Edward Harrison

1 week ago | bloomberg.com | Edward Harrison

Have you seen the Road Runner cartoon, where the coyote chases the speedy bird only to overshoot the mark and run off the cliff? At first, Wile E. Coyote levitates as if he’s still on firm ground, but once the illusion fades, he plummets toward rock bottom. That’s the risk with US financial markets as foreign investors withdraw their support. To be sure, a panic isn’t the likely outcome here.

3 weeks ago | bloomberg.com | Edward Harrison

Now that the trade war between the US and China has de-escalated, everyone on Wall Street seems to think the risk of recession is greatly diminished. This suggests that Treasury yields will rise because the Federal Reserve won’t need to save the day. My view is that the Fed was never going to save the day to begin with, so de-escalation actually opens the door for rate cuts in a weakening labor market. Unlike the majority on Wall Street, I see downside risk in equities, not bonds.

1 month ago | bloomberg.com | Edward Harrison

This article is for subscribers only. Equity markets have already sniffed it out: The pressure on Donald Trump to make trade deals is too great to think tariffs won’t come down from the lofty levels advertised on “Liberation Day.” The question is whether the deals come too little too late — and if so, whether the Federal Reserve will bail out the president. If you look at where stocks and bonds are trading, it’s clear many investors are betting that central bankers will ride to the rescue.

1 month ago | bloomberg.com | Edward Harrison

US President Donald Trump’s ‘America First’ economic revolution has quickly turned into ‘America Last’ as far as financial markets go. So many investors have been dumping US assets wholesale that we recently saw equities, bonds and the US dollar all decline in a self-feeding doom loop that hasn’t only hurt the value of American financial assets. If Trump persists, it threatens to cause an extended bear market and a financial crisis.

1 month ago | bloomberg.com | Edward Harrison

This article is for subscribers only. It seems the bond vigilantes have claimed another victim — Donald Trump. The recent correction in US asset prices encompassing equities, the dollar and, crucially, Treasury bonds has caused the president to cave on much of his tariff bluster. He’s also eased back on his tough talk against Federal Reserve Chair Jerome Powell. That’s a good thing for the US and global economy, but a lot of damage has been done. I, for one, still expect a recession.