The yield curve just inverted – Jim Cramer and three other experts weigh in
The bond market just did something it hasn't done since 2007. Four experts break down what comes next.Trading Nation The bond market just did something it hasn't done since 2007. The spread between the U.S. 10-year note and 2-year note inverted, a signal investors take as a recession indicator. Four experts break down what comes next. Jim Cramer , host of CNBC's "Mad Money," says the U.S. economy is in a good spot to withstand some of the headwinds facing the global economy. "Our economy is uniquely not as sensitive because these are not exporters that need to have a dollar weaker. Remember our dollar is just getting stronger – an extraordinary rally in the dollar. I don't want to see it but I struggle to reach a conclusion that this is all bad given the fact that Germany has had these rates for some time and their market is not doing that badly even though they have an export economy. Their DAX in real terms is up even though they're exporting the Mercedez-Benz, the Volkswagen and BMW right to China. And those sales are very weak as we see the numbers from China so it's not the end of the world." Erin Browne, managing director at Pimco, sees greater chances of a rotation coming to markets in the short term rather than a more severe downturn. "If you look at the data even prior to 1980, typically you see the equity market go up about 4% in the 12 months post the yield curve inversion. That said, what you do see under the surface is a rotation out of the cyclicals and into the more defensive stocks and remember yield curve inversion – first for it to be a sizeable signal, it needs to be inverted for about three months. After that three-month inversion, you typically see within one to two years on average the economy turn and go into a recession but it doesn't necessarily mean that a recession is imminent." Andy Brenner, director at National Alliance Securities, says weakening global economies signaled the inversion. "What we saw overnight is the German economy came out with a negative GDP print, the global economies continue to be in turmoil and continue to be weakening and it wasn't a surprise to me the 2s/10s got inverted by 2 basis points overnight and got to about 2 basis points now. I don't see a recession on the rise in the U.S. but nonetheless that's where we're going and we think rates are going to go lower from here." Ian Lyngen, head of U.S. rates strategy at BMO Capital, says this time looks different than the last. "I'm certainly worried about a recession, I'm worried about a recession in 2020. I think what makes this particular event different than inversions we've seen in the past is [Fed Chair Jerome] Powell has already cut once. Typically, we don't see an inversion until after the point at which the market says the Fed needs to cut but they haven't yet." Read more: CNBC
Jim Cramer “an expert” 🤣😂 That was fast.
Jim Cramer is not worried about the yield curve, says Warren Buffett is buying bank stocksCNBC's Jim Cramer says the strength of the consumer sector and Warren Buffett's confidence in back stocks are key reasons not to overreact to the yield curve inversion. Jim is an idiot. Pay no attention. The yield curve is nothing and this scare campaigns happened last year for fews days but the this time the funds who caught short yesterday when Trump delayed 10% tariffs decision they found another reason to push the market down and they close the short with profit. jimcramer I'm a lot more concerned about 10yr real yields at 0.0% than the 2s/10s curve doing what the 2s/5s curve has been doing for the last 9 months. yieldcurve
The 'fear gauge' shows the market could be headed for 'choppy waters,' Jim Cramer says'The averages haven't really digested these latest gains, and like we saw last week, big moves higher can result in some serious stock market reflux,' he says. You don’t say. Probably will get worse next year during election season.
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