Talking stocks, trading, and investing in general

[otc]

Is that relevant in this case though, as many of the most appreciating assets are non-discretionary? (Housing/food/transportation) Demand won’t/can’t change that much

I think it sort of can still?

Housing: purchase prices are set in an auction format AND are directly tied to interest rates. Less willing buyers, less people thinking it is a good time to upgrade, more expensive financing would all lead to an expectation that housing prices won't continue to surge as much as they did the past few years. Rents follow similar patterns although not as directly.

Food: At some level food is still discretionary. Plenty of substitution to cheaper brands, less fancy choices, etc. for people who aren't already shopping the low end of the market. And again, we're talking about expectations here. We know COVID gave a bunch of CPG/food brands excuses to raise prices, but can we convince people that won't keep happening?

Transport: Similar story to food. Car prices have been high long enough that we are starting to move into what you might call the medium-term where people aren't stuck with their past choices. In the face of high gas prices AND still-high car prices plus increased financing costs, it is about time for many consumers to choose cheaper cars, more efficiency, shorter commutes, etc.

 

[venividivicibj]

I think it sort of can still?

Housing: purchase prices are set in an auction format AND are directly tied to interest rates. Less willing buyers, less people thinking it is a good time to upgrade, more expensive financing would all lead to an expectation that housing prices won't continue to surge as much as they did the past few years. Rents follow similar patterns although not as directly.

Food: At some level food is still discretionary. Plenty of substitution to cheaper brands, less fancy choices, etc. for people who aren't already shopping the low end of the market. And again, we're talking about expectations here. We know COVID gave a bunch of CPG/food brands excuses to raise prices, but can we convince people that won't keep happening?

Transport: Similar story to food. Car prices have been high long enough that we are starting to move into what you might call the medium-term where people aren't stuck with their past choices. In the face of high gas prices AND still-high car prices plus increased financing costs, it is about time for many consumers to choose cheaper cars, more efficiency, shorter commutes, etc.

Housing - with the higher rates, mortgage rates are up ~40% yoy
Transport - with new cars stock slacking (and not catching up), used car pricing is still sky high (up 10% yoy, up 100% over 2019). Gas - no substitute.

Can't really go that much cheaper with either of these...(at least for the next 6-12 months)

 

[otc]

Yeah, but Omega was talking about the expectation of inflation.

You're not going to make things cheaper, but but you might be able to make people believe they aren't going to get even more expensive. Those current high prices are already baked in to the inflation figures.

For instance, on the housing front, high mortgage rates makes it hard for new buyers (who aren't coming in with a bunch of equity from an existing home) to make high bids and sustain the kind of price increases we've seen.
Yes, even if they pay today's prices, they will be paying more due to the mortgage rates, but cash (or high-equity) buyers will end up paying less and the new buyers will either stay out of the housing market or buy something smaller/cheaper.

It isn't directly fixing the housing cost problem--but the goal is just to make people *think* house prices won't continue to surge. Otherwise you get the spiral. They think housing will go up, so they need higher wages, in order to pay higher wages, company raises prices, faced with higher inputs other company raises prices, etc.

 

[amerikajinda]

Just ask the dude on here who has 100 dividend funds

The only formula I care about is Number of Shares Needed = Desired Annual Income / (Price x Yield)

or S=I/(P*Y)

This will give you the number of shares that you need to own in order to make the desired annual income that you want. So let's say you want to make $1,200 per year (or $100 per month) off of QYLD... then you'd take $1,200 and divide it by $17.30 times 10.99%, or 1200/(17.30 * .1099) to get 631.16, or let's just round up and say 632 shares needed of QYLD to make $100 per month. So checking the math, 632 shares at $17.30/share would cost you $10,933.60. So every year you'd be making $10,933.60 times 10.99% or $1,201.60, and then $1,201.60 divided by 12 months gets you $100.13 per month.

