IN THIS ISSUE:

1. Mainstream Media Wants Recession to Get Rid of Trump
2. July Retail Sales – Consumers Tune Out Global Slowdown
3. Temporary Treasury Yield Curve Inversion Rattles Markets
4. Dirty Little Secret: Stocks Tend to Rise After Yield Inversions
5. US Budget Deficit to Top $1 Trillion in 2019, Not in 2021

Mainstream Media Wants a Recession to Get Rid of Trump

It is becoming increasingly clear that the Left and the mainstream media believe the only way to get President Trump out of office next year is a US recession. They are increasingly stoking fears of a recession next year, and that led to some wild markets last week. The Dow Jones plunged 800 points last Wednesday amid such fears, its worst day of the year.

Adding to those fears, the Treasury yield curve temporarily inverted fractionally – which many fear is a precursor of recession. The yield on the 2-year Treasury briefly rose a few basis points above the yield on the 10-year Treasury on Wednesday, for the first time since 2007. The yield curve, while still very flat, normalized on Thursday.

Meanwhile, the 30-year Treasury bond yield plunged to a new record low, briefly falling below 2%. The mainstream and financial media interpreted this to be another sign that the US economy is heading south. Some even predicted that deflation is on its way soon. Fan those flames!

The problem for the recession crowd is that US consumers are not buying it. US retail sales were much stronger than expected in July, more than doubling the pre-report consensus. Despite the global slowdown, consumer spending was bolstered by the continued strong US job market and rising wages.

July Retail Sales – Consumers Tune Out Global Slowdown

American shoppers gave the US economy a boost in July, countering manufacturing-sector weakness, yet investors continued to have jitters due to fears of an inverted yield curve and the media’s unending warnings about a recession just ahead.

Retail sales, a measure of purchases at stores, restaurants and online, climbed a seasonally adjusted 0.7% in July from a month earlier when it was up 0.3%, and more than double the pre-report consensus of just 0.3%, the Commerce Department reported Thursday.

The robust sales report – the strongest reading since March – is a positive signal for the US economy, amid warning signs of a global slowdown. Consumer spending accounts for apprx. 70% of US economic output. Spending gains will feed into the broader pace of economic growth for the quarter, which could offset weakness from manufacturing and business investment.