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(This story is part of the Weekend Brief edition of the Evening Brief newsletter. To sign up for CNBC’s Evening Brief, click here.)

The idea that we are late in the economic and financial-market cycle is one that even most Wall Street bulls won’t dispute.

After all, when the economic expansion surpasses a decade to become the longest ever and the S&P 500 has delivered a compounded return of nearly 18% a year since March 2009, how can the cycle not be considered pretty mature?

Yet it’s not quite that simple. Huge parts of the economy have run out of sync, at separate speeds. Some indicators have a decidedly “good as it gets” look, others retain a mid-cycle profile — and a few even resemble early parts of a recovery than the end. Friday’s unexpectedly strong November job gain above 200,000 reflects this debate, suggesting we are not at “full employment” even this deep into an expansion.

And the market itself has stalled and retrenched several times along the way, keeping risk appetites tethered and purging or preventing excesses.

In the “late-cycle” category we find several broad, trending data readings: Unemployment rate and jobless claims at a 50-year low; consumer confidence hit a cycle peak and has flattened out; and the broad index of leading economic indicators has slipped from very high levels. Auto sales peaked a few years ago. Corporate debt levels are near extremes, profit margins have retreated from historic highs and equity valuations are certainly full and in line with the latter phases of prior bull markets.

But corporate-credit conditions are sturdy, and households have simply not loaded up on debt this cycle, in a long period of enforced and then voluntary sobriety after the massive credit boom and bust that culminated in 2008. This leaves consumers in good shape. And the housing market, a drag on growth for years after the crash, has now perked up and is feeding off supply-demand dynamics that are more typical of an early-cycle environment.

What about the yield curve?

The summertime inversion of the Treasury yield curve — in which longer-term bond yields slip below short-term rates after the Federal Reserve has been tightening policy for a while — crystallized the debate on the cycle’s effective age.

Such an inversion, in the past, has started the countdown to a recession — but sometimes with a lag as long as two years. This indicator has been translated into a recession-probability gauge one year ahead by the New York Fed.

Source: New York Fed

It has turned lower since late summer as the yield curve has returned to its “normal” shape, but only in the 1960s has it ever climbed above 30% and fallen back to tame levels well ahead of any recession.

Have there even been enough cycles for this pattern to qualify as a statistically reliable “rule?” Do the extremely low absolute level of rates now (similar to the ’60s) change the interpretation? Was the inversion too shallow and short-lived to serve as a proper signal?

Whatever the answers, Jason Hunter, technical strategist at JP Morgan, notes that stocks have tended to have some of their strongest runs after an inversion, late in a cycle. “The longer-term bull cycles persisted for nearly two years after the initial [Treasury] curve inversion during the past three business cycles, with the majority of the late-cycle rally acceleration phases unfolding within the year after curve inversion.” The S&P on average has gained more than 20% over less than two years in the past four episodes before peaking.

One way to view the summer tumult is as the third severe “growth scare” of this expansion, following those of 2011-12 and 2015-16. Both brought with them nasty 15-20% equity downturns, new lows in Treasury yields and forced central banks to become more accommodative.

The Fed has referred to its shift from rate-hiking last year to three cuts this year as a “mid-cycle adjustment,” which would leave it on hold for now and summons happy memories of prior such Fed-enabled “soft landings.”

‘Still upside’ for stocks

Jurrien Timmer, head of global macro at Fidelity, has been tracking the current market performance against previous mid-cycle “mini-bear markets” of the ’90s and 2011.

Source: Fidelity

Citing the recent upturn in global industrial surveys and central-bank pivots toward easier policy, Timmer says, “I’m not prepared to call it early cycle, but perhaps it’s a mini-reflation wave within an ongoing late cycle. Maybe the markets are whistling past the graveyard, but my sense is that this is the playbook right now.”

Citi’s Tobias Levkovich, says, “Our biggest concerns for the S&P 500 are more [second-half 2020] related, tied to the possibility of a business slowdown caused by management teams hunkering down prior to the elections, tighter [commercial] lending standards in October with a traditional nine-month lag, our margin lead indicator and the impact of the yield curve’s shape on volatility with a two-year lag… But in the interim there is still upside for equities even if such gains become more limited.”