This way... you spread your risk around. If you only own just enough shares of many different dividend paying ETFs or stocks to earn you $100 per month, then if you do this with just 30 or 31 different investments you'd be making $100 a day, every day of the year, or approximately $36,500 per year in dividends without selling anything! You'll have less money invested in riskier, higher dividend paying investments and more money in safer, lower dividend paying investments...

For example, if you wanted to earn $100 per month from SCHD... you'd need to take 1,200/(72.58 x .0277) to get 597 shares needed, or $43,330. So you'd own more of the safer SCHD and less of the riskier QYLD but both would be paying you $100/month. Just repeat this with 30 more investments and you'll be making $100 a day, every day of the year, while spreading your risk around and owning more "safer" investments and less "riskier" investments.

Here are my current holdings:

Symbol	Name	Yield	Frequency
ASHS	Xtrackers Harvest CSI 500 China-A Shares Small Cap ETF	0.00%​	Annually
AUSF	Global X Adaptive U.S. Factor ETF	2.56%​	Quarterly
BBCA	JPMorgan BetaBuilders Canada ETF	1.23%​	Quarterly
BBEU	JPMorgan BetaBuilders Europe ETF	1.30%​	Quarterly
BBJP	JPMorgan BetaBuilders Japan ETF	0.00%​	Annually
BBUS	JPMorgan BetaBuilders U.S. Equity ETF	1.07%​	Quarterly
BDJ	BlackRock Enhanced Equity Dividend Fund	7.11%​	Monthly
BKLC	BNY Mellon US Large Cap Core Equity ETF	1.42%​	Quarterly
BST	BlackRock Science and Technology Trust	8.55%​	Monthly
CDC	VictoryShares US EQ Income Enhanced Volatility Wtd ETF	3.83%​	Monthly
CII	BlackRock Enhanced Capital and Income Fund Inc	6.43%​	Monthly
CNYA	iShares MSCI China A ETF	0.37%​	Semi-Annually
DEM	WisdomTree Emerging Markets High Dividend Fund	3.72%​	Quarterly
DES	WisdomTree U.S. SmallCap Dividend Fund	2.43%​	Monthly
DGRE	WisdomTree Emerging Markets Quality Dividend Growth Fund	2.04%​	Quarterly
DGRO	iShares Core Dividend Growth ETF	1.94%​	Quarterly
DGRW	WisdomTree U.S. Quality Dividend Growth Fund	1.44%​	Monthly
DHS	WisdomTree U.S. High Dividend Fund	3.81%​	Monthly
DIVO	Amplify CWP Enhanced Dividend Income ETF	4.89%​	Monthly
DJIA	Global X Dow 30 Covered Call ETF	8.61%​	Monthly
DNL	WisdomTree Global ex-U.S. Quality Dividend Growth Fund	4.26%​	Quarterly
DVY	iShares Select Dividend ETF	2.81%​	Quarterly
DWX	SPDR® S&P International Dividend ETF	1.35%​	Quarterly
EWUS	iShares MSCI United Kingdom Small-Cap ETF	2.60%​	Semi-Annually
FLGB	Franklin FTSE United Kingdom ETF	2.71%​	Semi-Annually
FOVL	iShares Focused Value Factor ETF	3.28%​	Quarterly
FYLD	Cambria Foreign Shareholder Yield ETF	4.09%​	Quarterly
GAL	SPDR® SSgA Global Allocation ETF	1.06%​	Quarterly
GHY	PGIM Global High Yield Fund, Inc.	10.51%​	Monthly
GLDI	Credit Suisse X-Links Gold Shares Covered Call ETN	7.87%​	Monthly
GLO	Clough Global Opportunities Fund	14.23%​	Monthly
GLQ	Clough Global Equity Fund	14.29%​	Monthly
GLV	Clough Global Dividend and Income Fund	12.53%​	Monthly
GOF	Guggenheim Strategic Opportunities Fund	12.43%​	Monthly
GWX	SPDR® S&P International Small Cap ETF	2.38%​	Semi-Annually
HDV	iShares Core High Dividend ETF	2.18%​	Quarterly
HERD	Pacer Cash Cows Fund of Funds ETF	1.65%​	Quarterly
IAI	iShares U.S. Broker-Dealers & Securities Exchanges ETF	1.88%​	Quarterly
ICF	iShares Cohen & Steers REIT ETF	1.27%​	Quarterly
IDV	iShares International Select Dividend ETF	8.97%​	Quarterly
IEDI	iShares Evolved U.S. Discretionary Spending ETF	1.05%​	Quarterly
IEUS	iShares MSCI Europe Small-Cap ETF	2.49%​	Semi-Annually
IGRO	iShares International Dividend Growth ETF	3.94%​	Quarterly
