What if Goldman Sachs Is Right and Yield Curves Can't Predict Recessions Anymore?
We're again going through a turbulent period in the world in which the economy and stock markets will also be more volatile in consequence. Friday was no exception.
On that day, we were met with a barrage of U.S. economic data, including private payrolls, nonfarm payrolls, and the unemployment rate. Initially, we witnessed a surge in yields and a sharp drop in stocks. However, just as the session was about to begin, stocks staged an unexpected turnaround, closing the day in positive territory. Notably, this marked the first time the S&P 500 had closed a session with a gain of over 1 percent since late August.
The current market climate has become increasingly challenging to decipher. It often forces us to confront a difficult truth: admitting when we were wrong and didn't anticipate such market movements.
Over the past year and a half, central banks worldwide have been combatting inflation by aggressively raising interest rates. The Federal Reserve's actions have been among the most assertive in history. Remarkably, despite these measures, we have not yet experienced a recession.
Given the significant amount of time that has elapsed, could we perhaps argue that we are already witnessing a gentle economic slowdown?
In the present moment, if we scrutinize one of the prominent trends—comparing the NASDAQ and Russell 3000 indices—it becomes evident that mega-cap growth stocks continue to outperform both small-caps and large-caps. This trend remains a noteworthy aspect of the current market landscape.
This leads us to ponder a pertinent question: If the prevailing consensus among economists and analysts is that the market is on the brink of a collapse, why do we witness Consumer Discretionary sectors, which deal in secondary
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