Ned Davis Research, in its 2020 outlook, boils down four separate cycles — tied to the economy and earnings; Fed policy; the election-year cadence; and NDR’s own model of equity-market conditions and trend — to arrive at a year-ahead S&P target of 3225, up a few percent from here.

The fourth-quarter collapse in the S&P 500 last year amounted to a comprehensive flush for the market, pummeling the majority of stocks far worse than the indexes, resetting valuations to a five-year low and generating the highest investor-pessimism levels of this bull market. The reversal higher one year ago set off a rare “breadth thrust” signal of the sort more typically seen at the start of major market advances.

Now, the S&P is 34% higher with earnings just about flat and the trailing price/earnings multiple is near a cycle high above 20 and investor sentiment is far more optimistic. So perhaps the market is now priced for a glass-almost-full scenario rather than the end of a cycle. But if the market isn’t detecting signs of a recession, it tends to find a way to stay supported or work its way higher — even if fitfully, and shadowed by constant end-of-cycle warnings.

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34 US troops had brain injuries from Iran’s strike, Pentagon says

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A picture taken on January 13, 2020 during a press tour organised by the US-led coalition fighting the remnants of the Islamic State group, shows a view of the damage at Ain al-Asad military airbase housing US and other foreign troops in the western Iraqi province of Anbar.

Ayman Henna | AFP | Getty Images

The Pentagon said Friday that 34 U.S. troops were diagnosed with traumatic brain injuries suffered in this month’s Iranian missile strike on an Iraqi air base, and that half of the troops have returned to their military duties.

Seventeen of the 34 are still under medical observation, according to Jonathan Hoffman, the chief Pentagon spokesman.

President Donald Trump had initially said he was told that no troops had been injured in the Jan. 8 strike. The military said symptoms were not immediately reported after the strike and in some cases became known days later.

After the first reports that some soldiers had been hurt, Trump referred to them as “headaches” and said the cases were not as serious as injuries involving the loss of limbs.

Hoffman’s disclosure that 34 had been diagnosed with traumatic brain injury, or TBI, was the first update on the number injured in Iran’s missile attack on Ain al-Asad air base in western Iraq since the Pentagon said on Jan. 17 that 11 service members had been flown out of Iraq with concussion-like symptoms.

Hoffman said that of the 34 with TBI, 18 were evacuated from Iraq to U.S. medical facilities in Germany and Kuwait, and 16 stayed in Iraq. Seventeen of the 18 evacuees were sent to Germany, and nine remain there; the other eight have been transported to the United States for continued observation or treatment.

The one American sent to Kuwait has since returned to duty. All 16 of those who were diagnosed with TBI and remained in Iraq have since returned to duty, Hoffman said.

No one was killed in the attack on Ain al-Asad. The strike was launched in retaliation for a U.S. drone missile strike that killed Qassem Soleimani, the most powerful military general in Iran, on Jan. 3 at Baghdad International Airport.

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CDC confirms second US case of coronavirus. Chicago resident diagnosed

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U.S. health officials said Friday they diagnosed a second patient with the China coronavirus — a Chicago woman who returned from Wuhan with the infection, and they are monitoring dozens of other potential cases here.

There are 63 cases being monitored in the U.S. that stretch across 22 states, including the first patient in Washington state and the new case in Illinois, said Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases.

Officials said the new patient, a woman in her 60s, is doing well and is in stable condition. She remains isolated in a hospital as a precaution, U.S. health officials said on a conference call with reporters. The Illinois patient traveled to China in late December and began experiencing symptoms when she returned to the U.S. last week, officials said. She did not have symptoms while flying, they said.

“She was not symptomatic when flying. And based on what we know now about this virus, our concern for transmission before symptoms develop is low, so that is reassuring,” Dr. Allison Arwady, Chicago’s public health commissioner, said on the call.

Upon returning to the U.S., the patient had very limited movement from outside her home and did not use public transportation or attend any large gatherings, they said. The patient began to feel unwell a few days after completing her trip and alerted her doctor.