INKM	SPDR® SSgA Income Allocation ETF	3.03%​	Quarterly
JEPI	JPMorgan Equity Premium Income ETF	11.11%​	Monthly
JEPQ	JPMorgan Nasdaq Equity Premium Income ETF	9.69%​	Monthly
KLCD	KFA Large Cap Quality Dividend Index ETF	0.00%​	Annually
KNG	FT Cboe Vest S&P 500® Dividend Aristocrats Target Income ETF	4.06%​	Quarterly
MOAT	VanEck Morningstar Wide Moat ETF	0.00%​	Annually
NDVG	Nuveen Dividend Growth ETF	1.30%​	Quarterly
NOBL	ProShares S&P 500 Dividend Aristocrats ETF	1.60%​	Quarterly
NUGO	Nuveen Growth Opportunities ETF	0.00%​	Annually
NUSI	Nationwide Nasdaq-100® Risk-Managed Income ETF	8.36%​	Monthly
OPP	RiverNorth/DoubleLine Strategic Opportunity Fund	16.02%​	Monthly
PBP	Invesco S&P 500 BuyWrite ETF	1.32%​	Quarterly
PEX	ProShares Global Listed Private Equity ETF	1.35%​	Quarterly
PEY	Invesco High Yield Equity Dividend Achievers™ ETF	3.88%​	Monthly
PFF	iShares Preferred and Income Securities ETF	5.26%​	Monthly
PGX	Invesco Preferred ETF	5.56%​	Monthly
PIE	Invesco DWA Emerging Markets Momentum ETF	0.02%​	Quarterly
PRN	Invesco DWA Industrials Momentum ETF	0.11%​	Quarterly
QDF	FlexShares Quality Dividend Index Fund	1.92%​	Quarterly
QDIV	Global X S&P 500® Quality Dividend ETF	2.97%​	Monthly
QDPL	Pacer Metaurus US Large Cap Dividend Multiplier 400 ETF	6.74%​	Quarterly
QQQJ	Invesco NASDAQ Next Gen 100 ETF	0.47%​	Quarterly
QQQM	Invesco NASDAQ 100 ETF	0.65%​	Quarterly
QQQX	Nuveen NASDAQ 100 Dynamic Overwrite Fund	8.30%​	Quarterly
QYLD	Global X NASDAQ 100 Covered Call ETF	11.99%​	Monthly
QYLG	Global X Nasdaq 100® Covered Call & Growth ETF	6.01%​	Monthly
RAFE	PIMCO RAFI ESG U.S. ETF PIMCO RAFI ESG U.S. ETF	1.99%​	Quarterly
REVS	Columbia Research Enhanced Value ETF	0.00%​	Annually
RIV	RiverNorth Opportunities	13.98%​	Monthly
RLY	SPDR® SSgA Multi-Asset Real Return ETF	1.12%​	Quarterly
RYH	Invesco S&P 500® Equal Weight Health Care ETF	0.79%​	Quarterly
RYLD	Global X Russell 2000 Covered Call ETF	11.93%​	Monthly
SAEF	Schwab Ariel ESG ETF	0.48%​	Quarterly
SCHD	Schwab U.S. Dividend Equity ETF™	2.77%​	Quarterly
SDY	SPDR® S&P Dividend ETF	2.54%​	Quarterly
SLVO	Credit Suisse X-Links Silver Shares Covered Call ETN	12.40%​	Monthly
SPDW	SPDR® Portfolio Developed World ex-US ETF	3.32%​	Semi-Annually
SPHQ	Invesco S&P 500® Quality ETF	1.57%​	Quarterly
SPMD	SPDR® Portfolio S&P 400 Mid Cap ETF	1.37%​	Quarterly
SPSM	SPDR® Portfolio S&P 600 Small Cap ETF	0.65%​	Quarterly
SPYG	SPDR® Portfolio S&P 500 Growth ETF	0.86%​	Quarterly
SPYV	SPDR® Portfolio S&P 500 Value ETF	1.91%​	Quarterly
SUSA	iShares MSCI USA ESG Select ETF	1.05%​	Quarterly
SVOL	Simplify Volatility Premium ETF	16.93%​	Monthly
SYLD	Cambria Shareholder Yield ETF	1.20%​	Quarterly
TDVG	T. Rowe Price Dividend Growth ETF	1.06%​	Quarterly
VIG	Vanguard Dividend Appreciation Index Fund ETF Shares	1.90%​	Quarterly
VIGI	Vanguard International Dividend Appreciation Index Fund ETF Shares	1.32%​	Quarterly
VNQ	Vanguard Real Estate Index Fund ETF Shares	2.49%​	Quarterly
VOX	Vanguard Communication Services Index Fund ETF Shares	0.65%​	Quarterly
VYM	Vanguard High Dividend Yield Index Fund ETF Shares	2.49%​	Quarterly
VYMI	Vanguard International High Dividend Yield Index Fund ETF Shares	1.99%​	Quarterly
XLE	Energy Select Sector SPDR® Fund	3.16%​	Quarterly
XLRE	The Real Estate Select Sector SPDR Fund	2.61%​	Quarterly
XLV	Health Care Select Sector SPDR® Fund	1.36%​	Quarterly
XRMI	Global X S&P 500® Risk Managed Income ETF	9.86%​	Monthly
XYLD	Global X S&P 500® Covered Call ETF	12.01%​	Monthly
XYLG	Global X S&P 500® Covered Call & Growth ETF	5.99%​	Monthly

