Stocks Stumble As Yield Curve Inverts

Associated Press ^ | 27 December 2005 | Ellen Simon

[Pondman88]

Yield curve inversion has not always preceded a recesion.
Judging by the sheer insanity of the mall yesterday, the crowds of people shopping, and my liberal brother's comment that the economy sucked....2006 is going to be a very good year.

[harwood]

NYT's sky IS falling..They just hit a new 52-week low!
Hahahaha

[Safetgiver]

Most all predictions are S&P up 11% minimum, DJ at 15000 before year end and overseas seeing records.

[DManA]

I disagree. It is a very useful industral metal.

With gold, it just happens to be that inflation is the cause for the demand.

[monocle]

High PEs can be the result of unrealistic expectations or falling earnings. Inversion of the yield curve is one of the single best predictors of the stock market which can be proven statistically. If one would have paid heed to this indicator in 2000-2001, one would have avoided all the grief which followed.

[montag813]

WAY too many folks (including on this forum) were expecting Dow 11k this week; the "Santa rally", etc. for it to possibly work.

[Protagoras]

Don't people sell off stock losers at the end of the year anyway?

Usually against profits. Not a lot of people have profits for the year.

[Protagoras]

For market/DJIA/Wall Street savvy Freepers, what is the consensus on the outlook for 2006?

If you find out, you can safely take the opposite position.

[Darkwolf377]

signals that in the past have preceded economic slowdowns

Why didn't the AP just headline this "COME ON, ECONOMIC SLOWDOWN, COME ON!!!!"?

[montag813]

Market is sensing that inflation is not a factor for the forseeable future.

It's too late. The Fed has already tightened 3-4 too many times. One benefit is that mortage rates are dropping for the first time in months.

[Protagoras]

Inverted yields are quite predictive in this respect.

More like correlated.

[devane617]

Anyone know if we have an "Investor" ping list here at FR? I am an evil DayTrader, or at least I like to think of myself as a trader, but in reality my returns are less than stellar.

[Protagoras]

With gold, it just happens to be that inflation is the cause for the demand.

That would be one opinion.

[308MBR]

Now that makes entirely too much sense. No wonder you aren't in politics.

Until the GOP starts supporting true conservatives challenging RINOs in the primaries, they aren't getting ANY of my money or time.

Alaska for instance recieved over $12,000 per capita last year in federal dollars, so why can't the state build its own dang bridges? I wonder what the per capita tax collections were from that state, including income and exise taxes. Pols like Stevens are THE problem.

[quant5]

I think trend will not hold this time as it has historically. The Feds intention was to purposely cool the housing market by raising short-term rates. That appears to be working but it has not slowed the entire economy down. If anything, it will be energy that slows the economy from a great bull market in 2006 to a slow but steady bull market.

[308MBR]

That generally means recession.

[DManA]

You and I don't know how many tightnings are "right" and neither does the Fed. That's the problem.

The Fed has already tightened 3-4 too many times.

[308MBR]

The trouble is about 90% of that 9% increase was in the form of personal debt.

[Protagoras]

Most all predictions are S&P up 11% minimum, DJ at 15000 before year end and overseas seeing records.

Most predictions YOU saw.

I sure hope you are incorrect, that would mean a really crappy year for the market in the most likely scenario.