My Investing Muse

Is the macro so bad?   What is the macro (economics)? According to Investopedia: Macroeconomics is the branch of economics that deals with the structure, performance, behavior, and decision-making of the whole, or aggregate, economy. The two main areas of macroeconomic research are long-term economic growth and shorter-term business cycles. Gross Domestic Product (GDP) For a start, 2 successive quarters of GDP decline in the US is a good start on why the macro is bad.   US GDP (2018 - 2022) Source: https://www.bea.gov/news/2022/gross-domestic-product-second-quarter-2022-advance-estimate According to the US, this alone does not imply recessions.  However, we are expecting earning compressions in the coming earnings reports. With the recent PMI coming out from China, the demand for production is slowing down.  China is one of the big producers and this should imply a drop in global demand too. Inverted Yield Curve An inverted yield curve shows that long-ter...

There is much talk about yield curve inversions and their correlation with recessions. the news painted a mixed response to the inverted yield curve Yield curve extracted from Reuters From Investopedia: An inverted yield curve describes the unusual drop of yields on longer-term debt below yields on the short-term debt of the same credit quality.   Sometimes referred to as a negative yield curve, the inverted curve has proven in the past to be a relatively reliable lead indicator of a recession. The yield curve can be expressed using a percentage of the 2-year and 10-year treasury yield rates or the net difference between the 2 year and 10 years treasure rates.  From marketwatch.com - note that a recession usually follows the inversion An inversion in these particular points has correctly predicted a recession with a lead time of between eight months and two years in each of the last eight recessions .   The average time between the formation of the inverted...