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Oil, gold and Treasuries diverge on US recession risk: Livermore’s Neuhauser

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Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, United States, on December 7, 2023.

Brendan McDiarmid | reuters

According to hedge fund manager David Neuhauser, markets are confused about the prospects of a US recession and “someone has got it wrong”.

The CIO of Livermore Partners told CNBC on Monday that many investors are expecting a “Goldilocks” scenario in which the economy doesn’t grow too fast, or shrink too much.

“Of course, the possibility was that the Fed was going to cut rates because they see a soft landing approaching. And on the surface it looks like it is,” he told “Squawk Box Europe.”

Recent jobs data and inflation data have boosted expectations that a recession may be avoided in the US, non-farm payrolls in November exceeded expectations, and inflation data for October also came in better than expected, consumer Prices remained stable over the past month and rose 3.2%. year ago.

“But at the same time, beneath the surface, you’re seeing a lot of cracks,” Newhauser said.

He identified weakness in the US consumer and the global economy – particularly China – and the fact that inflation numbers remain persistently high in many countries.

“It seems like America is the best place to live, and I think that’s true today. Except that I think the way forward — do we want to see things fall off a cliff? Or do we Are we going to have, in a way, a slippery slope to the bottom and corporate earnings being protected from the storm?” He said.

“That’s the thing, I think, people don’t really have a good sense of today, but they’re believing it’s going to happen — that’s the story.”

According to Neuhauser, the oil and gas markets are “telling a completely different story” when it comes to the economic outlook.

“When you look at oil … and you look at the gold market, it’s telling you that a recession is ahead,” he said. “But when you read the tea leaves in terms of what analysts are saying, economists are saying about the US economy – that a soft landing is coming. In fact, that’s what the 10-year (Treasury yield) is telling you. “

brent crude futures Prices were trading at around $75.67 per barrel early Monday along with February expirations, down 20% from their high of around $97 per barrel in September.

spot prices of gold The price has risen from early October lows of around $1810 an ounce. The commodity was trading around $1,991 an ounce on Monday, down from the record high of above $2,100 an ounce last week.

Falling oil prices and rising gold prices both indicate growing recession fears. At the same time, rising expectations for a soft landing (following strong jobs data) saw 10-year Treasury yields jump on Friday. 10 year yield It was hovering around 4.254% early Monday.

“Someone did something wrong here, that’s what I’m trying to tell you,” Neuhauser said. “It’s still hard to describe who has it (wrong). So I’m really waiting and waiting to understand which path is the right one to take.”

(Tags to translate)breaking news: politics

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