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Wed Aug 14, 2019, 02:51 PM

Janet Yellen says yield curve inversion may be false recession signal this time

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 historically 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 they’re higher than I’m frankly comfortable with,” she said.

https://www.cnbc.com/2019/08/14/janet-yellen-say-yield-curve-inversion-may-be-false-recession-signal-this-time.html

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Response to Zorro (Original post)

Wed Aug 14, 2019, 02:52 PM

1. Yeah. Sure she did

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Response to Takket (Reply #1)

Wed Aug 14, 2019, 07:32 PM

14. they are trying their damnedest to keep it spinning

debit is going to get them
all indicators point to recession maybe depression if we continue republican supply side economics

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Response to Zorro (Original post)

Wed Aug 14, 2019, 02:56 PM

2. Except isnt this the second one since december?

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Response to Tiggeroshii (Reply #2)

Wed Aug 14, 2019, 03:08 PM

3. different part of the yield curve

various parts of the yield curve have been inverted for a while. back in march, the inversion of the 10-year vs. the 3-month made headlines. that's a pretty good recession predictor, but the 2-year is historically a stronger predictor of recession.

part of the reason is that the 3-month is more in control of the fed and/or expectations of fed action. that's good and bad. as far as the signal goes, it means that the 3-month might temporarily be at the "wrong" level, predicting recession when the risk is actually low.

the 2-year is harder for the fed to control, for better or for worse, which means that a 10yr-2yr inversion is more likely to be indicative or real underlying problems rather than a temporary fed miscalculation.


i think yellen's point is that a lot of our problems could go away if donnie would just stop his tariff nonsense.

wouldn't surprise me if that's his game anyway. depress the economy until summer before the election, then drop the tariff crap while declaring victory, watch the markets boom, and ride the wave to re-election.

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Response to unblock (Reply #3)

Wed Aug 14, 2019, 03:21 PM

4. I see a situation where the orange asshole, sometime next year...

when the economy is on the very verge of going full toilet, suddenly lifts all tariffs.

the market would skyrocket.

the rubes would think he's a master with the economy and it was all about making china "feel the pain"

granted this sudden turn about would do nothing for the poor farms he totally screwed over, but he wouldn't care.

it's all about image, not reality to him.

And he will use this sudden surge of the market as a tool for his reelection.

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Response to Javaman (Reply #4)

Wed Aug 14, 2019, 03:22 PM

5. exactly. i have been worried about this playing out since the start of his tariff crap.

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Response to unblock (Reply #5)

Wed Aug 14, 2019, 03:26 PM

7. I wonder what unintended and unpredictable ill effects that kind of BS would have on the rest

of the economy.

the see sawing of the market is taking it's toll on my 401k for sure.

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Response to Javaman (Reply #7)

Wed Aug 14, 2019, 03:39 PM

9. it's infuriating. cnbc showed nonstop pundits and ceos complaining about "uncertainty" when obama

was president, when the fed left interest rates unchanged for years on end and when congress was a stalemate for years on end.

obama's last 6 years in particular were the most stable and predictable 6 years on record, but that didn't stop the media complaining about some mythical "uncertainty".

then along comes a one-man wrecking crew called donnie, bull in a china shop, imposes tariffs on china to end the bull market.
no one know what he's going to do next because that uncertainty is exactly his game.

but does cnbc complain about the uncertainty? not really, not in the same way at all. the uncertainty now is in the outcomes, about how china will react, not about any uncertainty coming out of "washington".

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Response to Javaman (Reply #7)

Wed Aug 14, 2019, 04:53 PM

10. I cant imagine this wouldnt backfire in some huge way.

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Response to Javaman (Reply #4)

Wed Aug 14, 2019, 03:26 PM

6. Grifter, con artist.

Drumpt tanks the market with tariff and tariff threats.

His minions in his unrecused business interests buy the tanked shares.

He magically removes tariff threat and shares skyrocket in value.

Rinse, repeat.

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Response to Javaman (Reply #4)

Wed Aug 14, 2019, 03:29 PM

8. I predicted that several weeks ago

he's going to announce (maybe at the RNC?) that Trump has won the trade war with China and that all the tariffs are lifted.

sure, it will be complete BS, but he's hoping that the full story won't fall apart until after the election.

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Response to NewJeffCT (Reply #8)

Wed Aug 14, 2019, 05:26 PM

12. but by then

wouldn't the buyers of our crap had found new sellers? Like Brazil or anywhere else. There isn't a magic charm that turns shit into gold that I know of, especially instantly.

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Response to Zorro (Original post)

Wed Aug 14, 2019, 04:54 PM

11. 'may be'

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Response to Zorro (Original post)

Wed Aug 14, 2019, 05:42 PM

13. Sounds like she's trying to calm nerves. I wonder what she really thinks.

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