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While a major stock index hit a new record on Wednesday, a Wall Street veteran warned that the risks of an economic recession were steadily increasing.
Moments after the S & P 500 broke the 3,000-point mark, Art Cashin, chief executive of UBS Financial Services, spoke to CNBC's "Squawk on the Street" about its outlook for the US economy. Cashin said his hat, with "S & P 3000" on the front, was ironic, warning that investors should not be too excited by the milestone of the day.
Cashin referred to the New York Fed's recession indicator, based on the spread between 10-year and 3-month US Treasury yields.
"For the first time in a long time, [it] Mr. Cashin has exceeded the 30% chance of a recession in 2020, said Mr. Cashin.
Because of this gap, Cashin believes that Fed Chairman Jerome Powell is making the decision to maintain the longest period of expansion in modern American history.
"I would say that Powell is not just under the influence of the market," said Cashin, but that the Fed is even "scared". He said Powell "had to react pretty much" and that "the Fed had to keep the wheel moving".
But Cashin's mistrust is not based on the feeling of an imminent slowdown, but rather on the signals he thinks the Fed will react to.
"I'm not necessarily talking about an immediate recession – what I'm saying is that the warning signs are moving, that Powell needs to move and that's exactly what's going on." he does, "said Cashin.
He added that he "will soon have to have a hat higher," saying that "the Fed is handcuffed about it" and "that they do not want to leave". The stock market "is comfortable" because he feels "that the Fed and Mr. Powell are under his control."
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