The Curve Inverted....Recession Coming...

The yield on the ten year treasury in the USA has dropped below both the yield on the two year treasury and below the yield on the three month treasury bill.

Those who want you to just keep buying stocks say this...

https://business.financialpost.com/investing/investing-pro/the-yield-curve-has-inverted-heres-why-investors-shouldnt-freak-out-and-go-to-cash

And this...

https://www.cnn.com/2019/03/26/investing/savita-subramanian-markets-now-preview/index.html

And this...

https://www.cnn.com/2019/03/26/investing/savita-subramanian-markets-now-preview/index.html

Fact - The inversion of the ten year treasury yield and the three month treasury bill yield has predicted every single recession in the USA in the last 50 years.

Yield curves invert because the smart money sees a recession coming, and moves money into secure investments like government bonds, thereby driving prices for long term debt up, and the yields on that debt down. When those yields are higher on short term debt that long term debt, we have reached an inflection point - confidence is now negative among those investors who actually matter - a.k.a. not you.

To bail out of their riskier assets, they need buyers - that is where you come in. Every single time the curve inverts there is a cavalcade of persons telling investors that this time it is different - often resulting in investors having piles of crap in their portfolio when the recession hits, usually about 300 days following inversion.

Their arguments - USA focused...

You can hold companies in your portfolio that see massive price drops and recover later, which is what advisers who focus on the long term advise. But what is a bankrupt company worth in the log run? Quick - which companies are going to survive this time around?

The tax cuts will help? There was $350 Billion a year in tax cuts in the system when the recession started in 2007-08. This is total BS.

But the prognosticators are right - this time it is different.

We have never had so much public and private debt outside of a war.

We have never had so many out of the formal workforce outside of an acknowledged depression.

We have never had 30 years of wage stagnation on the part of the declining middle class.

We have never had such a large proportion of our society primed to retire and reduce their rates of consumption, implying a decade's long drag on growth.

What is happening isn't hard. Rates have been rising, and the economy that was heavily based on those low rates has been slowing.

The Central Bankers have pre-built a catastrophe. Look to them to start reducing rates soon. Too little, too late.