There is so much speculation about the upcoming recession.
Understand these 5 indicators to improve your decision-making.
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Understand these 5 indicators to improve your decision-making.
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1. Inverted Yield Curve
The yield curve is a graphical representation of the yields (bond rates) in the short-term and the long-term.
When the long-term yield is lower than the short-term yield, there is a high probably a recession in looming.
The yield curve is a graphical representation of the yields (bond rates) in the short-term and the long-term.
When the long-term yield is lower than the short-term yield, there is a high probably a recession in looming.
2. High inflation
Persistently high inflation reduces our ability to buy goods and services.
The last major recession due to high inflation was in 1981-83, which was a deep recession.
Mortgage rates went all the way passed 20%!
Persistently high inflation reduces our ability to buy goods and services.
The last major recession due to high inflation was in 1981-83, which was a deep recession.
Mortgage rates went all the way passed 20%!
3. The VIX
The VIX is this Chicago Board Options Exchange’s Volatility Index.
It's known as the "Fear index"
In recent recessions, the end of the bear market is usually signaled by a bump in the VIX up to around 50, suggesting it gets worse before it gets better.
The VIX is this Chicago Board Options Exchange’s Volatility Index.
It's known as the "Fear index"
In recent recessions, the end of the bear market is usually signaled by a bump in the VIX up to around 50, suggesting it gets worse before it gets better.
4. Unemployment rate
We haven't experienced high unemployment yet.
At some point, the prediction is the inflation will push the interest rates so high that demand falls and companies need to downsize.
We haven't experienced high unemployment yet.
At some point, the prediction is the inflation will push the interest rates so high that demand falls and companies need to downsize.
5. Market sentiment
The stock market is highly correlated with people's emotions.
Very simply, investors’ optimism and pessimism has a significant impact on the market and the economy.
People sell when they are fearful.
People buy when they are optimistic.
The stock market is highly correlated with people's emotions.
Very simply, investors’ optimism and pessimism has a significant impact on the market and the economy.
People sell when they are fearful.
People buy when they are optimistic.
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Check out this video for more details:
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