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Yield Curves Invert in U.S., U.K

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Re: Yield Curves Invert in U.S., U.K

#81

Post by xivzgrev »

dkrich wrote: post #58

I'm surprised that everyone blindly cites the inverted yield curve as a recession indicator without considering the "why". Seriously, if you were to ask ten people why an inverted curve predicts recession, you'd get ten completely different answers. I personally don't think this is necessarily the inversion that is going to be predictive of a recession because the inversion is occurring at the long end (the 10/30 yea…

I agree. For the two recessions I’ve lived through, we didn’t arrive at them with everyone well aware it was going to happen. They snuck up and took the country by surprise. The tech bubble burst, and the real estate subprime bubble burst.

We may go into a slump because everyone is expecting a splump to happen because it’s been 10 or so years of a bull run. But I don’t see a full-on recession without a large bubble bursting somewhere in the economy, causing a panic.

Re: Yield Curves Invert in U.S., U.K

#82

Post by cletus »

apo wrote: post #33

Key recession indicator is flashing red. Unlike the stock market, which is both backward- and forward-looking, the bond market is myopically forward-looking. When the yield between the 10-year and 2-year US treasury inverts, a recession is months away. This chart, showing the difference between the yield (or spread), shows recessions in grey: https://journal.firsttuesday.us/using-the-yield-spread-to-fo... Notice how…

I'd just like to point out that the yield curve inverted in 2018 [1] yet here we are.

> Prepare for the inevitable recession. It's not different this time.

This point is tautological. Of course there will eventually be a recession. No one can say when.

There are different factors in every cycle. The QE period is essentially unprecedented. The rise of tech stocks in the last 20 years is a once-in-a-century type structural change in the economy.

It's fair to say the market is currently closer to the top than the bottom and above the historical mean and a reversion to mean is inevitable but whether the current mode goes on for days, months or even years is anyone's guess.

[1] https://www.bloomberg.com/opinion/articles/2018-12-03/u-s-yi...

Re: Yield Curves Invert in U.S., U.K

#83

Post by [deleted] »

jermaustin1 wrote: post #12
torstenvl wrote: post #5

Time to get more conservative with your investments. Just moved my retirement accounts from 100% in a 2050 lifecycle fund to 75% in a 2030 lifecycle fund and 25% in just government bonds. Not all investment vehicles have a "lifecycle" fund but its intent is to be appropriately conservative for a target date. As the date grows closer, the fund gets more conservative in order to lessen the risk of sudden swings right b…

I'm 40% in cash, 50% in S&P and 10% in small-cap. The last few months, all of my contributions have been going into cash, so that when the fall happens, I can hopefully scoop up a deal.

[deleted]

Re: Yield Curves Invert in U.S., U.K

#84

Post by gzu »

whatshisface wrote: post #52
rfrey wrote: post #37

Earlier quoted context omitted.

What specifically has changed?

I'm not the OP, but if the Fed decides that the stock market isn't going to fall, then come hell or high inflation it's not going to fall. Some people think that the recent history of interventionist monetary policy (QE) points to a Fed that is willing to pump up asset prices in the event of trouble. Does that mean the economy won't fall apart? No, but it does mean that holding cash could be a worse idea than holding…

There’s now also moral hazard too with the rise of indexing and retirement. They need to keep the WHOLE stock market up. Many fewer investors now do any research and chose companies based on fundamentals. The companies that exist today must exist forever into in roughly the same proportions to keep SP 500 index from falling too heavily.

Companies exploit this relationship now by destroying their balance sheets and using buybacks to boost their relative market caps vs other companies to capture more passive investment money flow.

There’s a good argument (elsewhere) that because vanguard of we’ve entered a pseudo communist market system.

Re: Yield Curves Invert in U.S., U.K

#85

Post by mywittyname »

wil421 wrote: post #23
jermaustin1 wrote: post #12

Earlier quoted context omitted.

I'm 40% in cash, 50% in S&P and 10% in small-cap. The last few months, all of my contributions have been going into cash, so that when the fall happens, I can hopefully scoop up a deal.

Let’s talk in 10 years and see if your cash will beat my S&P allocation.

Yup. I "called" the recession in 2017 and spent 2016 building cash reserves instead of investing.

I was wrong.

Re: Yield Curves Invert in U.S., U.K

#88

Post by mrep »

freehunter wrote: post #48
anonymousJim12 wrote: post #10

Earlier quoted context omitted.

Has it ever inverted but then a near term recession never followed?

We had one close call in the mid 90s, about 1995-1996. I don't think it actually inverted but it was within less than one percentage point away from inverting. Luckily, 1995-1996 was the start of the Dotcom bubble, which gave us a few more years before the recession of 2001 hit. We could stave off the coming recession if we had another Dotcom-type bubble, but market corrections are inevitable so it would just be a de…

> We could stave off the coming recession if we had another Dotcom-type bubble, but market corrections are inevitable so it would just be a delay.

Recessions aren't some magical part of economies that are required to happen every so often. As freddie_mercury pointed out yesterday [0], Australia, has gone 27 years without a recession, Japan had no recession from 1961-1993 (32 years), and the Netherlands had no recession from 1981-2008 (27 years).

[0]: https://news.ycombinator.com/item?id=20692043

Re: Yield Curves Invert in U.S., U.K

#89

Post by cryoshon »

0003 wrote: post #34

It literally broke the Fed: https://fred.stlouisfed.org/series/T10Y2Y If you go to the homepage of the st louis fed and search popular series, this is the first that shows up.

this frightens me far more than the yield curve inverting. the information-distributing capacity of the fed's website is built for routine loads, but the fact that it is down suggests that everyone is scrambling.

Re: Yield Curves Invert in U.S., U.K

#90

Post by mgamache »

techntoke wrote: post #70
voidfunc wrote: post #45

I don't want the economy to tank anymore than the next guy but if it blows up before the 2020 elections and kills President Trump's chance of re-election that would be a fantastic silver lining.

I'm calling it now, but you won't actually see a recession until after he leaves office. The rich and powerful control the market and it has no actual real indicator to the effects a majority of people are seeing in their personal lives.

That supposes the rich and powerful give a rip about trump. They don't. If anything, they don't like his unpredictability. But, I don't think it's really tied to a person or party. For example, Obama provided the wall street bailout.
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