re: Dow down 700 pts

The yield curve inversion preceeded the Great Recession and other previous downturns in financial markets. We are just about in another situation where we have an inverted yield curve. Many economists put a lot of stock in it as a predictor of market downturns.

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The yield curve inversion preceeded the Great Recession and other previous downturns in financial markets.

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True, but that downturn was anywhere from 17-31 months out after inversion. That's a substantial amount of time to still make money post yield curve inversion, and it's more than a year gap you could be too early/late.

As a tool to use regarding investment decisions, it's shoddy at best.

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Not a timing indicator, it’s a condition indicator.

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Even still, what good is a condition indicator with no predictive power?

10y minus 3-month spreads are at 60 basis points. The last 3 times they fell from 150 basis points to 60, the market rallied 154% cumulatively (16.9% annualized), 32% cumulatively (8.5% annualized), and 26.5% cumulatively (11.5% annualized) from breaking that support level to actual recession.

Yield inversion is essentially hogwash as far as I'm concerned. It's a tiny part of a much larger dynamic.

Baby boomers have the majority of the money out in the economy (they had plenty of disposable income because their cost of living was so low). They don't have to spend (velocity has slowed to a crawl) like younger people do and are net sellers of stocks for the forseeable future. Liquidity in these markets are at all time lows. We have to ask ourselves: where will the net buyers come from? If central banks don't start buying stocks, we will collapse.

Personally, I am buying volatility on any weakness.

Good luck everyone

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They don't have to spend (velocity has slowed to a crawl) like younger people do and are net sellers of stocks for the forseeable future. Liquidity in these markets are at all time lows.

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Wut

Demographics are a HUGE problem not just here but globally.

People just aren’t having children like they used to. Just can’t afford it.

It takes more and more people borrowing and spending to keep the ponzi going. This is the exact reason that the banking system wants open borders which equal more debt slaves to keep it all going. Every country fighting over crumbs of a rapidly shrinking pie.

PRogrammed algos are buying (until they aren’t and bids dry up). They can and will pull bids quickly when we get a 2008 type volatility spike which is coming very soon.

This is what happens when the Fed scared out short sellers for so long.

You need them to buy to cover (liquidity for sellers wanting out).

Most of the holdings are in passive investment vehicles like ETFs.

You will see the biggest flash crash you can imagine.

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If central banks don't start buying stocks, we will collapse.

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Then I guess we’re going to collapse because the Federal Reserve, by law, cannot buy stocks. It can buy corporate bonds but not equities.

Exactly