Morgan Stanley says the U.S. is officially on “recession watch,” but not everyone is buying it.

“Business confidence is pretty decent, and jobs are still plentiful so I wouldn’t bet on a recession this year,” Kathy Jones, chief fixed income strategist at Charles Schwab, tells Yahoo Finance’s “The First Trade.”

If we get a recession at all, Jones predicts it will be a “2020 event.”

Morgan Stanley’s chief U.S. equity strategist, Michael Wilson, is not nearly as optimistic. In a note he said:

“Recent data points suggest U.S. earnings and economic risk is greater than most investors may think… The U.S. economy is vulnerable to a more significant slowdown due to overheating last year from the fiscal stimulus.”

The technical definition of a recession is two consecutive quarters of negative economic growth, as measured by a country's gross domestic product (GDP).

Inverted yield curve worries

Wilson also points to the inverted yield curve in the bond market as a harbinger for recession.

The yield on the 10-year Treasury bill has dipped below that of the 3-month bill twice this year. Historically, this bond market phenomenon has been a prognosticator for recession.

The yield on the 10-year note fell to 2.21% Wednesday, the lowest since September 2017. At the same time, the yield on the 3-month bill rose to 2.36%.

Betting on the Federal Reserve

Some investors are now increasingly betting that the Federal Reserve could cut interest rates not once, but twice this year, to goose a slowing economy.

The probability that the central bank will cut rates two or more times by the end of 2019 rose above 48% Wednesday, according to futures prices.

But Jones says an inverted yield curve doesn’t guarantee an imminent recession.

“There’s only a handful of recessions, so you only have a handful of data points in modern history," she says. “The timeline between an inversion [of the yield curve] and an actual recession can be very long and that time is variable.”

The ‘safer side’ of investing

Jones says the last three U.S. recessions weren’t caused by inflation or the Federal Reserve tightening monetary policy, but rather “financial instability.”

“Right now, you don’t see that [instability] in the U.S.,” says Jones. “The banking system seems to be in really good shape and resilient enough to handle a downturn.”

Instead, Jones says the next recession will be driven by a slowdown in global growth that ultimately spills over into the U.S.

“If we continue to get these trade problems, we continue to get a slowdown in manufacturing and demand in Europe, that I think could spill over to the U.S.”