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(CNBC)   The yield curve between 2- and 10-year Treasuries has inverted, a phenomenon that has predicted 12 of the last 10 recessions since 1955. EVERYBODY PANIC   (cnbc.com) divider line
    More: Scary, Monetary policy, Central bank, Treasury yield curve, Federal Reserve System, 10-year note, longer duration Treasury yields, bond market, Yield curve  
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571 clicks; posted to Business » and Main » on 05 Jul 2022 at 2:27 PM (11 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



28 Comments     (+0 »)
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2022-07-05 2:34:03 PM  
It inverted in 2019 and there wasn't a recession.
 
2022-07-05 2:37:23 PM  
Predicted 120% of recessions?  That's amazing.
 
2022-07-05 2:38:54 PM  

Rapmaster2000: It inverted in 2019 and there wasn't a recession.


https://en.wikipedia.org/wiki/COVID-19_recession#United_States
 
2022-07-05 2:40:02 PM  
the old indicators are almost useless.  this economy is not what it used to be.  the animal spirits that consume the asset class cannot be an accurate predictor of where the new corporate feudal state is moving.
 
2022-07-05 2:41:14 PM  

overzelus: Rapmaster2000: It inverted in 2019 and there wasn't a recession.

https://en.wikipedia.org/wiki/COVID-19_recession#United_States


I mean, yes, technically there was a recession but not due to anything that could have been predicted by economic indicators in 2019.
 
2022-07-05 2:48:57 PM  

shroom: overzelus: Rapmaster2000: It inverted in 2019 and there wasn't a recession.

https://en.wikipedia.org/wiki/COVID-19_recession#United_States

I mean, yes, technically there was a recession but not due to anything that could have been predicted by economic indicators in 2019.


The indicator was that the ten and two had crossed, signalling investor sentiment about the future.
It doesn't attempt to explain why investors feel that way, only that they do.
And recessions can certainly have a self-fulfilling aspect to them.
You might argue that COVID was just the emotional excuse needed to have the recession.
The shocks to the supply-chain were due to demand whip-sawing because of... wait for it... how people felt about the future.
 
2022-07-05 2:52:17 PM  

overzelus: Rapmaster2000: It inverted in 2019 and there wasn't a recession.

https://en.wikipedia.org/wiki/COVID-19_recession#United_States


Yes, I'm aware that the US endured an extremely short recession nearly a year after the inversion due to everything being closed.

Clearly, there will be a pandemic in 2023.
 
2022-07-05 2:58:46 PM  

shroom: overzelus: Rapmaster2000: It inverted in 2019 and there wasn't a recession.

https://en.wikipedia.org/wiki/COVID-19_recession#United_States

I mean, yes, technically there was a recession but not due to anything that could have been predicted by economic indicators in 2019.


The recession started in Feb 2020. I don't think COVID was officially a factor until March. Ironically, our COVID response (trickle-up stimulus) likely shortened the recession.
 
2022-07-05 3:03:47 PM  

Rapmaster2000: overzelus: Rapmaster2000: It inverted in 2019 and there wasn't a recession.

https://en.wikipedia.org/wiki/COVID-19_recession#United_States

Yes, I'm aware that the US endured an extremely short recession nearly a year after the inversion due to everything being closed.

Clearly, there will be a pandemic in 2023.


A catalyst will be found and blamed: doesn't need to be a pandemic.

Boat get stuck in a canal again?
European energy crisis?
Implosion of crypto hedge funds and their lenders?
Collapse of Chinese real estate market?
Could even just be the Fed continuing to raise rates.

From crossing in May 2019 to a recession in Feb 2020 is ~9 months.
Well within the 6-18 month window usually prescribed by the 10-and-2.
 
2022-07-05 3:04:07 PM  
Only like 2 out of 5 dentists are on board with these recession predictions.
 
2022-07-05 3:05:00 PM  

Fonaibung: shroom: overzelus: Rapmaster2000: It inverted in 2019 and there wasn't a recession.

https://en.wikipedia.org/wiki/COVID-19_recession#United_States

I mean, yes, technically there was a recession but not due to anything that could have been predicted by economic indicators in 2019.

The recession started in Feb 2020. I don't think COVID was officially a factor until March. Ironically, our COVID response (trickle-up stimulus) likely shortened the recession.


Because Asia was already farked in January.  that spilled over.

Our China office closed at the end of Chinese New Year.  They simply never went back to the office.  We had a guy get quarantined just because he changed trains in Wuhan.  He wasn't able to work for a month.
 
2022-07-05 3:14:05 PM  
Sounds like a great time to buy. Bring on recessions as they are the best time to make money!
 
2022-07-05 3:14:30 PM  

shroom: Predicted 120% of recessions?  That's amazing.


Invert that: 83% of the time inversion preceded a recession.
 
