Simon_says

Prediction of next financial downturn

According to FedWatch Tool https://www.cmegroup.com/trading/interes... there will be 2 or even 3 interest rate CUTS in late 2020.

It means the difference between US10-US02Y spread will move up - arrow on the plot. We can already see that values jumped to 1.63 and that will continue!

The vertical dashed lines indicate the official beginning of recessions from https://fred.stlouisfed.org/series/T10Y2...

While the horizontal line (red/green) indicate 250 days moving average; Every time US10Y-US02Y crossed the 250d average the recession occurred but was not announced until a few months later!

It means interest cuts will follow during Presidential elections in the US and recession will not be announced until 2021!!!
Comment: Probability of US Recession Predicted by Treasury Spread, Official NY FED website

https://www.newyorkfed.org/medialibrary/...

The Most Scary and Important Chart You NEED to See Right Now:

https://youtu.be/Bs1_8r4oS_E
Comment: Bond market anticipating future Fed rate cuts

https://www.youtube.com/watch?v=7gYwGq47...
Comment: The Entire Treasury Yield Curve Is 'Inverted'

https://www.zerohedge.com/markets/entire...
Comment: Here we go again: Bank of America calls for 50 basis point cut at Fed's March meeting

https://www.youtube.com/watch?v=Ud1ZaiFi...
Comment: Two weeks before Official FOMC meeting, Fed cuts rates by half a percentage point to combat Coronavirus slowdown - that escalated very quickly!

https://www.cnbc.com/2020/03/03/fed-cuts...
Comment: Market Massacre: Oil Crashes 30%, Dow Down 1,000, VIX Explodes As Spoos Crater

https://www.zerohedge.com/markets/market...
Comment: Stocks Suffer Worst Week Since Lehman Despite Biggest Fed Bailout Ever

https://www.zerohedge.com/markets/stocks...
Comment: Very nice video, please watch: Will the Coronavirus TRIGGER a Global Recession?

https://www.youtube.com/watch?v=uc38v9yh...

These Updating Charts Show How Many People Are Losing Their Jobs Amid The Coronavirus Pandemic

https://www.buzzfeednews.com/article/lam...
Comment: The US will have negative interest rates in 2020/21, FED just needs another wave of nCov19 as an excuse!
Comment: Bloomberg urges users to get set for negative US rates
https://www.ft.com/content/4542185a-0017...

The stock market didn't plunge due to gigantic stimulus i.e. money-printing!

Please check out this very nice visualisation of $10+ Trillion 2020 Economic Stimulus in Cash
https://www.youtube.com/watch?v=YPHEM4gE...
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Simon_says
Comment: 'Recovery' Hopes Fade As US Wholesale Inventories Unexpectedly Plunge In June

https://www.zerohedge.com/markets/recove...
Comment: Gold And Crypto: Is This How Charts Look Before A Monetary Collapse?

https://www.zerohedge.com/markets/gold-a...
Comment:
Comment: The most predictable global financial crisis

https://www.aei.org/op-eds/the-most-pred...
Trade active: JPM: "Bond Yields Are Likely To Move Higher From Here" But The Real Question Is "What's Behind The Move"

https://www.zerohedge.com/markets/jpm-bo...

You've got to Pump it up,
Don't you know Pump it up!!

Danzel - Pump It Up
https://www.youtube.com/watch?v=0HtyF0ju...

Comments

Great chart but beware of timing. If you look back at the period Oct 98 up to 2000 you will notice the graph crossing the 250 day MA several times and then falling again. Suffice to say we could still have a 1-2 year window of rising stocks before any meaningful inversion and stock market crash.
+2 Reply
Simon_says BhaktaBasics
@BhaktaBasics, Thank you for the comment, similar question/suggestion was already posted under this plot by @sundevil8 Please check my answer as Yield Curve has to go below'0' zero then move above and close ~250 days moving average, I don't want to go too much into details related to this analysis e.g. interest rate cuts (please check how did they look like in 98-2000s and now 2020s), double deep of Yield Curve or crisis expectation window (statistically 12-18 months). I believe we are approaching huge financial crisis but if you think my timing is wrong then it's fine, official FED website already plotted yellow bar on their timeline, which means they expect something to happen soon https://fred.stlouisfed.org/series/DGS10
Reply
Can you explain me why the spread between 10y and 1y should increase? It would mean that the price of the long term bond increases substantially while the shorter term bond will increase by a smaller degree or even decrease. This is counter intuitive in a market collapse event. The short term bond price should decrease a lot! Given bankrupcy chances. While the long term should be more stable. Can't figure it out ;/
+2 Reply
lets continue with your thought what it means for the stock market.... interest rate cut is, generally speaking, bullish for stocks plus election year almost always comes with a bullish run for the us stocks and companies and most of the time other markets follow.

USD bearish
stocks/ indices bullish

does that make sense?
+2 Reply
Simon_says Caripoule
@Caripoule, Thank you for this question, I have another plot that shows 250 moving average for US10-US02Y against US indexes and will post it this weekend :-)
Reply
Second coming of Nostradamus I’m calling it haha
+1 Reply
This chart is moving up like clockwork.
+1 Reply
I think your right, just a year late in your prediction. March-April could be when this occurs
+1 Reply
Simon_says cnegussie98
@cnegussie98, I think you are not following FRED charts, as we are already in recession https://fred.stlouisfed.org/series/T10Y2Y and heading for double-dip recession/great depression!

Everything is correct and run as expected i.e. 2021 will be a 77th anniversary of Bretton Woods i.e. new financial system! 2021-1944 = 77 years

https://www.federalreservehistory.org/essays/bretton-woods-created#:~:text=The%20United%20Nations%20Monetary%20and,as%20the%20Bretton%20Woods%20system.

It was all planned long time ago and announced in 2014 by Christine Lagarde "The Magic Number 7" watch from 7:10 https://www.youtube.com/watch?v=ZUXTzVj5-uE
+1 Reply
cnegussie98 Simon_says
@Simon_says, my mistake I hadn't read your whole post fully but wow! You were right on point and everything seems to be going as planned, good work. Crazy how this is all foreseeable, amazing job sir!
+1 Reply
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