 

[Texasmade]

Seems like you trimmed the list!

 

[amerikajinda]

Yes indeed I got rid of all individual stocks... loaded up on everything that's been on sale lately... consolidated a lot!

 

[Omega Male]

Speaking of “rational” expectations.

 

[HRoi]

He’s ahead of the game - baked beans and their byproduct, methane, solve your food and energy shortage problems in one go

 

[Piobaire]

He’s ahead of the game - baked beans and their byproduct, methane, solve your food and energy shortage problems in one go

Except then you get hit with that nasty carbon tax.

 

[ValidusLA]

The only formula I care about is Number of Shares Needed = Desired Annual Income / (Price x Yield)

or S=I/(P*Y)

This will give you the number of shares that you need to own in order to make the desired annual income that you want. So let's say you want to make $1,200 per year (or $100 per month) off of QYLD... then you'd take $1,200 and divide it by $17.30 times 10.99%, or 1200/(17.30 * .1099) to get 631.16, or let's just round up and say 632 shares needed of QYLD to make $100 per month. So checking the math, 632 shares at $17.30/share would cost you $10,933.60. So every year you'd be making $10,933.60 times 10.99% or $1,201.60, and then $1,201.60 divided by 12 months gets you $100.13 per month.

This way... you spread your risk around. If you only own just enough shares of many different dividend paying ETFs or stocks to earn you $100 per month, then if you do this with just 30 or 31 different investments you'd be making $100 a day, every day of the year, or approximately $36,500 per year in dividends without selling anything! You'll have less money invested in riskier, higher dividend paying investments and more money in safer, lower dividend paying investments...

