Yield curve is steepening a little bit. Buys this equities bull market some more time.
Leading Economic Index is still trending higher. A medium-long term bullish factor for the stock market.
GDP continues to exceed potential output. This bull market doesn’t have many years left.
1 am: Yield curve is steepening a little bit. Buys this bull market some more time.
Interest rates are rising, so the majority of financial media is asking “when will rising interest rates hurt stocks”. This is the wrong question to ask.
Investors and traders should focus more on the yield curve. An inverted yield curve is a leading indicator for bear markets and recessions.
The yield curve has not inverted yet. In fact, the yield curve has steepened a little bit, which buys us more time until the yield curve inverts.
This leading indicator for bear markets still has months before it becomes triggered (probably at least half a year).
1 am: Leading Economic Index is still trending higher. A medium-long term bullish factor for the U.S. stock market.
The Leading Economic Index’s latest reading increased 0.4%, up from 0.3% in the previous month. The year-over-year change in LEI is still trending higher: this is important because the Leading Economic Index tends to turn negative before a recession begins.
1 am: GDP continues to exceed potential output. This bull market doesn’t have many years left.
The output gap measures the difference between current GDP (current output) and “potential GDP”. GDP continues to exceed “potential GDP”, which puts upwards pressure on inflation.
Historically, a bear market and recession didn’t always start when current GDP exceeded “potential output” by this much. But it meant that the bull market and economic expansion didn’t have many years left.