Setting the Stage for the Coming Recession

Brian Smedley, head of the Macroeconomic and Investment Research Group, explains what the data tell us about the timing and severity of the coming recession.

October 18, 2019

 

 

Key Takeaways:

  • Fed rate cuts could start to have more impact, but so far data are consistent with our recession forecast, which also suggests the next recession will be of average severity.
  • Limited monetary and fiscal policy space may prolong the recession; the Fed doesn’t have much room to maneuver on rates, and the effect of 2018’s one-time tax cuts has worn off.
  • When the business cycle turns, the Fed is likely to pull out all the stops by cutting rates to the zero bound and recommencing asset purchases.
  • Historical evidence of “successful” Fed cuts is mixed, however, and it is difficult to correctly time policy moves.
  • At this point in the cycle, we believe there is more risk to the downside than upside and caution investors to focus on capital preservation.


Read Forecasting the Next Recession: Will Rate Cuts Be Enough?

 

Important Notices and Disclosures

The views and strategies described herein may not be suitable for all investors. Past performance does not guarantee future returns. The value of any investment may rise or fall over time. Investing involves risk, including the loss of principal. The content of this video is for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. The material should not be considered research nor is it intended to provide a sufficient basis on which to make an investment decision. Any opinions contained herein are not necessarily those of Guggenheim Partners, LLC or its subsidiaries and are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and nonproprietary research and other sources. This material has been provided by Guggenheim Investments which represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, Transparent Value Advisors, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management.


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