Another Chart Shows a Recession Is Coming

The probability of a recession is rising. I recently highlighted how the Federal Reserve will trigger a recession at its December meeting.

Now, market data confirms that research. The yield curve, a traditional recession indicator, is falling. It’s at a 10-year low. In fact, it’s only been this low twice in the past 20 years.

I recently highlighted how the Federal Reserve will trigger a recession at its December meeting. Now, market data confirms that research.

The yield curve is the difference between the interest rates of two different Treasury notes. This chart shows the difference between notes due in 10 years and in two years.

The interest rate on the 10-year Treasury is about 2.3%. On the two-year, the interest rate is about 1.6%. The difference is 0.7%.

A large and growing difference between the two rates indicates the economy is growing. That means investors are willing to pay more to borrow money. They pay more because they believe growth will increase the return on investments.

A falling yield curve shows investors are worried. They are no longer willing to pay high rates to borrow money. And the rate on the 10-year Treasury drops faster than the rate on the two-year.

Based on the previous two signals, the chart shows there is good news and bad news in this data.

The good news is that the market tends to rally when the yield curve drops to this level. The S&P 500 gained almost 30% in the 19 months after the yield curve dropped below 0.7% in 2005. In 1995, the signal kicked off a 300% rally.

Both rallies ended in crashes. That’s the bad news.

This data is consistent with the recession indicator I wrote about last month. The end of the bull market is near. But the gains before the top will be significant.


Michael Carr, CMT
Editor, Peak Velocity Trader

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Source: Banyan Hill 

Bitcoin’s Next Fork Canceled

Bitcoin’s fork, which was scheduled to take place on November 16, has been canceled.

Support for the fork simply faded. Criticisms came mostly from longtime developers. Interestingly, many of them still agreed on the idea of larger blocks, which the new protocol would have provided. But they felt bullied and didn’t like how the decision to fork was made – which was in an invitation-only meeting, by the way.

So, what’s next?

Bitcoin still needs to scale. Increasing block size was an obvious way to do it. But it’s not the only way. Other technological solutions will likely compete with larger block sizes as the way to move forward.

Whatever is decided in the future, greater attention will be paid to forming a consensus in all corners of the bitcoin community.

I want to make clear that we’re still big believers in bitcoin and maintain that it should make up 50% of your cryptocurrency portfolio.

We fully expect bitcoin to continue to be the dominant digital coin. After all, this wasn’t the first time something like this happened. Bitcoin Classic, Bitcoin Unlimited and Bitcoin XT all proposed software upgrades and also failed to gain adoption.

Bitcoin’s price is slightly down this morning. Cancellation of the fork has eliminated uncertainty and should allow prices to continue to rise.

Thank you for your email inquiries regarding the fork. We’ll continue to keep you informed of further developments on this front.

Good investing,

Andy Gordon
Co-Founder, First Stage Investor

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Source: Early Investing