Posted on 08/14/2019 10:55:30 AM PDT by rightwingintelligentsia
Former Federal Reserve Chairman Janet Yellen said the markets may be wrong this time in trusting the yield curve inversion as a recession indicator.
“Historically, it has been a pretty good signal of recession, and it think that’s when markets pay attention to it, but I would really urge that on this occasion it may be a less good signal,” Yellen said on Fox Business Network. “The reason for that is there are a number of factors other than market expectations about the future path of interest rates that are pushing down long-term yields.”
The yield on the benchmark 10-year Treasury note was at 1.623% on Wednesday, below the 2-year yield at 1.634%, causing the bond market’s main yield curve to invert and send markets plummeting. The bond market phenomenon is histrionically a trusty signal of an eventual recession; however, Yellen said this time may be different.
When asked if the United States is headed into a recession, Yellen said “I think the answer is most likely no. I think the U.S. economy has enough strength to avoid that, but the odds have clearly risen and their higher than I’m frankly comfortable with,” she said.
Yellen is not the only other former Fed chair who is weighing in on lower yields. With more than $15 trillion of government bonds trading at negative interest rates worldwide, Former Federal Reserve Chairman Alan Greenspan said Tuesday ‘there is no barrier’ to negative yields in the U.S.
(Excerpt) Read more at cnbc.com ...
Wow. If I had money in the market I would DEFINITELY take it out now.
Talk about your “nothing to see here, folks” and “this time it’s different” speech.
bttt
Wow. If I had money in the market I would DEFINITELY take it out now.
Which is exactly what the fed is hoping investors will do. Anything to stop Trump. Anything to stop us.
If they think it will help them defeat President Trump, leftists in finance will try to arrange a near collapse of the system, regardless of how many of us it harms.
Well, to be fair, I was being tongue in cheek. :)
I got out of the market quite a while ago when it became more like Vegas.
The prediction models no longer work since we live in a world with basically 0% interest.
Regardless of what she says, the Fed is manipulating short term rates to be much higher than what the market would charge.
Their justification is that higher rates slow the economy, and that a growing economy causes inflation. They are wrong.
Yellen said this time may be different.
...
That’s what Lucy always said to Charlie Brown.
Today is probably a good buying opportunity. The stock market always crashes and always recovers. These days you get mini crashes where people panic sell and this creates buying opportunities. They are quickly followed by mini recoveries. It’s a roller coaster ride. The best time to buy is when everyone else is selling.
Trump has put together a very strong economy. The Dems are trying to talk it down. They are praying for a stock market crash. They can’t win without it.
soooo! ..if interest is the cost of hiring money then does this mean that money has no value?
If so interesting times indeed!
You’re right. Artificially low interest is the future. Can you imagine if rates hit 22% as they did on July 22, 1981? What is the daily interest on $23 trillion at 22%?
When asked if the United States is headed into a recession, Yellen said “I think the answer is most likely no.
...
Will she be held accountable if she’s wrong?
Will anyone at the Fed ever be held accountable for the recessions they’ve caused and the trillions of dollars they’ve cost the United States?
“....leftists in finance....”
Therein lies the problem. Leftists should NOT be allowed near any “levers of power” of any kind...political, finance, education, etc. Instead, they need to locked up in a frickin’ insane asylum.
Today’s national economic leadership is not the same as America’s economic leadership in the past ... IT’S FAR, FAR BETTER. Predictably, the mainstream media is, for the most part, befuddled by and hostile to this leadership. They are also mystified by its continuing success.
This media hostility unfortunately also extends to the Fox News Channel. Prime evidence of this was, this past weekend, Leland Vittert’s hostile “interview” (actually it was a hostile interrogation) of Peter Navarro. Navarro is Trump’s Trade and Manufacturing Policy Advisor. Vittert wouldn’t let Navarro get a word in edgewise and clearly didn’t want Navarro to get his very reasonable messages out. Compared to Navarro, Vittert is a mental midget and economic ignoramus.
I was not surprised by Vittert’s behavior given his evident leftist/Globalist beliefs. But I was surprised this morning by Sandra Smith’s interview of Navarro where she similarly (but more politely) would not allow Navarro to complete his sentences by her constant interruptions. Somebody in Fox News has handed down marching orders.
Peter Navarro is the PERFECT complement to Trump. These two know exactly what they are doing and what they are doing is good for America and Americans.
Haha... fair enough.
I’ve been out, too, but am thinking this might be the right time to get back in.
Yellen is agreeing with Peter Navaro that people are borrowing money in Europe with negative interest rates (they pay back less than they borrow) to buy US 10 and 30 year Treasuries (they get back nearly 2.0% on their borrowed money). The technical term for this is win-win and with trillions of dollars in the float it amounts to real money. This completely nullifies the predictive value of the inverted yield curve and the equities algorithms and traders are selling based on the expectation of a recession that will not happen. When they come to their senses and realize their mistake they will pour into equities again. That coupled with the crowd that is boycotting equities because Trump is President will provide the fuel for a powerful FOMA upside when they realize that he is going to get reelected in 2020.
She is a commentator now...Why would you hold her accountable for what she says she thinks is likely?
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