With credit card delinquencies rising sharply at smaller banks, Societe Generale's uber-bearish strategist Albert Edwards has predicted that the U.S. economy is headed for recession.
"Markets are now sniffing out a rising stench," Edwards claimed in his latest research note, published Thursday.
Edwards said a flattening of the U.S. yield curve — where the difference between short-dated and longer-dated U.S. Treasury yields narrow — was revealing investor fears about the economic recovery, despite punchy data related to consumer and business optimism.
"The optimists have had their day. This data merely reflects the illusion of prosperity," Edwards argued.
Societe Generale's lead global strategy analyst holds a history of outlandish negative calls and in this latest note he has claimed the authority of the U.S. Federal Reserve is now at risk.