Posted on 08/15/2019 8:25:47 AM PDT by SeekAndFind
Wall Street’s most widely watched gauge of the yield curve’s slope, the spread between the 2-year Treasury note yield and the 10-year inverted Wednesday morning, flashing the clearest signal to date that the U.S. is set to face an economic recession, but that doesn’t have to mean doom and gloom for stock investors.
The U.S. 2-year Treasury note yield
The so-called inversion of the main measure of the yield curve, or a negative spread between short-term and long-term yields, has preceded the last seven recessions.
Check out: 5 things investors need to know about an inverted yield curve
However, history shows that an inversion, while not an upbeat sign about the coming state of the economy, doesn’t necessarily translate to a lasting selloff in equity markets.
The durability of the stock market might be a point lost on investors Wednesday afternoon.
Currently, the Dow Jones Industrial Average DJIA, the S&P 500 SPX, and the Nasdaq Composite COMP, indexes are trading at least 2.7% lower on Wednesday. But over the longer stretch stocks have tended to rise firmly following the closely watched recession alarm.
On average, the S&P 500 has returned 2.5% after a yield-curve inversion in the three months after the episode, while it has gained 4.87% in the following six months, 13.48% a year after, 14.73% in the following two years, and 16.41% three years out, according to Dow Jones Market Data (see table below):
(Excerpt) Read more at marketwatch.com ...
On average, the S&P 500 has returned 2.5% after a yield-curve inversion in the three months after the episode, while it has gained 4.87% in the following six months, 13.48% a year after, 14.73% in the following two years, and 16.41% three years out, according to Dow Jones Market Data (see table below):
| Date of first 2/10-year inversion | 3 months later | 6 months later | 1 year | 2 years | 3 years |
| 8/17/1978 | -10.14% | -6.10% | 3.06% | 19.64% | 24.88% |
| 8/20/1980 | 13.44% | 2.27% | 5.59% | -8.69% | 32.49% |
| 12/9/1988 | 6.10% | 17.93% | 25.87% | 18.31% | 36.54% |
| 5/26/1998 | -0.90% | 8.49% | 19.26% | 25.96% | 16.81% |
| 12/30/2005 | 4.16% | 1.76% | 13.62% | 18.44% | -28.65% |
| Average | 2.53% | 4.87% | 13.48% | 14.73% | 16.41% |
Read: These stocks are falling the most as Treasury yield curve inverts
Data from LPL Financial also corroborate the tendency for markets to punch higher in the long term.
Libtards trying to talk the economy down like they did on Bush. They still fail to realize NOTHING will drive a hair width’s distance between Trump and his voters. Look at what they are doing after Trump WON. Can you imagine their behavior if he were to lose?
Just remember, voters, those liberals who are trying to tank the economy are robbing your 401k funds of your retirement...to buy the votes of others.
Plus almost NO retirement account owns anything mirroring the DJIA or S&P500 unless it is invested heavily into said index funds. I used to put a decent share of my retirement funds into fairly speculative investments (SHOP and ZEN paid off handsomely when I MOSTLY cashed them out last year), now that figure is down to 5% or so as I am about one year from age 65 and prefer more boring offerings like REITs and utilities.
Correlation is not causation. That is a phrase that must be repeated time and again.
There are other underlying factors, not now being integrated into this calculation which WOULD be a basis for causation.
This may be a measure, but there is no existing mechanism by which one set of circumstances necessarily lead to only one outcome.
They treated it like it was a certainty of doom and gloom and yet it's clearly not based on your data.
They're trying to talk down the economy to give the Dems some hope in 2020.
Never think the markets drive the economy. Trump haters want us to do that, but the economy isn’t subject to emotional speculation pressure like markets are. The markets have to eventually follow the economy. And the economy is on the best foundation it’s been on in many decades.
Trump haters can talk the markets down, but not the economy. read post 10.
What Recession?
No recession
But the news announcer is gleeful and cheerful when announcing this....
They were successful in dumping GHW Bush also, by hyping a “recession” that was already over by the time Slick Willy was elected.
Strangely, the recession that was ‘already over’ got its own nickname, based on its length ... the ‘L’-shaped recovery.
some rich leftards were colluding with the media to profitably short the market
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