Today's stock market decline is brought to you by the "inverted yield curve"

[Commissar SFLUFAN]

Comparisons are typically made between the interests rates of the Treasury's 2-year note and the 10-year note to determine the future direction of the economy.  Normally, the interest rate on the 10-year note is higher than that of the 2-year note.  This is logical because the longer time horizon to maturity means greater risk which requires a greater return in the form of a higher interest rate. 

 

However, in the last few months, these yield curves have begun to converge and are very close to "inversion" whereby the yield on the 2-year note exceeds that of the 10-year note.  What this means is that the 2-year note is "riskier" than the 10-year one, a situation that really only occurs when the bond market expects an economic contraction or a recession.

 

Right now the yield curve is the flattest its been since 2007

[CitizenVectron]

Just in time to hamstring another Democratic president!

[Commissar SFLUFAN]

1 minute ago, CitizenVectron said:

Just in time to hamstring another Democratic president!

One isn't getting elected in 2020 so you don't have to worry about that!

[Guest]

1 hour ago, CitizenVectron said:

Just in time to hamstring another Democratic president!

I still think the bigger timing issue is that Trump can tell people the downturn is the fault of the Dems because everything was great until they won big in the midterms. And people will fall for it.

[b_m_b_m_b_m]

58 minutes ago, SFLUFAN said:

One isn't getting elected in 2020 so you don't have to worry about that!

There's literally no one who can appease the large progressive wing and the spineless, mushy centrist wing. Add in the racial and gender tinderbox that is the Democratic party and the general stupidity and susceptibility to dumb social media propaganda by the American electorate, we're in for 8 years of trump, should we be so unfortunate that his cheeseburger diet doesn't take him first

[PaladinSolo]

Dems just won the midterms vote by the largest percentage in a century with the highest turn out in decades, "dems in disarray" though. The president always takes the blame for the economy BTW, always. 

[Signifyin(g)Monkey]

The lags have varied, so it could take over a year after inversion for the official recession to start, but definitely count on some pain in 2019/2020 if it inverts soon.

 

And, yes, Trump might get stuck with the blame, but that doesn’t mean the Dems won’t, too.  Recession rage knows no political allegiances amongst the populace.

[b_m_b_m_b_m]

20 minutes ago, Signifyin(g)Monkey said:

The lags have varied, so it could take over a year after inversion for the official recession to start, but definitely count on some pain in 2019/2020 if it inverts soon.

 

And, yes, Trump might get stuck with the blame, but that doesn’t mean the Dems won’t, too.  Recession rage knows no political allegiances amongst the populace.

Electorally it doesn't bode well for the president and his party.

[Joe]

Not that I know what the fuck I am talking about, but the NYC/JC housing market has suffered a pretty steep decline over the last 9 months. I wonder if it's a sign of things to come.

[Nokra]

17 hours ago, sblfilms said:

I still think the bigger timing issue is that Trump can tell people the downturn is the fault of the Dems because everything was great until they won big in the midterms. And people will fall for it.

Out of curiosity, what would be your Cliff-Notes-version, serious answer to someone arguing this? 

[mclumber1]

The markets are off to a fine start this morning!

[Jason]

 

[TwinIon]

3 minutes ago, Jason said:

 

I'm so tired of all this winning.

[mclumber1]

MAGA

[PaladinSolo]

500 would be a good thing at this point, now down 650.  Quote of the day from CNBC, lol.

 

"There's concern that the trade deal is not as good as [President Donald] Trump said it was," said Mark Esposito, CEO of Esposito Securities. "Recession fears are also settling into the market."

[Commissar SFLUFAN]

This is going to puts significant pressure on the Fed's plans for more rate hikes, more so than the Imbecile's tweets.

[osxmatt]

I was told there would be winning.

[Kal-El814]

4 hours ago, osxmatt said:

I was told there would be winning.

We got tired of it so we stopped, as it was foretold. 

[Joe]

5 hours ago, PaladinSolo said:

500 would be a good thing at this point, now down 650.  Quote of the day from CNBC, lol.

 

"There's concern that the trade deal is not as good as [President Donald] Trump said it was," said Mark Esposito, CEO of Esposito Securities. "Recession fears are also settling into the market."

 

It recovered.

[Commissar SFLUFAN]

1 hour ago, Jose said:

 

It recovered.

It recovered because of a report in the WSJ that the Fed may pause its planned rate hikes in 2019.

[mclumber1]

Oh hey the stock market rebounded nicely today.  TAKE THAT LIBCUCKS!

[Joe]

40 minutes ago, mclumber1 said:

Oh hey the stock market rebounded nicely today.  TAKE THAT LIBCUCKS!

 

Huh?

[Massdriver]

Our trade war with China isn't helping, even though I am tired of China stealing IP. It would be nice if Trump lifted all our tariffs on everyone else. We are overdue for a recession. The bond market is starting to show it. Higher rates are going to start hitting all these companies that borrowing a bunch for dividends and buybacks. I just don't think our economy can handle rates going up much more.

[PaladinSolo]

Fell to a new low for 2018 today, and is on pace for largest December drop since 1931

[CayceG]

5 minutes ago, PaladinSolo said:

Fell to a new low for 2018 today, and is on pace for largest December drop since 1931

 

Alternative take: 

 

DOW down only 800 points on the year!

[Jason]

9 minutes ago, PaladinSolo said:

Fell to a new low for 2018 today, and is on pace for largest December drop since 1931

 

And remember, tariffs were a huge contributor to making the Great Depression happen.

[osxmatt]

2 hours ago, PaladinSolo said:

Fell to a new low for 2018 today, and is on pace for largest December drop since 1931

 

And December is normally a very good month for stocks.

 

Only 25 December’s have posted a loss since 1931. That’s 87 years. 

[Massdriver]

This seems long overdue. 

[Commissar SFLUFAN]

At this stage, the Fed really does appear to be raising interest rates simply with the intention of cutting them when the slowdown finally arrives.

[b_m_b_m_b_m]

1 hour ago, SFLUFAN said:

At this stage, the Fed really does appear to be raising interest rates simply with the intention of cutting them when the slowdown finally arrives.

 

[Commissar SFLUFAN]

8 minutes ago, b_m_b_m_b_m said:

 

Exactly - there are no "economic fundamentals" reasons for a rate hike.

[b_m_b_m_b_m]

Just now, SFLUFAN said:

Exactly - there are no "economic fundamental" reasons for a rate hike.

We must raise rates now so that we can cut rates when a recession hits in part due to our rate hikes

[Commissar SFLUFAN]

2 minutes ago, b_m_b_m_b_m said:

We must raise rates now so that we can cut rates when a recession hits in part due to our rate hikes

 

[b_m_b_m_b_m]

2 minutes ago, SFLUFAN said:

 

Every fed chair who came of age in the late 70s/early 80s needs to resign. This isn't the age of the inflation boogieman. We're losing a generation to student debt and out of reach high asset prices, and they're single-mindedly focusing on something that isn't there

[Commissar SFLUFAN]

7 minutes ago, b_m_b_m_b_m said:

Every fed chair who came of age in the late 70s/early 80s needs to resign. This isn't the age of the inflation boogieman. We're losing a generation to student debt and out of reach high asset prices, and they're single-mindedly focusing on something that isn't there

It's essentially a residual cognitive holdover from the days of the gold standard.