Wednesday, August 14, 2019

INVERSION!..and the Dow takes a dive.

The big word of the day – INVERSION.
The Dow Jones Industrial Average dropped 800.49 points or 3.05% to 2,5479.42, its biggest point decline of the year and fourth largest point drop of all time. The S&P 500 fell 85.72 points or 2.93% to 2,840.6, while Nasdaq Composite declined 3.02% to 7,773.94. The Dow has given up the entire rebound from a sell-off earlier in the month.

The yield on the benchmark 10-year Treasury note on Wednesday broke below the 2-year rate, an odd bond market phenomenon that has been a reliable indicator of economic recessions. Investors, worried about the state of the economy, rushed to long-term safe haven assets, pushing the yield on the benchmark 30-year Treasury bond to a new record low on Wednesday.

“The U.S. equity market is on borrowed time after the yield curve inverts,” wrote Bank of America technical strategist Stephen Suttmeier.
As you can see, every time the 10-year has fallen below the 2-year in America over the last 40 years, recession has always followed, usually within 12-18 months.

It’s not just the equity market that is in trouble these days, as the real economy also seems to be hitting the wall. And not just in America.
Investors are increasingly worried about a global economic slowdown as weaker-than-expected data in China deepened the gloom in the world’s second-largest economy. Official data published Wednesday showed growth of China’s industrial output slowed to 4.8% in July from a year earlier, the weakest growth in 17 years.

Adding to the fears is Germany’s negative GDP print, which raised the risk that Europe’s largest economy is on the verge of falling into a recession. Euro zone GDP also grew by just 0.2% quarter on quarter, a significant slowdown from the 0.4% growth in the first quarter.
But hey, cheaper borrowing rates makes it easier to pay for a $1 trillion budget deficit that’s going to get higher as the markets and the economy sputters out. So that’s…something?

Our fair ex-Governor chimes in from BubbleWorld.

Nice timing, dickhead!

I'm thinking Dems will have plenty to say about the mess we're likely to be in. Maybe the reason that Trump's "robust economy" is such a secret is because it's not so robust in much of America. Including Wisconsin, which was 39th in the country for job growth in Walker's last year in office.

Hey Scotty - let's see Trump and other GOPs try to sell "their economy" and "their stock market" this time next year, especially in the Rust Belt states you need. I wonder if you'll even try.

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