Category: Blog

Where Is the Credit Cycle Headed? “Typically, once the horse leaves the barn on the domestic credit cycle, there’s no turning back…” We all know that never ends well. Image: Hedgeye Risk Management LLC

Fear & Greed Index vs. S&P 500 Index This chart shows how optimism stays unusually low. Is this alarming for bears? Image: Cable News Network

New York Fed Probability of Recession in Next 12 Months since 1990 When an inverted yield curve occurs, short-term interest rates exceed long-term rates. It suggests that the long-term economic outlookis poor and that the yields offered by long-term fixed income securities will continue to decline. Since 1962, no recession has occurred without an inverted…

How Does Education Affect the Unemployment Rate? The chart below shows the unemployment rate by education and the importance of education for the unemployed. Image: Ben Casselman

Probability of Fed Rate Cut in July 2019 Probability of Fed rate cut in July 2019 at 77%. Image: Bloomberg

The Great Re-allocation from Equities to Bonds Continues Since the end of 2018, S&P 500 ETFs have seen outflows, while long Treasury ETFs have seen inflows. Image: Macrobond and Nordea

Yield Curve Inversion, How Long Until The Recession? In recent history, once the 10-Year minus 3-Month Treasury yield spread is negative and hits 10 consecutive days, it persists for weeks/months. When an inverted yield curve occurs, short-term interest rates exceed long-term rates. It suggests that the long-term economic outlook is poor and that the yields offered…

The Market is Almost Wrong about What the Fed Will Do Actually, the Fed decides when to raise rates. But the market decides when to cut rates: “Markets have accurately priced in cuts before easing cycles begin.” Keep in mind that rate cut expectations are highly predictive six months in advance. You may also like “Fed Policy…

Short-term Pessimism Almost as Extreme as December The trade war and tariffs scared the stock market. Short-term pessimism is generally a good contrarian indicator, especially at a time when the media seem to be worried about the market. Image: Ned Davis Research

ISM Manufacturing vs. 10-Year Treasury Yields This chart shows a nice correlation between ISM manufacturing index and 10-year Treasury yields since 2010. This chart can explain why 10-year Treasury yields have fallen. PMI index above 50 percent indicates that the manufacturing economy is expanding, and a PMI index below 50 percent indicates that the manufacturing…

Billionaire Ken Fisher Doesn’t Think the Fed Matters Here’s Why Another great interview with Ken Fisher: “It is a bull market, but people are too focus on the negative.” Keep in mind that knowledge is the key to understanding markets.