“CDC believes the immediate risk to the U.S. public is low at this time, but the situation continues to evolve rapidly,” Messonnier said, adding that there is likely to be more cases in coming days. “We have our best people working on this problem.”

The flu-like coronavirus, first identified on Dec. 31, has killed at least 26 people in China and infected more than 900 worldwide.

On Tuesday, the U.S. Centers for Disease Control and Prevention confirmed the country’s first case — a Washington state man who has been quarantined in a hospital outside of Seattle after flying back from Wuhan, where the outbreak was first reported. The CDC said the man reached out to local health authorities last week once he started experiencing pneumonia-like symptoms.

U.S. health officials warned on Friday that the flu or other respiratory illnesses could complicate identifying more cases. They recommend that people call a health-care provider before seeking treatment so the appropriate measures can be put in place. The CDC is trying to speed up testing and to get the tests in the hands of state health officials. It currently takes the CDC about four to six hours to make a diagnosis once a sample makes it to its lab.

“We’re really working to understand the full spectrum of the illness with this coronavirus,” Messonnier said. “The problem with this time of year is it’s cold and flu season and there are lots of cold and respiratory infections circulating.”

On Thursday, the World Health Organization declined to formally designate the new virus as a global health emergency, after postponing its decision the day before. Health officials are trying to contain the fast-spreading illness without unnecessarily spooking global trade. WHO physicians said they needed more data before declaring a global emergency, but the virus is now spreading through close human contact and in health-care settings, they said.

Coronaviruses are a large family of viruses that usually infect animals but can sometimes evolve and spread to humans. Symptoms in humans include fever, coughing and shortness of breath, which can progress to pneumonia.

U.S. officials began screening passengers flying from China at major international airports over the weekend. Health officials said Friday that they have screened more than 2,000 people across 200 flights and have not found any cases.

In China, some 33 million people are now under travel restrictions. Shanghai Disney is closing until further notice at a time when theme park would normally be packed with tourists during Saturday’s Lunar New Year holiday.

Physicians have compared the outbreak to the 2003 outbreak of SARS, which had a short incubation period of two to seven days. U.S. officials said Friday that symptoms from the new virus, temporarily named 2019-nCoV, may take up to 14 days to appear. Neither U.S. patient had symptoms while they were flying, U.S. health officials said.

Former FDA Commissioner told CNBC on Friday the fast-spreading coronavirus outbreak is likely more contagious but less severe than the SARS epidemic, which rattled markets and slowed global economic growth.

“We probably will have some isolated outbreaks [of coronavirus in the U.S.], but that doesn’t mean it’ll translate to an epidemic,” Gottlieb told “Squawk Box.”

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China’s Hubei province confirms 15 more deaths due to coronavirus

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A militia member checks the body temperature of a driver on a vehicle at an expressway toll gate in Wuhan in central China’s Hubei province Thursday, Jan. 23, 2020, in a bid to contain the spread of the new coronavirus.

Barcroft Media | Getty Images

China reported 15 more deaths and 180 new cases of coronavirus, according to a statement from the health department of Hubei province, as the outbreak escalates.

The outbreak that began in Wuhan, capital of Hubei province, has prompted China to ramp up measures to contain the virus including suspending public transport in 10 cities, shutting temples over the Lunar New Year and closing part of the Great Wall.

The newly identified coronavirus has created alarm because there are still many unknowns surrounding it such as how dangerous it is and how easily it spreads between people. It can cause pneumonia, which has been deadly in some cases.

China closed Shanghai Disneyland and part of the Great Wall and suspended public transportation in 10 cities as it rushed to contain the virus, stranding millions of people at the start of the country’s Lunar New Year holiday.

France reported three cases on Friday evening, the first ones discovered in Europe. More were likely, Health Minister Agnes Buzyn said.

Wuhan, a city of 11 million where the virus was first identified, is in virtual lockdown. Nearly all flights at Wuhan’s airport have been canceled and checkpoints block the main roads leading out of town. 

