With signs of weakness spreading over into services, the economy has a 30 percent chance of falling into a recession, says market economist Peter Cardillo.
Rising oil prices could prevent stocks from turning south Wednesday. Joining us now for a look at the markets from the floor and NYSE. Peter card yellow he's chief market economist at first standard financial. Peter welcome. I SM services they foul. To 53 and a half in January missed expectations. On the concern over certain services sector. Is that Brooklyn trump war. Well you know that's one of the reasons why we saw a real dive in the market. And that points to a weakening economy. Unfortunately you know. Some of the other. Economic news has been weak and I think what was seen key areas the possibility. They've real slow down that might lead us to weigh. That might lead us to negative growth. Negative growth sorry talk about possibly that the economy mom might be thinking into recession. We've all had a earnings recession would about the yeah if there's no question that you know the economy is slow. And of course you know the gross domestic product numbers we got last week. For the fourth quarter is a good indication that this quarter it's probably going to be even. Slightly less than we were anticipating on that necessarily mean. Meaning. Zero growth but certainly I would. On that 1% is that he is likely scenario. And of course it's all about oil the weakness in oil prices you know it's been weighing on the global economy and I think that. It's safe to say that the correlation between. The equity markets and the other markets. Certainly is not gonna let out many times do. Until we see oil prices stabilizes. And it's just simple economics at this point you know. In normal times. Low oil prices would be very beneficial. Obviously it faces disposable income. And that means consumer spending strengthened but we haven't seen that we haven't seen that here in the states we haven't seen that in Europe. And certainly we're not seeing that in China you are sensing that the weakness that we've seen how long weakness in the manufacturing sector that is now spilling over into the services. That's right that's right factor at two sectors sectors. That clearly. In recession right now. That is of course the energy sector and of course the manufacturing effective so what what's holding up the economy. Basically. The service sector which means that the consumer. Spending but. If that continues to weaken and which. I suspect it probably will. You know the chances chances of recession. Continues to grow when he put the odds of a recession. Right now I would say there about maybe 30%. But if we continue to see weakness in the service sector and I think Woolsey. Consumers just pulled back. On spending because of the uncertainties that because. Of the job market although that. Currently we can. If we. Get massive layoffs. In the industrial. And energy senses. Lastly gold rally yet again today what's that telling. The reason why we have. Pop in oil prices today I think if you follow. One for men from yesterday's bill with no. Market and sector and the fact that we've store. Real dollar weakness then. It might be a coincidence but you know gently alluded to it strong dollar and its effect. On the economy. And and maybe I'm not sure about this but it may have been done convention which knotted at. Fairly themselves in the US currency and that in turn. Lifted oil prices and commodities in general. That's what we're in now. My pleasure my thanks to Peter cargo of first standard financial I'm Fred contact Alan this is.