4 ms·
Most of the commentary on the signaling of an inverted yield curve is all parroted by everyone else as “ominous”. Catherine Wood is the only person I’ve seen to
by whb07 8y ago
Most of the commentary on the signaling of an inverted yield curve is all parroted by everyone else as “ominous”. Catherine Wood is the only person I’ve seen to go against the grain on this one [0].
Essentially, she notes that the yield curve has been inverted roughly 50% of the time in the late 19th century and early 20th century. Furthermore, during the times it was inverted, it marked periods of strong growth!
It’s an interesting take as everyone else conveniently (more like lazy) are not doing the research and going back as far back as late 18th century. Her point of view is contrarian and refreshingly unique!
[0] https://www.cnbc.com/2018/12/04/the-economy-will-surprise-to-the-high-next-year-arks-catherine-wood.html https://www.cnbc.com/2018/12/04/the-economy-will-surprise-to...
- deleted 8y ago[deleted]
- dragonwriter 8y ago> Essentially, she notes that the yield curve has been inverted roughly 50% of the time in the late 19th century and early 20th century. Actually, she says specifically 1800-1929, which is an interesting choice because AFAICT the “3-month" security (the 13-week T-bill) referenced when discussing the 3m/10y inversion (the one discussed here as a key indicator) was first regularly issued in 1929. [0] The behavior of the markets when either or both of the instruments in the analysis were not regularly issued is obviously not comparable. (Further, when they aren't both regularly issued, assessing how much of the time an inversion was in effect is, at best, creative extrapolation, and more likely outright fiction.) > It’s an interesting take as everyone else conveniently (more like lazy) are not doing the research and going back as far back as late 18th century. So lazy of everyone else to only study a measure as far back as the basic premises of using the measure are valid and the components that make it up actually exist. [0] https://www.treasurydirect.gov/indiv/research/history/histmkt/histmkt_bills.htm https://www.treasurydirect.gov/indiv/research/history/histmk...
- dnautics 8y agowouldn't the motion of the yield curve in that era be very different given that the dollar was long-term noninflationary? if you expect the dollar to deflate in the long term, you might be OK accepting a lower long term yield.