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HVAU

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About HVAU

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  1. I've been following the bond market for about a year now. The reading I've done, and my limited understanding, indicate that it's a reasonably effective tool for market predictions. An increasing spread between the 2 year and 10 year bonds can predict market growth, while a diminishing spread can predict an upcoming recession. Numbers from the Treasury Department show a spread curve that is rapidly flattening. Here are the numbers for 2017 to current using data from the beginning of each: 1-17 1.23 2-17 1.26 3-17 1.17 4-17 1.1 5-17 1.05 6-17 .93 7-17 .84 8-17 .92 9-17 .81 10-17 .85 11-17 .76 12-17 .59 1-18 .54 2-18 .62 3-18 .59 4-18 .48 5-18 .47 6-18 .42 7-18 .3 Last .29 There is a visual chart here: http://journal.firsttuesday.us/using-the-yield-spread-to-forecast-recessions-and-recoveries/2933/ *This site uses 10 year to 3 month comparison. I used 10 year to 2 year as that is how I've most frequently seen the spread reported. This article from investorolace.com investigates the idea that the yield curve may fail in it's predictive ability in the near term, but also states the following: "That is why an inverted yield curve has preceded every U.S. recession since 1960. At the current time, the inverted yield curve is arising for several reasons. One, the Feds are hiking rates to offset rising inflation. Two, the Fed is unwinding its balance sheet at a fairly rapid rate. Three, trade tensions are rising. Four, we are ten years into the current economic expansion, and history says we are due for a pullback soon." https://investorplace.com/2018/07/why-stock-market-keep-heading-higher-despite-inverted-yield-curve/ The author goes on to say that 19 months following an inversion is the right estimate for the stock market react to recession realities. If I use the current trend in the curve to extrapolate the date of inversion combined with the author's 19 month cushion I should be able to predict when the market will react to recession realities. The average loss in the spread from 1-17 to 7-18 (19 months) is .048 per month. If that rate holds true inversion will occur in January of 2019. The realities of recession will set in July of 2020. Using the average rate of loss in the spread over only the last 12 months (8-17 to 7-18) of .051 shows an inversion in December. Using the rate over only the last six months (2-18 to 7-18) of .53 indicates inversion also in December. Using the rate over the last three months (5-18 to 7-18) of .56 shows an inversion in late November or early December. The last three scenarios indicate the market recognizing recession realities in May of 2020. I went through these calculations to illustrate that the approach of the inversion may be accelerating. That acceleration will likely be affected by Fed rate decisions as well. If that acceleration continues inversion and recession may move up a month or so. Of course everything could change and the curve could stabilize, a recession not occurring for a few more years. So what? This isn't the economic smack talk board. All of this is to point out the problems with Trump and company's economic agenda for the time being. First, the tax cuts: These tax cuts are hog's ass money. The economy was peaking before the tax cuts were even passed. Passing them increases the deficit significantly. Combine the higher deficit with already low, though increasing to quell inflation, interest rates and we end up with a government with a weakened bag of tricks to minimize the recession. Second, "trade wars are easy to win": Trump could be riding the high of an inherited, booming economy (thanks Obama), but he doesn't seem to have it in him to recognize his good fortune. Instead, Trump has engaged in trade wars with China, Mexico, Canada, the EU, etc. Now he's made overtures of an escalation to a currency war which may trigger dumping of US assets. https://www.bloomberg.com/view/articles/2018-07-20/trump-s-trade-war-a-dangerous-new-front https://www.cnbc.com/2018/07/20/trade-war-could-be-morphing-into-currency-war-if-china-is-plays-hardba.html Third, the GOP agenda: A major platform of Republicans is deficit reduction...doh. They kind of shot their credibility there with that whole deficit increasing tax cuts, WealthCare reform. So where do they turn? Most predict that they'll focus on entitlements, social safety nets for those that can't retire on the dividends of their tax cut investments. In essence there is a real likelihood that as those with more receive more, those with less will be left with much less protection in the probable economic downturn. It's getting on in the evening and I'm sure I've left some stones unturned, but I should be on my way. Of course I could be wrong in all of this. Exponentially greater market watchers than I have failed at the prediction game. You conservatives can choose to play defense on the issue, but maybe try to take this as a message if peace as well. If things are going the way they quite possibly could and you've seen this post maybe you will protect your money and while doing so think to yourself "that HVAU sure is a center left son of bitch, but I'm glad I read that one post and was prepared to move my investments into a stable position". Some more articles and links: https://money.cnn.com/2018/03/28/investing/bond-market-yield-curve-wall-street/index.html https://www.cnbc.com/2018/07/19/biggest-bond-market-risk-isnt-the-fed-versus-trump-or-rising-rates.html https://money.cnn.com/2018/01/31/investing/alan-greenspan-bubble-stocks-bonds/index.html https://www.foxbusiness.com/markets/bond-yield-curve-continues-to-flatten-are-we-headed-towards-a-recession https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield https://www.wsj.com/articles/flattening-yield-curve-raises-warning-flag-1524055903 https://www.wsj.com/articles/the-other-yield-curve-investors-should-watch-as-trouble-mounts-1529408536
  2. HVAU