For example, if you wanted to earn $100 per month from SCHD... you'd need to take 1,200/(72.58 x .0277) to get 597 shares needed, or $43,330. So you'd own more of the safer SCHD and less of the riskier QYLD but both would be paying you $100/month. Just repeat this with 30 more investments and you'll be making $100 a day, every day of the year, while spreading your risk around and owning more "safer" investments and less "riskier" investments.

Here are my current holdings:

Symbol	Name	Yield	Frequency
ASHS	Xtrackers Harvest CSI 500 China-A Shares Small Cap ETF	0.00%​	Annually
AUSF	Global X Adaptive U.S. Factor ETF	2.56%​	Quarterly
BBCA	JPMorgan BetaBuilders Canada ETF	1.23%​	Quarterly
BBEU	JPMorgan BetaBuilders Europe ETF	1.30%​	Quarterly
BBJP	JPMorgan BetaBuilders Japan ETF	0.00%​	Annually
BBUS	JPMorgan BetaBuilders U.S. Equity ETF	1.07%​	Quarterly
BDJ	BlackRock Enhanced Equity Dividend Fund	7.11%​	Monthly
BKLC	BNY Mellon US Large Cap Core Equity ETF	1.42%​	Quarterly
BST	BlackRock Science and Technology Trust	8.55%​	Monthly
CDC	VictoryShares US EQ Income Enhanced Volatility Wtd ETF	3.83%​	Monthly
CII	BlackRock Enhanced Capital and Income Fund Inc	6.43%​	Monthly
CNYA	iShares MSCI China A ETF	0.37%​	Semi-Annually
DEM	WisdomTree Emerging Markets High Dividend Fund	3.72%​	Quarterly
DES	WisdomTree U.S. SmallCap Dividend Fund	2.43%​	Monthly
DGRE	WisdomTree Emerging Markets Quality Dividend Growth Fund	2.04%​	Quarterly
DGRO	iShares Core Dividend Growth ETF	1.94%​	Quarterly
DGRW	WisdomTree U.S. Quality Dividend Growth Fund	1.44%​	Monthly
DHS	WisdomTree U.S. High Dividend Fund	3.81%​	Monthly
DIVO	Amplify CWP Enhanced Dividend Income ETF	4.89%​	Monthly
DJIA	Global X Dow 30 Covered Call ETF	8.61%​	Monthly
DNL	WisdomTree Global ex-U.S. Quality Dividend Growth Fund	4.26%​	Quarterly
DVY	iShares Select Dividend ETF	2.81%​	Quarterly
DWX	SPDR® S&P International Dividend ETF	1.35%​	Quarterly
EWUS	iShares MSCI United Kingdom Small-Cap ETF	2.60%​	Semi-Annually
FLGB	Franklin FTSE United Kingdom ETF	2.71%​	Semi-Annually
FOVL	iShares Focused Value Factor ETF	3.28%​	Quarterly
FYLD	Cambria Foreign Shareholder Yield ETF	4.09%​	Quarterly
GAL	SPDR® SSgA Global Allocation ETF	1.06%​	Quarterly
GHY	PGIM Global High Yield Fund, Inc.	10.51%​	Monthly
GLDI	Credit Suisse X-Links Gold Shares Covered Call ETN	7.87%​	Monthly
GLO	Clough Global Opportunities Fund	14.23%​	Monthly
GLQ	Clough Global Equity Fund	14.29%​	Monthly
GLV	Clough Global Dividend and Income Fund	12.53%​	Monthly
GOF	Guggenheim Strategic Opportunities Fund	12.43%​	Monthly
GWX	SPDR® S&P International Small Cap ETF	2.38%​	Semi-Annually
HDV	iShares Core High Dividend ETF	2.18%​	Quarterly
HERD	Pacer Cash Cows Fund of Funds ETF	1.65%​	Quarterly
IAI	iShares U.S. Broker-Dealers & Securities Exchanges ETF	1.88%​	Quarterly
ICF	iShares Cohen & Steers REIT ETF	1.27%​	Quarterly
IDV	iShares International Select Dividend ETF	8.97%​	Quarterly
IEDI	iShares Evolved U.S. Discretionary Spending ETF	1.05%​	Quarterly
IEUS	iShares MSCI Europe Small-Cap ETF	2.49%​	Semi-Annually
IGRO	iShares International Dividend Growth ETF	3.94%​	Quarterly
INKM	SPDR® SSgA Income Allocation ETF	3.03%​	Quarterly
JEPI	JPMorgan Equity Premium Income ETF	11.11%​	Monthly
JEPQ	JPMorgan Nasdaq Equity Premium Income ETF	9.69%​	Monthly
KLCD	KFA Large Cap Quality Dividend Index ETF	0.00%​	Annually
