Go to the Amazon.com link below for TIMING THE MARKET by Deborah Weir (Wiley, 2005).
Email: DebWeir@WealthStrategies.bz
Take her class at the NY Institute of Finance: nyif.com/courses/fimk_1014.html.
Thursday, August 17, 2006
The Fed added five times its normal amount today, and some will stay in the system for two weeks. Money supply should start to grow soon.
5 comments:
Anonymous
said...
Hello Deborah...
I notice that the 10yr-3mo Tbill spread reached a new negative low today ==> bigger yield curve inversion. Also, September is approaching. Morey
Do you apply your yield curve analysis to foreign stock markets? In other words, would a 3month/10 yr. treasury inversion in the US make you cautious about buying - say - japanese stocks or European stocks? I realize these markets are highly linked these days and tend to follow each other closely. But foreign markets have outperformed the S&P over the last few years so perhaps there has been some decoupling . .
The article at the above link contains a chart of probabilities for a recession given a value for the 10 yr-3month Treasury yield curve. As of Friday's close, I calculate the spread to be -.24. Given this, the chart suggests a 30% to 40% chance of recession.
The increased inversion is a concern! Fortunately, quality spreads are narrow and suggest that rates are still too low to cause a recession. I am, however, watching the high-yield/10-yr spread and will bail if it increased rapidly.
I use the same thought process for all developed countries.
Europe traditionally has lagged our economic & investment cycles by 6 months because we are their trading partners. Japan is closely tied to the US except when they make too many bad loans as they did in the late 80's and go into a 20-year bear market. Some think that Japan is starting a very long recovery, and I think they are probably right.
5 comments:
Hello Deborah...
I notice that the 10yr-3mo Tbill spread reached a new negative low today ==> bigger yield curve inversion. Also, September is approaching. Morey
Deb,
Do you apply your yield curve analysis to foreign stock markets? In other words, would a 3month/10 yr. treasury inversion in the US make you cautious about buying - say - japanese stocks or European stocks? I realize these markets are highly linked these days and tend to follow each other closely. But foreign markets have outperformed the S&P over the last few years so perhaps there has been some decoupling . .
Brian
http://www.schwabiis.com/mktoutlook.html?WEBKEY=100322
The article at the above link contains a chart of probabilities for a recession given a value for the 10 yr-3month Treasury yield curve. As of Friday's close, I calculate the spread to be -.24. Given this, the chart suggests a 30% to 40% chance of recession.
Morey
Dear Morey,
The increased inversion is a concern! Fortunately, quality spreads are narrow and suggest that rates are still too low to cause a recession. I am, however, watching the high-yield/10-yr spread and will bail if it increased rapidly.
Thanks for your comments,
Deb
Dear Brian,
I use the same thought process for all developed countries.
Europe traditionally has lagged our economic & investment cycles by 6 months because we are their trading partners. Japan is closely tied to the US except when they make too many bad loans as they did in the late 80's and go into a 20-year bear market. Some think that Japan is starting a very long recovery, and I think they are probably right.
Best regards,
Deb
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