The outlook for recession is still pretty high

Outlook:

The outlook for recession is still pretty high, with estimates ranging from 25% to 95% among various economists, who are hindered by all the uncertainty created by the erratic moves misnamed "policies" coming out of Washington.

But for reasons that we fail to understand, the 2-10 year yield curve recovery is persisting. This is better news than it seems at first, not only because it pushes off the prospect of negative rates (see above) but also because it calms the Mismanager-in-Chief. Trump has no idea what a yield curve is, of course, but Kudlow can keep up the mostly false reassurance that a recession is not on its way in the year Trump seeks re-election. If Trump thinks a recession is a dead cert, heaven only knows what nonsense he would rain down on us.

We get a ton of data, starting with retail sales (probably a small loss), inventories, TICS and the Beige Book. We may think business inventories are a yawn but the Atlanta Fed examines that data very closely as a harbinger of current sentiment and harbinger of future plans. We will get a new Atlanta Fed GDP forecast later today. It was 1.7% as of Oct 9th.

We see choppiness and volatility and whipsaws pretty much everywhere. The most stable currency is the Swiss franc and it's not rising as a safe haven is supposed to do. We think risk aversion should be on the rise but evidently it faces nice headwinds from the un-inversion of the yield curve and blind faith. We can't read some charts—like the CAD. If we can't read them to come up with a 12-hour forecast, it means conditions are swirly and whirly. Get out? Unless you have deep pockets and nimble fingers, yes.

Politics: The debate last evening of the 12 Dem candidate was awfully hard to watch. Biden fumbled. Warren sounds whiny and not credible on tax issue of paying for Medicare for all. Bernie was Bernie. The only surprise was a far more likable Klobuchar. We still think Mayor Pete has the chops. We await the number of viewers. The June debate has 18.1 million. August had 10.7 million. With Trump inching closer to impeachment with every passing day and another insider testifying, you'd think public interest would be on the rise.

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