2 year inverted yield curve

It has felt like a recession for 2 years

A short line item thesis is usually to simplistic to explain economics, but I am not an economist. I’m not sure if there is anything novel here to take away, just my own thoughts.

Most of the yield curve inversions were in periods of a secular decline in yields. Coming off of ZIRP, inversion was easy to get to.

Zero rates which put in motion a potentially secular higher rate environment might make a LOT of 2000-2020 indicators obsolete. At minimum, less reliable.

Just like value metrics have been unreliable as we progressed into ZIRP.

We already had a technical recession

History would tell us to keep buying into pull backs as our markets recover with huge returns after these periods. However it looks to me like our next “crisis” will be a sovereign debt crisis and that’s much different than what we’ve faced in the past. In 2008 the Fed was able to paper over the mortgage crisis but can the do that if US debt is the issue?

If you were Japanese buying into the Nekkai crash in 1989 it took almost 30 years t get back to even. But, during that same period if you shifted to US markets you made out like a bandit.

I got conservative in 2008 as it seemed a real possibility that everything was going to blow up. It cost me a little on the rebound and I learned that you shouldn’t underestimate the PTB ability to kick the can down the road and keep things from breaking to protect their wealth.

The truth is nobody knows what the next crisis will be. I agree that the markets and assets are in a bubble but who knows when and what the catalyst will be that triggers a correction or worse yet, crash. About all you can do is not try to time it and keep your head on a swivel.