US could go into recession in 2015: Expert

[C130]

Plunging oil prices and a strengthening dollar could force the United States into a recession by the end of 2015, according to Raoul Pal of The Global Macro Investor newsletter.

The greenback's strength has pushed oil prices lower and sent fear across the markets. Pal said he now feels that the U.S. is heading toward a recession in the near future.

"There's a probability that the U.S. goes into recession this year alone," Pal said in an interview on CNBC's "Fast Money" on Tuesday.

Pal based his prediction on a number of factors, centered on his view that current trends in the dollar and oil are likely to not only continue, but accelerate.

Regarding the strength in the dollar, Pal said the dollar index could climb another 25 percent before the bull run is over. "If we look back historically at how these big dollar bull markets go, I think it's going to go, using the (dollar index), at least to 125, maybe even further."

Historically the price of oil moves inversely to the strength of the U.S. dollar.

Pal said that the historical relationship, along with weakness in Europe and China, has led oil companies to put crude into storage in hopes of waiting out the downturn in prices. Crude stores are filling "at an incredible rate" and could be full by summer, he said. That could lead to even more dire consequences.

"Any oil that is then brought out of the ground will either have to be sold into the normal market, which will be at much cheaper prices, or they're going to have to shut down production," he said. "I think that shutdown of production is something that people haven't really thought through yet."

Pal said the impact of a large-scale production shutdown could have severe ripple effects across the economy.

"So many of these companies are going to have to shut down production, and the economic damage from that, both in terms of loss of wealth and loss of production, is significant."


who knew oil at $20 dollars and a strong dollar would be a bad thing for the U.S economy

I was under the impression if gas below $2 dollars a gallon consumers have more cash to spend on goods and services

 

[Víðarr]

Plunging oil prices and a strengthening dollar could force the United States into a recession by the end of 2015, according to Raoul Pal of The Global Macro Investor newsletter.

The greenback's strength has pushed oil prices lower and sent fear across the markets. Pal said he now feels that the U.S. is heading toward a recession in the near future.

"There's a probability that the U.S. goes into recession this year alone," Pal said in an interview on CNBC's "Fast Money" on Tuesday.

Pal based his prediction on a number of factors, centered on his view that current trends in the dollar and oil are likely to not only continue, but accelerate.

Regarding the strength in the dollar, Pal said the dollar index could climb another 25 percent before the bull run is over. "If we look back historically at how these big dollar bull markets go, I think it's going to go, using the (dollar index), at least to 125, maybe even further."

Historically the price of oil moves inversely to the strength of the U.S. dollar.

Pal said that the historical relationship, along with weakness in Europe and China, has led oil companies to put crude into storage in hopes of waiting out the downturn in prices. Crude stores are filling "at an incredible rate" and could be full by summer, he said. That could lead to even more dire consequences.

"Any oil that is then brought out of the ground will either have to be sold into the normal market, which will be at much cheaper prices, or they're going to have to shut down production," he said. "I think that shutdown of production is something that people haven't really thought through yet."

Pal said the impact of a large-scale production shutdown could have severe ripple effects across the economy.

"So many of these companies are going to have to shut down production, and the economic damage from that, both in terms of loss of wealth and loss of production, is significant."


who knew oil at $20 dollars and a strong dollar would be a bad thing for the U.S economy

I was under the impression if gas below $2 dollars a gallon consumers have more cash to spend on goods and services

Interesting, but that runs counter to all indicators, projections and stats that have been reported thus far this year. First quarter growth is expected to be small (around 1%), again the weather takes its toll, but with a firm labor market, stronger housing market, increaed manufacturing, rising wages and R&D spending, consumer confidence at a near all-time high, and projections from everyone except Mr. Pal offering strong US growth, I don't put too much stock into the ramblings of a single man. The first quarter is the worst for the US, a dip in growth is widely expected to be temporary and a rebound will be seen as soon as Q2. Quarters 3 and 4 should see growth around 4-5%.

There's a great deal of variance in the impact a high USD would have on US businesses. Anyone remember how low oil prices were supposed to curtail US output? Well output hasn't stopped. The point? Too much variance! Too many unknown or unaccounted factors. Based on available data thus far, and continuing good news, a recession seems far from reality right now, even with declining oil prices.

A firm dollar will take a toll in the short-term, but not as badly as this article would suggest.

 

[Kompromat]

Fed has QE to get you more in debt.

 

[C130]

Interesting, but that runs counter to all indicators, projections and stats that have been reported thus far this year. First quarter growth is expected to be small (around 1%), again the weather takes its toll, but with a firm labor market, stronger housing market, increaed manufacturing, rising wages and R&D spending, consumer confidence at a near all-time high, and projections from everyone except Mr. Pal offering strong US growth, I don't put too much stock into the ramblings of a single man. The first quarter is the worst for the US, a dip in growth is widely expected to be temporary and a rebound will be seen as soon as Q2. Quarters 3 and 4 should see growth around 4-5%.

There's a great deal of variance in the impact a high USD would have on US businesses. Anyone remember how low oil prices were supposed to curtail US output? Well output hasn't stopped. The point? Too much variance! Based on available data thus far, and continuing good news, a recession seems far from reality right now, even with declining oil prices.

A firm dollar will take a toll in the short-term, but not as badly as this article would suggest.

I find it hard to believe as well.

Fed has QE to get you more in debt.

we sure do love us some debt

 

[SipahSalar]

The ugly banking institutions have been able to reverse all changes brought in the previous financial melt down, so of course the risk is back as well.

 

[Echo_419]

Plunging oil prices and a strengthening dollar could force the United States into a recession by the end of 2015, according to Raoul Pal of The Global Macro Investor newsletter.

The greenback's strength has pushed oil prices lower and sent fear across the markets. Pal said he now feels that the U.S. is heading toward a recession in the near future.

"There's a probability that the U.S. goes into recession this year alone," Pal said in an interview on CNBC's "Fast Money" on Tuesday.

Pal based his prediction on a number of factors, centered on his view that current trends in the dollar and oil are likely to not only continue, but accelerate.

Regarding the strength in the dollar, Pal said the dollar index could climb another 25 percent before the bull run is over. "If we look back historically at how these big dollar bull markets go, I think it's going to go, using the (dollar index), at least to 125, maybe even further."

Historically the price of oil moves inversely to the strength of the U.S. dollar.

Pal said that the historical relationship, along with weakness in Europe and China, has led oil companies to put crude into storage in hopes of waiting out the downturn in prices. Crude stores are filling "at an incredible rate" and could be full by summer, he said. That could lead to even more dire consequences.

"Any oil that is then brought out of the ground will either have to be sold into the normal market, which will be at much cheaper prices, or they're going to have to shut down production," he said. "I think that shutdown of production is something that people haven't really thought through yet."

Pal said the impact of a large-scale production shutdown could have severe ripple effects across the economy.

"So many of these companies are going to have to shut down production, and the economic damage from that, both in terms of loss of wealth and loss of production, is significant."


who knew oil at $20 dollars and a strong dollar would be a bad thing for the U.S economy

I was under the impression if gas below $2 dollars a gallon consumers have more cash to spend on goods and services

Highly unlikely