As the city slides into isolation, pharmacies have begun to run out of supplies and hospitals have been flooded with nervous residents. The city is rushing to build a 1,000-bed hospital by Monday, state media said.

Despite the lockdown, the virus is already spreading further afield.

The vast majority of the cases and all of the deaths have been in China, but it has also been detected in Thailand, Vietnam, Singapore, Japan, South Korea, Taiwan, Nepal and the United States. There is no vaccine or specific treatment for the new virus.

The U.S. Centers for Disease Control and Prevention said on Friday it had 63 patients under investigation, with two confirmed cases, both in people who had traveled to Wuhan.

Following a congressional briefing by health officials, Republican U.S. Senator John Barrasso, a former physician, said people in the United States with the virus may have been infected up to 14 days ago in China.

“We want to try to stop and prevent people from coming to the United States if they have it,” Barrasso told reporters, without providing details of how that might be accomplished.

Airports around the world have stepped up screening of passengers from China.

The newly identified coronavirus has created alarm because there are still many unknowns surrounding it such as how dangerous it is and how easily it spreads between people.

It can cause pneumonia, which has been deadly in some cases. 

Symptoms include fever, difficulty breathing and coughing. Most of the fatalities have been in elderly patients, many with pre-existing medical conditions, the World Health Organization said.

As of Thursday, China’s National Health Commission said there were 830 confirmed cases and 26 deaths.

‘Sense of urgency’

Most cases have been in Wuhan, where the virus is believed to have originated in a market that traded illegally in wildlife.

As China scrambles to contain the outbreak, it has suspended transportation in 10 cities in the central province of Hubei, where Wuhan is located, the Hubei Daily reported.

The country will take further, more targeted measures, state television reported, citing a State Council meeting on Friday. It did not give further details.

“Local authorities should take more responsibility and have a stronger sense of urgency,” state broadcaster CCTV said.

Week-long celebrations to welcome the Year of the Rat began on Friday, raising fears that the infection rate could accelerate as hundreds of millions of people travel to see family at home and abroad.

In Wuhan, a handful of people got off a high-speed train that pulled into the city’s station on Friday but nobody boarded.

“What choice do I have? It’s Chinese New Year. We have to see our family,” said a man getting off the train who gave his family name Hu.

As part of the restrictions, some sections of the Great Wall near Beijing will be closed from Saturday, state media said.

Beijing’s Lama Temple, where people traditionally make offerings for the new year, has closed, as have some other temples and the Forbidden City, the capital’s most famous tourist attraction.

Shanghai Disneyland will close starting on Saturday. The theme park has a 100,000 daily capacity and sold out during last year’s new year holiday.

Film premieres have been postponed and McDonald’s suspended business in five cities in Hubei province.

“There’s so much news, so much data, every 10 minutes there’s an update, it’s frightening, especially for people like us in a severely hit area,” Lily Jin, 30, a resident of Wuhan, told Reuters by phone.

Vaccine quest

The WHO said on Thursday it was a “bit too early” to designate the outbreak a public health emergency of international concern, which would require countries to step up their response.

That decision could well be reassessed in coming days as the situation evolves, said Anthony Fauci, the U.S. National Institutes of Health’s top infectious disease official, adding that it was “open to question” whether shutting down travel would have a major effect.

“The mass involuntary quarantine in Wuhan and its neighboring cities is counterproductive,” added Lawrence Gostin, a public health expert at Georgetown University Law School in Washington. “A lockdown of Wuhan will drive the epidemic underground, provoking fear and panic.”

Some experts believe the virus is not as dangerous as the one that caused the 2002-03 outbreak of Severe Acute Respiratory Syndrome (SARS), which also began in China and killed nearly 800 people, or the one that caused Middle East Respiratory Syndrome (MERS), which has killed more than 700 people since 2012.

Three international research teams – using different approaches – have begun work on vaccines, the Coalition for Epidemic Preparedness Innovations said.

Markets have been roiled this week on fears that the outbreak will curb travel and hurt economic demand. Shares in luxury goods companies have been particularly hard hit on fears of a drop in demand from China.

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