Inverted yield curve.
With long term rates so low historically for so long, the US economy should be roaring. The big question is why it is not? There are several narratives, but no theory supported by evidence that is compelling enough to gain widespread agreement.
A predictor with a perfect track record on the American economy is moving closer to signaling a recession
Jonathan Garber
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US Economy Might Be at Pre-Bubble Stage as Treasury Yield Curve Flattens Again
Kristian Rouz
4 comments:
Then short it....
I would suppose that some narratives would suggest that, and some wouldn’t. That's what happens in the face of uncertainty. Bulls operate on a positive narrative and bears on a negative one.
But the question from the POV of finance and econ is why, that is, what is the explanation in terms of some model of a mechanism which can be subjected to empirical test.
Otherwise it is just guessing and rationalizing about it.
Michael Hudson says we are in debt deflation and that is the real reason that Sears and other brick and mortar outlets are having problems, not the internet.
Many factors may be converging, and different narratives emphasize one or the other and argue over which is the primary factor.
Trying to identify causal factors in social systems is tricky owing to confirmation bias.
People tend to find what they start out looking for and don't see what they are not looking for.
When groupthink is involved the diagnosis based on etiology may be wrong and the wrong treatment prescribed, like "expansive fiscal austerity" win a debt deflationary environment.
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