage, cutting back on hiring."

President Trump seems to be on both sides of the recession discourse, in one breath arguing the economy is strong and in another talking about moves the White House could make to boost the economy, such as a payroll tax cut.

On Wednesday, Trump tweeted his admiration of Germany for its sale of bonds that promise negative yields, not mentioning that the Germans failed to even sell half of the bonds they auctioned. Or that many observers see negative bond rates as a warning signal for the global economy.

Trump also continued baiting Fed Chairman Jerome Powell to lower interest rates, saying "He's like a golfer who can't putt."

Fed minutes released Wednesday revealed a divided central bank, but one that did not settle on its last rate cut as part of an ongoing easing cycle.

As for why the economy may be facing a recession the Fed judged Trump's tariffs and trade war, combined with slowing economic conditions, as possibly having "significant negative effects on the U.S. economy."

Stocks bounced slightly higher on Wednesday as strategists digested the pros and cons of the economic news.

Powell may not be able to putt, but so far he hasn't put the economy in the hole.

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