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A yield curve inverts when long-term interest rates drop below short-term rates, indicating that investors are moving money away from short-term bonds and into long-term ones. This suggests that the market as a whole is becoming more pessimistic about the economic prospects for the near future . When looking at inverted yield curve, it can be any pair of long-term interest rates and short-term interest rates. In this article, we will look at the inverted yield curve between 30-year and 10-year treasury bond yields . Inverted Yield Curve Precedes the Recession The Fed's ongoing rate hiking will eventually trigger the next recession. Historically, an inverted yield curve - the difference between 10-year and 2-year bond yields - has been one of the single-best leading indicators of an impending downturn . Figure 1. Inverted Yield Curve Precedes the Recession The Slope of the Yield Curve Conceptually, the slope of the yield curve is a rough approximation of the stance of U.S. mo...

One popular macroeconomic analysis metric to compare economic productivity and standards of living between countries is purchasing power parity (PPP). PPP is an economic theory that compares different countries' currencies through a "basket of goods" approach. Purchasing Power Ranking Based on 2021 Data Based on data of  Purchasing power parities (PPP), and  Exchange rates from [1].  The below table ranks the purchasing power of using US dollars to purchase the same basket of goods in different countries.  For example,  In Columbia, you can purchase 2.76 times of the same basket of goods as you do in USA. Country Purchasing Power of USD Georgia 3.37 Zambia 3.23 India 3.19 Turkey 3.18 Madagascar 3.18 Indonesia 3.01 Colombia 2.76 Russia 2.69 North Macedonia 2.67 Cameroon 2.45 Albania 2.41 Romania 2.38 Senegal 2.35 ...

Figure 1. Long-term Elliot Wave analysis posted in 2019  (courtesy:  Elliott Wave Trader ) Elliott  theorized that  public sentiment and mass psychology  move in 5 waves within a  primary trend  and 3 waves within a  counter-trend : [1]   Once a 1-to- 5 wave move in public sentiment has completed, then it is time for the subconscious sentiment of the public to shift in the opposite direction, which is simply the natural cycle within the human psyche, and  not  the operative effect of some form of "news."   Elliott Wave Analysis In [1],  Avi Gilburt  describes  Elliott Wave analysis  succinctly in this way: I have not found any other analysis methodology which  provides an understanding of market context  which exceeds that of Elliott Wave analysis. Moreover, Elliott Wave analysis  does not provide any 100% guarantees . Rather, it  provides us with probabilistic expectations based up...

Economics is not very good at explaining swings in economic activity.  We don't know what causes recessions.  We've never known.   — Eugene Fama In this article, we will not speculate on whether a recession is coming or will it be a mild recession or not.  But, we will focus on gold market development during a period of recession . Mild Recession vs Deep Recession A technical recession normally started when  GDP contracted for two consequent quarters.  However, recessions are officially declared by the National Bureau of Economic Research (NBER), a group of economists whose Business Cycle Dating Committee defines a recession as “ a significant decline in economic activity that is spread across the economy and lasts more than a few months .” In this article, mild recession vs deep recession are differentiated roughly by how long the pain last : Mild Recession Is a short and shallow recession like in 1990-91 or in 2001 Would be a relatively ne...

In 2020, over $6 trillion of stimulus money was created from thin air by the Federal Reserve and injected directly into the US economy by Donald Trump (and continued by Joe Biden) through COVID relief checks, PPP loans and bailouts for numerous corporations. Again, in 2021, Biden instituted the 'American Rescue Plan Act' which added $1.9 trillion to the pile. That's at least $8 trillion in helicopter money dropped on top of the US economy. [4] In this article, we will focus only on the  Economic Impact Payments  paid to the  lower- and mid-income earners. Figure 1.  Personal Saving Rate tagged with COVID-19 Stimulus Checks for Individuals [2] Stimulus Checks vs Personal Saving Rate The IRS issued three Economic Impact Payments during the coronavirus pandemic for people who were eligible: [1] 1st Stimulus Checks $1,200 in April 2020 2nd Stimulus Checks $600 in December 2020/January 2021 3rd Stimulus Checks $1,400 in March 2021 Figure 2.  Price of Sig net Jew...

In this article, we will cover what a market bottoming process looks like and various measures (i.e., rule of 20 , breadth thrust , etc.) to look for. Also read the below companion article: Investment—Finding A Market Bottom Market Bottoming Process According to Ned Davis Research (NDR), the stock market needs these 4 things to happen before it can find a bottom and starting moving higher again: [1] Oversold The first step is for the market to fall to deeply oversold levels. By several objective measures, the market can be described as oversold. Rally At some point, the sellers become exhausted , and the market posts a multi-week rally. Importantly, look for broad participation on rallies , including an expanding percentage of stocks above their short-term moving averages and upside volume. Note that the average bear market rally after a waterfall decline like the market is currently experiencing lasts a median of 25 days with gains of 14% (as of 05/24/2022) . Retest Most post-waterf...