Forecasting Recessions: the Puzzle of the Enduring Power of the Yield Curve
"Their nature and their behaviour is not something we are going to fully understand, if ever; certainly except in retrospect."
Technical:
Technical analysis must be agreed upon and make a buzz to work. We have that with the Hindenburg Omen (Hindenburg Omen Misconceptions).
Hindenburg Omen Google Trend
The Yield Curve TWISTs Again shows that a powerful TWIST of the Yield Curve is underway.
Tempo:What we need now in order to make a winning trade is a timing or a price for entry.
Financial crises are characterised by discontinuous breaks in market pricing the timing of which by definition must be unanticipated - if people see them coming, then the markets arbitrage them away.
Deus in Machina: 3, 2, 1, 0
As I explained the crash following a twist back to normal of a yield curve is a small external shock. For example it is well known that Black Thursday on Wall Street was triggered by the collapse of a small Austrian bank.
In physics we know that such a shock can be generated why several signals resonate (this is why infantry men don't march in step when crossing a bridge.)
For us economist annual holidays are a way to coordinate economic activities: For us economists holidays are a way to coordinate the economic activities of those who celebrate as well as those who don't. (confer Christmas for Christians, Passover for Jews, Ramadan for the Christians, Indian marriage season,...) When these activities occur at around the same time they economically resonate with each other.
Times and Dates:
First there is the yearly cycle of the stock market:
September:
As we see on September the stock
market has,
on average, the worst negative return.
Sept. 9th:
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