Commodity guru warns ‘shades of 2008’ as recession crisis looms

Amid concerns about the looming global financial crisis, senior commodity strategist at Bloomberg Mike McGlone has repeated his warnings and pointed out the similarities between the current economic situation and that prior to the Great Recession in 2008.

Specifically, McGlone said that the present economic situation showed “shades of 2008 but with more restraint and less inflation” than 15 years ago, according to the Bloomberg team’s chart and analysis he shared in an X post published on September 25.

2008 vs. 2023

As the renowned commodities expert pointed out, “it was at the onset of 2008 that the Bloomberg Economics model for US recession in six months advanced to 100%, in a similar pattern as now and with market implications.”

However, he also noted “the wide disparity in the year-over-year measure of the Consumer Price Index minus the Fed funds rate,” adding that “what was positive at the start of 2008 and peaked at 3.6% in July that year is now at minus 2.3%, showing clear monetary restraint vs. support at the beginning of the global financial crisis.”

Finally, McGlone also highlighted:

“Indicating the distortions of the pandemic, after advancing from the 2020 low to the 2022 peak at the fastest pace in history (data to 1948), the Produce Price Index dropped at a record pace to this year’s low of minus 3.1% in July. The PPI high in 2008 was 9.9%, and the index has about a 2x beta to CPI.”

In other words, what is evident from the chart patterns that the commodities expert has shared is that Bloomberg’s economic probability of a US recession within the next six months is, indeed, at 100%, or at the same levels as in 2008, and close to the levels during the onset of the Covid-19 pandemic.

Earlier in June, McGlone had joined the crowd of multiple finance experts and renowned investors predicting an unfolding recession, stating that the country was “at the beginning of one of the greatest economic resets of our lifetimes,” as Finbold reported on June 21, and his bleak predictions seem to be coming true.

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