Virginia Tech expert: Recession indicators tilting the scales


George MorganA Virginia Tech finance expert is talking up the indicators of a recession that have been discussed widely in the media in recent days.

“There are numerous factors that are all contributing in a similar direction,” said George Morgan, a professor of finance in the Pamplin College of Business. “Not everything points in that direction, but you don’t see everything pointing in the same direction until it is too late.”

Last week’s inversion of the yield curve aggregates all the factors, Morgan said.

“Because the U.S. Treasury market is one of the deepest in the world with average volume exceeding $500 billion changing hands every day and because bonds have specific characteristics that differ from stocks, one can infer what the market is incorporating regarding the future path of interest rates.”

Morgan said many money managers who operate in that market are forecasting that interest rates will fall significantly in the near future, “a pattern that typically happens during a recession.”

“Whether rates fall in the U.S. because other countries are lowering their rates, other economies such as Germany and China are faltering, the dollar is rising, U.S. manufacturing seems to be in a slump, inflation has peaked, or the Fed is hinting at cuts, the curve is reflecting a market anticipation of a downward drift,” he said.



uva basketball team of destiny

Team of Destiny: Inside UVA Basketball's improbable run

Team of Destiny: Inside Virginia Basketball’s Run to the 2019 National Championship, by Jerry Ratcliffe and Chris Graham, is available for $25.

The book, with additional reporting by Zach Pereles, Scott Ratcliffe and Scott German, will take you from the aftermath of the stunning first-round loss to UMBC in 2018, and how coach Tony Bennett and his team used that loss as the source of strength, through to the ACC regular-season championship, the run to the Final Four, and the thrilling overtime win over Texas Tech to win the 2019 national title, the first in school history.

Subscribe

Augusta Free Press content is available for free, as it has been since 2002, save for a disastrous one-month experiment at putting some content behind a pay wall back in 2009. (We won’t ever try that again. Almost killed us!) That said, it’s free to read, but it still costs us money to produce. The site is updated several times a day, every day, 365 days a year, 366 days on the leap year. (Stuff still happens on Christmas Day, is what we’re saying there.) AFP does well in drawing advertisers, but who couldn’t use an additional source of revenue? From time to time, readers ask us how they can support us, and we usually say, keep reading. Now we’re saying, you can drop us a few bucks, if you’re so inclined.

 


augusta free press
augusta free press
augusta free press news