Bloomberg Intelligence’s senior commodity strategist, Mike McGlone, has warned that the U.S. economy is “heading towards a severe deflationary recession,” emphasizing that the Federal Reserve is still tightening. “Typically, when you have commodities collapsing at this velocity in the past, the Fed has already been easing, and they’re still vigilant against that,” he cautioned.
Strategist Says We’re ‘Heading Towards a Severe Deflationary Recession’
Mike McGlone, a senior commodity strategist for Bloomberg Intelligence (BI), the research arm of Bloomberg, warned in an interview with Yahoo Finance Live last week that the U.S. economy is heading towards a severe deflationary recession. He described:
I see what we’re doing is heading towards a severe deflationary recession, as indicated by commodities, by the Fed still tightening.
“Now we have a pretty serious credit crisis going on with just pulling back of deposits from the major banks. That means it’s just starting to get started. And the key thing … is we were just looking at annualized industrial demand for natural gas in this country. It’s the lowest in six years now. And that’s an annualized basis so it’s not seasonal,” the strategist explained.
McGlone also cautioned that the Federal Reserve keeps talking about raising interest rates higher despite recent economic data. “They’re starting to get that trend of misses, misses on PPI, misses on retail sales. And it’s just, to me, part of what happens in a recession. I think that’s the stage we’re at right now,” he detailed. “The markets are getting it. T-note yields, 10-year notes are getting it, but the Fed is still being vigilant against inflation.”
The commodity strategist continued: “You look at PPI, I see PPI on a year-over-year basis heading towards negative by the time we get to July. And that’s just what happens normally when commodities collapse.” He stressed:
The Fed is still tightening. Typically, when you have commodities collapsing at this velocity in the past, the Fed has already been easing, and they’re still vigilant against that.
Tags in this story
Bloomberg Intelligence, commodity strategist, deflationary recession, Fed, Fed tightening, Federal Reserve, Federal Reserve easing, Mike McGlone, QE, QT, Recession, severe deflationary recession, us economy recession
What do you think about Mike McGlone’s “severe deflationary recession” warning? Let us know in the comments section below.
Kevin Helms
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