    Remember This Pic?

    Since we're sharing historical documents, I thought PT would enjoy this memory from recent events. It's still really not that funny, but I know PT enjoys this sort of thing.
  3. You usually don't just play the hits. The Uranium One deal has been discussed ad nauseum, and shown to be much less significant than Trump and the R's tried to make it.
  4. HVAU

    Remember This Pic?

    Well, I'm forty. So I'd say forty-one. Until next year.
  5. HVAU

    Remember This Pic?

    To be fair to the geezers, I can no longer use youthful, humorous vulgarities. I look like a creepy, middle-aged man if I try now.
  6. HVAU

    Remember This Pic?

    I bet your sense of humor is as sharp as my Hock knife compared to PT.
  7. HVAU

    Remember This Pic?

    My responses to you have been fairly explicit in expressing my disdain for your political views. I can further clarify them if it helps. Your style is riddled with the hackery best exemplified by the phrase "fake news". Your blind allegiance, and you're not the only, to what is plainly an administration that is devaluing democratic philosophies is fairly pathetic. On top of that, your sense of humor is geriatric, nursing home level unfunny. Have a great day.
  8. HVAU

    Remember This Pic?

    You're full of it. I've seen this pop up several times, and every time the one disseminating is serious about it until they get called out. Edit: "In light of all the recent criticism of Trump in his meeting with Putin, I laughed when I came across this pic. It speaks for it's self." The phrase in bold implies that you view the photo as valid.
  9. HVAU

    Remember This Pic?

    Sure looks ballsier than the spineless, bonespur riddled conman in the Whitehouse now.
  10. HVAU

    Remember This Pic?

    You guys really can't be this damn stupid, can you? Can you? https://www.snopes.com/fact-check/putin-obama-tie-pull/
  11. HVAU

    Obama Touts Universal Income

    You posted the chart. I thought it was to illustrate something that disproves the economic debates I've had ad nauseum here. I have posted a good many charts illustrating just how well the Obama administration handled the recession that it inherited, and how Trump was gifted a golden goose. An argument can be made that the moderate growth rate under Obama is preferable to rapid expansion which may shorten the growth periods in a boom/bust cycle.
  12. HVAU

    Obama Touts Universal Income

    It shows a leveling off in 2014 with a downward spike in the third quarter of 2015 and stasis from 2016 on. In other words, the equilibrium was achieved before Trump was even in office. What, pray tell, do you see?
  13. HVAU

    Obama Touts Universal Income

    That's not even what your chart shows.
  14. HVAU

    Obama Touts Universal Income

    I've made this argument over and over, but it still seems nobody gets it. These labor shortages aren't an all of the sudden phenomenon. The job market, and economy as a whole, increased remarkably well under Obama. Any 10 year economic chart will reveal that most gains occurred under Obama and a small percentage under Trump.