We hear a lot of coined terms thrown around by talking heads involved in the economy and it’s analysis. One is the “yield curve inversion” and how this ‘event’ marks a clear sign of upcoming recession. Yield curve inversions are when shorter-term government bonds have higher yields than long-term ones. This has been a hot topic of discussion in economic and market circles as everyone tries to determine where markets are going next.
You’re likely reading about an “impending recession,” which sounds kind of scary, especially for those of us who remember the Great Recession of 2008-9. The question right now is: are we already in a recession, or just experiencing another bump in the roller coaster?
There has been much discussion over the last month and half about Bear Markets, Sell-offs, the Global economy and a possible Recession. The vast majority of analysts believe we are not in a recession (neither the U.S., China, nor Europe) and that most economic indicators seem to point to the fact that overall the U.S. economy is strong. In fact, most analysts indicate that there is only a 20 -30% chance of a recession in the making for the U.S. In addition, trucking and retail industries are showing signs of stabilization indicating that things did not get worse in January. The factors that are seemingly the 'cause' of this downturn are angst surrounding global growth, politics, oil and Euro banking woes and each day one or another have been blamed for the sell-off during this downturn. However, none of them should be a catalyst for the down market indicating a true disconnect between reality and what investors in the market are thinking. It is important to note that when investors are buying in huge rallies it's traditionally thought the market has created a herd mentality however, when they are selling in bulk during downturns there is an assumption they are right.
