The August sell-off in stocks has investors rushing to the relative safety of bonds, sending the yield of the benchmark 10-year Treasury note to its lowest in nearly three years.
"The bond market is screaming that the economy is slowing; that the trade war is going to escalate," said Jim Bianco, president and macro strategist at Bianco Research.
Bianco told Cheddar on Wednesday, as the Dow Industrials traded lower by nearly 300 points, that treasury yields are telling economists something that the stock market is not. The combination of trade concerns, a cooling global economy, and the Fed's seeming unwillingness to keep cutting rates is flashing warning lights for the U.S. economy.
For those who would point to relatively strong corporate earnings, a 50-year low in unemployment, stable inflation, and high consumer confidence, Bianco responded that those are all "backward-looking" indicators that "discount where we're going." The bond market, however, show "where we're going."
The Fed Funds rate ー which currently is close to 2 percent after last month's rate cut ー may seem low historically, but Bianco said that it's all relative. "It's actually high because it's higher than every other interest rate in the world." In his argument, more rate cuts are in order sooner rather than later because while the Fed can be too late to act, it can't be too early. If further rate cuts now don't help the economy, rate cuts later won't either, he said.
"It's either going to work now or it's not going to work at all."
The market, for its part, is pricing in five rate cuts between last month and next year, which Bianco said is not even remotely the consensus of economists. It's rare ー and worrisome ー that the market is pricing in an extreme like that.
Meanwhile, bond yields continued to move lower in the UK and Germany ー a sign that the flight to safety for fixed-income traders is not isolated to the U.S. and that a trade war with China that continues to show no end in sight is increasingly a global sign of worry about what's to come.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
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