Yield Curve Inversion Does Not Mean Recession Is Coming!

Headlines about how we are entering a recession because of the inverted yield curve are everywhere but I think just focussing on these negative indicators is a mistake.

In my latest video, I take a step back and think about what macroeconomic indicators actually mean. I also discuss an alternative indicator that is looking more positive called the Sahm Rule and see whether this works for the UK as well as the US.

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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.

#Economy #Investing #PensionCraft

[YourAverageInvestor]

Following this channel for several years now. Each video always helps my understanding in some way - excellent content!

[gavjlewis]

I'm 100% certain this was another great video! 😁

[obnoxiaaeristokles]

Ramin, there is currently a sentiment among many macro experts that the west will return to domestic production of goods after having imported cheap goods from China for many years. Do you believe that in this case unemployment may stay flat or decrease while at the same time reduced margins and raising inflation may turn growth negative? This would create a scenario in which the Sahm rule could be wrong.
Thank you!

[panagiotisanastasopoulos]

Excellent information and presentation Ramin. Thanks!

[bubblydeveloper]

Buy the news! I really appreciate the balanced data driven content Ramin.

[Jazzy]

Ramin, I greatly appreciate this video - Thank you.
I have a question however: Referencing your recession probability calculator and the Sahm rule, it seems that I should be certain about the likelihood of recession NOW, but the process doesn't seem to lend itself to what might happen in 12-18 months, precisely when concensus suggests we might enter a recession.

How would I use the tools in this video for a more forward looking perspective? Or is it more like watching and waiting until the toaster pops?

[seongkoolee]

Sahm rule is clearly a lagging indicator. Also not able to catch it if the rate of change is rapid. This FED hike is quite fast.

[thankfulservant]

As always enjoying your data driven analysis

[mattiamartello]

Great content! Can you please make a video about the 5 factor tilted portfolio by fama and french? Youtuber "ben felix" is an adamant advocate of this and I would really like to hear your take on that.. also if you can somehow recreate this portfolio with UK ETFs I am sure you will gain broad interest and views because there is not a single video on YouTube recreating this portfolio for the UK market.

[theoracle]

The 2-10 yield curve is no longer inverted and hasn't been for days. Not sure why all financial you tube guys ignore this. It was a very short term inversion, which typically is NOT a reliable recession signal, i.e. yield curve inversion has to get inverted and stay inverted over time to indicate a recession. Even if it is a warning, and it's not, recessions can take a year or 18 months to develop after an inversion.

[BananaJoe]

Hey Ramin,
what are your thoughts on LIBOR Eurodollar Futures inverting? There are some experts that say that this is a 100% indicator for recession in the USA and it inverted some time before the US treasury yield curve inverted.
Also as some people already stated: would you not say, that we are already in a recession? It is an economic slowdown by any means, since inflation hits hard and people do not earn proportionally more at the same time. Meaning that private spending is reducing while inflation surges even higher. The effects on this kind of recession aren't yet to be seen in stock or real estate markets but they are proof of the recession, aren't they?

[peixeverde]

Excelent again! Thanks, Ramin :-))) Question: The energy matrix of the world, especially Europe, is changing. Where would be best to place my bets in renewables and when? Abrazo :-))

[jevgenijliogkij]

OK US 🇺🇸 and UK 🇬🇧 good and what about EU ?

[dragonbot]

Excellect! work! Way to go providing valuable content and backing it up with research!!

[jayhay]

"Always invert". A wise man says. Especially if it's the popular narrative of the main stream media?

[PursuingHeaven]

we are already in a recession. Inflation is crazy (housing prices, gas prices, supply issues and lot more) and none of us are making more money. I don't care what others say, the recession is not only here, we are heading toward DEPRESSION

[vinodhakarthik]

Thank you! Do you think the US yield curve (2-year yield above 10-year yield) will ends the year inverted?

[whiteswordwarrior]

this uk recession analysis didnt age well

[ianjackson]

Unemployment is a lagging indicator. Growth is driven by private sector credit expansion. Banks borrow short and lend long. When the yield curve inverts this stops credit expansion and contraction of private sector credit leads to recession. Lloyds Bank is at 44p for a reason and house builders are down 30%.

[shahidaslan]

One question about the Sahm rule, it seems to me that it doesn't actually measures a recession but instead measures one of the effects of the recession (high unemployment). So the casual link should be recession -> unemployment.