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Schwab's trading specialists answer your trading questions and provide the latest commentary and insights.

Schwab’s trading specialists

answer your trading questions and provide the latest commentary and insights.

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Schwab’s trading specialists

answer your trading questions and provide the latest commentary and insights.

Randy Frederick
Managing Director of Trading and Derivatives at Schwab
Market Perspectives

Stock Market Report

December 7, 2018

JEFF KLEINTOP: Some investors are asking, ‘Has a global recession already begun?’ We’ve seen a big plunge in oil prices in the last couple of months, and two major countries saw their economies shrink in the third quarter, and that may be causing the markets to price in the start of a global recession. Now, while we may be in the midst of a global economic slowdown and there’s a heightened risk of a recession in the next 6 to 18 months, we think in the near-term the global economy may actually bounce back, and that could provide some relief for the stock market. So let me talk about some of these ominous signs that I talked about there.

The plunge in oil prices, for example, well, oil was down nearly 30% from its peak earlier this year. You know, when commodity prices fall, it’s often seen as a sign of a weakness in production and a slowing economy. But what’s interesting is those declines aren’t echoed in other economically-sensitive commodities, like copper, or many others. And that may mean that the drop in oil prices may mean it’s just tied to oil, and not really a sign of a global economic slowdown.

Now, what about those other global weak spots that I mentioned? It’s true, Japan and Germany did see negative GDP growth in the third quarter, but those temporary drags on their growth—auto production in Germany and a string of natural disasters in Japan—have ended, and that’s led growth to rebound here in the fourth quarter.

So it may be that some of that recession scare may begin to fade here in the near-term as economic growth rebounds a little bit, and that may offer some relief to stocks as we close out the year.

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Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Please note that this content was created as of the specific date indicated and reflects the author’s views as of that date. It will be kept solely for historical purposes, and the author’s opinions may change, without notice, in reaction to shifting economic, market, business, and other conditions.

Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request. 

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Investing involves risk including loss of principal. 

©2018 Charles Schwab & Co., Inc. (“Schwab”). All rights reserved. Member SIPC (1218-87WB).
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This material was prepared by an independent third party that is not affiliated with Schwab. Schwab does not edit or endorse any of this material and is not responsible for its content.

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