KNG	FT Cboe Vest S&P 500® Dividend Aristocrats Target Income ETF	4.06%​	Quarterly
MOAT	VanEck Morningstar Wide Moat ETF	0.00%​	Annually
NDVG	Nuveen Dividend Growth ETF	1.30%​	Quarterly
NOBL	ProShares S&P 500 Dividend Aristocrats ETF	1.60%​	Quarterly
NUGO	Nuveen Growth Opportunities ETF	0.00%​	Annually
NUSI	Nationwide Nasdaq-100® Risk-Managed Income ETF	8.36%​	Monthly
OPP	RiverNorth/DoubleLine Strategic Opportunity Fund	16.02%​	Monthly
PBP	Invesco S&P 500 BuyWrite ETF	1.32%​	Quarterly
PEX	ProShares Global Listed Private Equity ETF	1.35%​	Quarterly
PEY	Invesco High Yield Equity Dividend Achievers™ ETF	3.88%​	Monthly
PFF	iShares Preferred and Income Securities ETF	5.26%​	Monthly
PGX	Invesco Preferred ETF	5.56%​	Monthly
PIE	Invesco DWA Emerging Markets Momentum ETF	0.02%​	Quarterly
PRN	Invesco DWA Industrials Momentum ETF	0.11%​	Quarterly
QDF	FlexShares Quality Dividend Index Fund	1.92%​	Quarterly
QDIV	Global X S&P 500® Quality Dividend ETF	2.97%​	Monthly
QDPL	Pacer Metaurus US Large Cap Dividend Multiplier 400 ETF	6.74%​	Quarterly
QQQJ	Invesco NASDAQ Next Gen 100 ETF	0.47%​	Quarterly
QQQM	Invesco NASDAQ 100 ETF	0.65%​	Quarterly
QQQX	Nuveen NASDAQ 100 Dynamic Overwrite Fund	8.30%​	Quarterly
QYLD	Global X NASDAQ 100 Covered Call ETF	11.99%​	Monthly
QYLG	Global X Nasdaq 100® Covered Call & Growth ETF	6.01%​	Monthly
RAFE	PIMCO RAFI ESG U.S. ETF PIMCO RAFI ESG U.S. ETF	1.99%​	Quarterly
REVS	Columbia Research Enhanced Value ETF	0.00%​	Annually
RIV	RiverNorth Opportunities	13.98%​	Monthly
RLY	SPDR® SSgA Multi-Asset Real Return ETF	1.12%​	Quarterly
RYH	Invesco S&P 500® Equal Weight Health Care ETF	0.79%​	Quarterly
RYLD	Global X Russell 2000 Covered Call ETF	11.93%​	Monthly
SAEF	Schwab Ariel ESG ETF	0.48%​	Quarterly
SCHD	Schwab U.S. Dividend Equity ETF™	2.77%​	Quarterly
SDY	SPDR® S&P Dividend ETF	2.54%​	Quarterly
SLVO	Credit Suisse X-Links Silver Shares Covered Call ETN	12.40%​	Monthly
SPDW	SPDR® Portfolio Developed World ex-US ETF	3.32%​	Semi-Annually
SPHQ	Invesco S&P 500® Quality ETF	1.57%​	Quarterly
SPMD	SPDR® Portfolio S&P 400 Mid Cap ETF	1.37%​	Quarterly
SPSM	SPDR® Portfolio S&P 600 Small Cap ETF	0.65%​	Quarterly
SPYG	SPDR® Portfolio S&P 500 Growth ETF	0.86%​	Quarterly
SPYV	SPDR® Portfolio S&P 500 Value ETF	1.91%​	Quarterly
SUSA	iShares MSCI USA ESG Select ETF	1.05%​	Quarterly
SVOL	Simplify Volatility Premium ETF	16.93%​	Monthly
SYLD	Cambria Shareholder Yield ETF	1.20%​	Quarterly
TDVG	T. Rowe Price Dividend Growth ETF	1.06%​	Quarterly
VIG	Vanguard Dividend Appreciation Index Fund ETF Shares	1.90%​	Quarterly
VIGI	Vanguard International Dividend Appreciation Index Fund ETF Shares	1.32%​	Quarterly
VNQ	Vanguard Real Estate Index Fund ETF Shares	2.49%​	Quarterly
VOX	Vanguard Communication Services Index Fund ETF Shares	0.65%​	Quarterly
VYM	Vanguard High Dividend Yield Index Fund ETF Shares	2.49%​	Quarterly
VYMI	Vanguard International High Dividend Yield Index Fund ETF Shares	1.99%​	Quarterly
XLE	Energy Select Sector SPDR® Fund	3.16%​	Quarterly
XLRE	The Real Estate Select Sector SPDR Fund	2.61%​	Quarterly
XLV	Health Care Select Sector SPDR® Fund	1.36%​	Quarterly
XRMI	Global X S&P 500® Risk Managed Income ETF	9.86%​	Monthly
XYLD	Global X S&P 500® Covered Call ETF	12.01%​	Monthly
XYLG	Global X S&P 500® Covered Call & Growth ETF	5.99%​	Monthly

