The New York Fed’s Recession Probability Model is showing a 38% chance of a “Powell recession” in 2023. However, DataTrek points out that the indicator is really sounding the alarm for a near-100% chance of a recession, given how reliable it is. DataTrek co-founder Nicholas Colas says that over the past 60 years, nine out of 11 times, a probability reading over 30% was able to predict a downturn. “It is clearly saying high short-term interest rates are going to cause a recession in the next 12 months. Moreover, these odds are very likely to increase.”

Business Insider/Jennifer Sor
A key indicator of a coming economic downturn is pricing in nearly 100% chance of a ‘Powell recession’ in 2023

The New York Fed’s Recession Probability model is indicating that a “Powell recession” in 2023 is almost a certainty, according to the research firm DataTrek.

The model measures the difference between yields on the 3-month and 10-year Treasury – similar to the 2-10 Treasury curve, which is a notorious bellwether of a recession when the curve is inverted.

Analysts have called the 3-10 Treasury curve a “more accurate” predictor, and Federal Reserve Chairman Jerome Powell has previously called it his preferred recession warning.

It’s now signaling a 38% probability of a recession, according to the NY Fed, but the indicator is really sounding alarms for a near-100% chance of a recession, given how reliable it is, DataTrek co-founder Nicholas Colas said in a note on Wednesday.

You can read the full story, here.

Seeking Alpha/Jason Capul
Cathie Wood: ‘Fed is making a serious mistake’ as she points to the inverted yield curve

High-profile investor Cathie Wood believes that Jerome Powell and the Federal Reserve are making a miscalculation in its aggressive interest rate policy, pointing to the inverted yield curve as evidence of a mistake.

The CEO and CIO of ARK Invest tweeted: “The bond market seems to be signaling that the Fed is making a serious mistake. At -80 basis points (as measured by the 10 year vs 2 year Treasury yields), the yield curve is more inverted now than at any time since the early ‘80s when double-digit inflation was entrenched.”

On Tuesday, the spread between the U.S. 10 Year Treasury yield (US10Y) and the U.S. 2 Year Treasury yield (US2Y) touched -82.5 basis points, a level not seen in four decades. On Wednesday morning, the inversion sits at -80 basis points with the 2y lower by 4 basis points to 4.32% and the 10Y lower by 1 basis points to 3.50%.

You can read the full story, here.

CNBC/Rebecca Picciotto
Here’s what America’s top CEOs are saying about a possible recession in 2023

As 2023 approaches and the prospect of a recession looms, corporate America is preparing for a slowdown in consumer spending.

CEOs of major companies including Walmart and General Motors joined CNBC’s “Squawk Box” on Tuesday morning to talk inflation, interest rates, geopolitics and what it all means for their outlooks in the new year.

Here’s what they said:

Read the full story, here.

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