I read an interesting article this past week on Business Insider titled,
Before we continue we should first define the word RECESSION. According to BusinessDictionary.com, a recession is:
Period of general economic decline, defined usually as a contraction in the GDP for six months (two consecutive quarters) or longer. Marked by high unemployment, stagnant wages, and fall in retail sales, a recession generally does not last longer than one year and is much milder than a depression.
In the article, CNBC's Art Cashin recently stated that every decade since 1850 in the U.S. has had a recession.
NOTE: We haven’t had a recession this decade yet, but have 1.5 years left to find out.
The article goes on to state:
No one can really predict when the next recession will hit with any degree of precision. Recessions typically occur because certain parts of the economy get overheated and then corrected. Yet even economists don't have an overarching model or theory that can accurately explain when, why or how that will happen. The reason this is the case is that something as complex as economic activity is mainly controlled by human behavior, not rational economic textbook theory.
Well, I totally disagree with the article. I wrote about the single best indicator that predicts recessions two months ago.
The inverted yield curve is the single greatest indicator of a coming bear market. The inverted yield curve has predicted the past 5 recessions going back to the late 1970's. Every time the yield curve turns negative, a recession has occurred in the near future. Since 1956, equities have peaked six times after the start of an inversion in the yield curve and the economy has fallen into recession within seven to 24 months.
The last two recessions occurred about 1.5 years after the yield curve inverted.
Based on the last 5 inverted yield curves, I think we will be in a recession no later than April 2020.
But by time, it will be too late, the Market would have already tanked and billions of dollars would have evaporated. Stay tune for my single greatest indicator that I use to predict Market tops and bottoms.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