No FSK? Ex div dat tomorrow and around 13.3%

 

[Omega Male]

Explainer: U.S. yield curve inverts again: What is it telling us?

A closely watched part of the U.S. Treasury yield curve inverted on Monday for the first time since April following hotter-than-anticipated inflation data last week.

www.reuters.com

The U.S. curve has inverted before each recession since 1955, with a recession following between six and 24 months, according to a 2018 report by researchers at the Federal Reserve Bank of San Francisco. It offered a false signal just once in that time. That research focused on a slightly different part of the curve, between one- and 10-year Treasury yields.

The yield curve has inverted 28 times since 1900, according to Anu Gaggar, Global Investment Strategist for Commonwealth Financial Network, who looked at the 2/10 part of the curve. In 22 of these instances, a recession has followed.

For the last six recessions, a recession on average began six to 36 months after the curve inverted, she said.

Before March, the last time the 2/10 part of the yield curve inverted was in 2019. The following year, the United States entered a recession, which was caused by the global pandemic.

 

[brokencycle]

Explainer: U.S. yield curve inverts again: What is it telling us?

A closely watched part of the U.S. Treasury yield curve inverted on Monday for the first time since April following hotter-than-anticipated inflation data last week.

www.reuters.com

Between 6 and 36 months is a long window.

 

[Omega Male]

Between 6 and 36 months is a long window.

That's true and much of the imputed predictive power of the inversion signal historically might simply be because business cycles were shorter in duration back then.

 

[brokencycle]

That's true and much of the imputed predictive power of the inversion signal historically might simply be because business cycles were shorter in duration back then.

And it happened 22 out of 28 times, so we have an 80% chance we have a recession sometime in the next 3 years. Seeing the average length of the business cycle is about 5 years since 1854, that's not very indicative.

 

[Omega Male]

And it happened 22 out of 28 times, so we have an 80% chance we have a recession sometime in the next 3 years. Seeing the average length of the business cycle is about 5 years since 1854, that's not very indicative.

The curve inverts because the market believes the Fed will be aggressively raising rates in the short- to medium-term. If the Fed does that, it significantly increases the chance of a recession*. That's about as far as we can go.

(* Of the last 14 hiking cycles, 11 have been followed by a recession.)