[ad_1]
The recent interest rate cut by the Federal Reserve has sparked concerns of an imminent U.S. recession, according to tail-risk hedge fund Universa. Founder Mark Spitznagel believes that the U.S. economy, burdened by high levels of debt and historical Interest rates, is on the brink of a significant downturn. Universa, specializing in risk mitigation against unpredictable market events, sees the rate cut as a precursor to a potential economic collapse.
The inversion of a key bond market indicator, the U.S. Treasury yield curve, suggests a looming recession, as short-term yields have been dropping faster than longer-term ones. Spitznagel points out that in previous recessions, this curve has turned positive before the economy started contracting, indicating a possible downturn. He warns that the next credit crunch could mirror the severity of the “Great Crash” of 1929, leading to a global recession.
Spitznagel anticipates that the Fed may need to aggressively cut rates and resort to quantitative easing (QE) to stabilize the economy in the face of a potential recession. He predicts that QE, along with near-zero Interest rates, could make a return as the Central bank seeks to support the economy in uncertain times.
[ad_2]
SOURCE
Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