2022-07-05 3:14:58 PM  
12 of the last 10 recessions

media0.giphy.comView Full Size
 
2022-07-05 3:15:39 PM  

GardenWeasel: 12 of the last 10 recessions

[media0.giphy.com image 480x270] [View Full Size image _x_]


Zero Hedge predicted 125 of 0 stock market crashes because of Obummer.
 
2022-07-05 3:19:47 PM  

natazha: shroom: Predicted 120% of recessions?  That's amazing.

Invert that: 83% of the time inversion preceded a recession.


I understand the math.  I just wish the modmins understood the math.
 
2022-07-05 3:22:21 PM  

Rapmaster2000: GardenWeasel: 12 of the last 10 recessions

[media0.giphy.com image 480x270] [View Full Size image _x_]

Zero Hedge predicted 125 of 0 stock market crashes because of Obummer.


One of these days they'll accidentally be right once. That's when we'll know we should have taken them seriously all along.
 
2022-07-05 3:26:40 PM  

nytmare: Rapmaster2000: GardenWeasel: 12 of the last 10 recessions

[media0.giphy.com image 480x270] [View Full Size image _x_]

Zero Hedge predicted 125 of 0 stock market crashes because of Obummer.

One of these days they'll accidentally be right once. That's when we'll know we should have taken them seriously all along.


There was a time when we got a Zero Hedge article a day here before it was figured out that it was simply Russian propaganda.  People made financial decisions based on what Zero Hedge told them.
 
2022-07-05 3:30:20 PM  

Rapmaster2000: It inverted in 2019 and there wasn't a recession.


Jesus, not only did you skip the article, you didn't even read the headline completely.
 
2022-07-05 3:31:26 PM  

cretinbob: Rapmaster2000: It inverted in 2019 and there wasn't a recession.

Jesus, not only did you skip the article, you didn't even read the headline completely.


No, I understood the headline.

But I totally didn't read the article.
 
2022-07-05 3:33:10 PM  
I didn't do a good job either
 
2022-07-05 3:36:08 PM  

natazha: shroom: Predicted 120% of recessions?  That's amazing.

Invert that: 83% of the time inversion preceded a recession.


The article doesn't even state this. The tag would indicate an 83% prediction rate (holding all else constant, which is an impossible and flawed assumption).

The article states there is a 66% chance of a recession in this year and a 98% chance two years out. There is nothing about it predicting 10 of 12 recessions.

Still a peculiar quirk in the market worth keeping informed on, though.
 
2022-07-05 3:43:28 PM  

severedtoe: the old indicators are almost useless.  this economy is not what it used to be.  the animal spirits that consume the asset class cannot be an accurate predictor of where the new corporate feudal state is moving.


This may be the first recession with no layoffs and a very low unemployment rate.

rdceconomics.wpengine.comView Full Size
 
2022-07-05 3:44:20 PM  
I submitted this headline back in April.
 
2022-07-05 4:13:05 PM  

GardenWeasel: 12 of the last 10 recessions

[media0.giphy.com image 480x270] [View Full Size image _x_]


Fark user imageView Full Size


11 (2 vs 10) yield curve inversions since 1955, plus the one in April 2022 not on the chart = 12

10 recessions
 
2022-07-05 4:14:49 PM  

mcreadyblue: severedtoe: the old indicators are almost useless.  this economy is not what it used to be.  the animal spirits that consume the asset class cannot be an accurate predictor of where the new corporate feudal state is moving.

This may be the first recession with no layoffs and a very low unemployment rate.

[rdceconomics.wpengine.com image 850x478]


I am kind of getting that feeling too - there might be a technical recession because inflation is higher than nominal GDP growth but since most people and businesses operate in the nominal economy and have debts denominated in nominal dollars with fixed interest rates, it could all feel very normal.
 
2022-07-05 5:40:07 PM  

Parthenogenetic: GardenWeasel: 12 of the last 10 recessions

[media0.giphy.com image 480x270] [View Full Size image _x_]

[Fark user image image 850x397]

11 (2 vs 10) yield curve inversions since 1955, plus the one in April 2022 not on the chart = 12

10 recessions


Your chart demonstrates that using this metric as an indicator of a recession is not really useful. There seems, at most, to be a weak correlation to recessions since at least 1970.

Also, the claim was "since 1955," not 1945. I only see 8 on this list since 1955, so at most, there are 9. (Your April 2022 assessment is not agreed upon by others who report on the topic).

Basically, I wouldn't take investment advice based on this one metric.
 
2022-07-05 5:49:26 PM  

theriotact28: Basically, I wouldn't take investment advice based on this one metric.


Well yeah, only a fool would trade stocks based on bullshiat they read from internet randos. That's only useful for NFTs and crypto.
 
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