Stagflation, inverted yield curves, oil risk, unemployment
Last summer, economist Nouriel Roubini and Brunello Rosa identified 10 potential downside risks that could trigger a US and global recession in 2020. Many involve the United States.
Trade wars with China and other countries, along with restrictions on migration, foreign direct investment, and technology transfers, could have profound implications for global supply chains, raising the threat of stagflation (slowing growth alongside rising inflation ).
Oil risk
With Iran sanctions and the Gulf of Oman tanker attack, we can add potential oil spikes as a supply-side risk. Oil price rise could threaten aggregate demand and thus consumption growth because tariffs and higher fuel prices reduce disposable income.
While there is no one way to predict a recession with technical analysis , there are ways to begin tracking multiple indicators that may collectively stand a much higher chance of predicting accurately the probability of one within a given time frame.
The slope of the yield curve
Yield curves don't typically invert. When they do, it creates an anomaly worth looking at. An inversion occurs when the yield on short-term Treasury securities exceeds the yield on long-term Treasury securities. While it might not seem like much at first glance, the inverted yield curve is actually a rare occurrence that can act as the bellwether for an economic recession.
Yield curve, Employment rate, VIX Volatility, Buffet Indicator
The Boyds economic recession model is triggered by a yield curve inversion (seen as red/orange on the graph).
Employment rate
In contrast to a narrowing of the spread between short- and long-term Treasury yields, a low unemployment rate usually suggests strengthening economic growth. However, historically, a trough in the unemployment rate also tends to be a reliable predictor of a business recession. Both the Civilian Employment-Population Ratio and Continued Claims (Insured Unemployment) are at all-time lows. We need to watch carefully because once a recession begins, unemployment rises sharply.
For more information please refer to my analysis:
Stagflation-US-and-global-recession-in-2020
The-Trade-War-Is-Not-Over
Yield-curve-Employment-rate-VIX-Volatility-Buffet-Indicator/
Trade wars with China and other countries, along with restrictions on migration, foreign direct investment, and technology transfers, could have profound implications for global supply chains, raising the threat of stagflation (slowing growth alongside rising inflation ).
Oil risk
With Iran sanctions and the Gulf of Oman tanker attack, we can add potential oil spikes as a supply-side risk. Oil price rise could threaten aggregate demand and thus consumption growth because tariffs and higher fuel prices reduce disposable income.
While there is no one way to predict a recession with technical analysis , there are ways to begin tracking multiple indicators that may collectively stand a much higher chance of predicting accurately the probability of one within a given time frame.
The slope of the yield curve
Yield curves don't typically invert. When they do, it creates an anomaly worth looking at. An inversion occurs when the yield on short-term Treasury securities exceeds the yield on long-term Treasury securities. While it might not seem like much at first glance, the inverted yield curve is actually a rare occurrence that can act as the bellwether for an economic recession.
Yield curve, Employment rate, VIX Volatility, Buffet Indicator
The Boyds economic recession model is triggered by a yield curve inversion (seen as red/orange on the graph).
Employment rate
In contrast to a narrowing of the spread between short- and long-term Treasury yields, a low unemployment rate usually suggests strengthening economic growth. However, historically, a trough in the unemployment rate also tends to be a reliable predictor of a business recession. Both the Civilian Employment-Population Ratio and Continued Claims (Insured Unemployment) are at all-time lows. We need to watch carefully because once a recession begins, unemployment rises sharply.
For more information please refer to my analysis:
Stagflation-US-and-global-recession-in-2020
The-Trade-War-Is-Not-Over
Yield-curve-Employment-rate-VIX-Volatility-Buffet-Indicator/
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