• 2 hours 3 Oil Stocks Ready To Weather The Geopolitical Storm
  • 20 hours Gold Miners Eye Big Third Quarter Profits
  • 1 day The U.S. Doubles Down On Domestic Lithium Production
  • 2 days Reddit Trader Scores 14,000% Returns On Rogue Trade
  • 3 days The Tangled Web Stretching From Turkey To DC
  • 3 days The U.S. Dollar Eyes Greater Upside
  • 3 days More And More Americans Believe A Recession Is Looming
  • 3 days Is The Pot Stock Boom Over Already?
  • 4 days How The California Utility Crisis Could Have Been Avoided
  • 4 days The Ugly Truth About Investing In Private Equity Deals
  • 5 days The World Is Facing A $1 Trillion Food Waste Crisis
  • 5 days Is It Time To Buy The Dip In Gold?
  • 5 days The History Of Oil Markets
  • 6 days Three Stocks To Watch Ahead Of Earnings Season
  • 6 days Markets Flat As Bulls And Bears Battle It Out
  • 6 days The Mining Industry Still Has a Human Rights Problem
  • 7 days 5 Billionaires Booted From Their Own Companies
  • 7 days Can Toyota's Hydrogen Car Take On Tesla?
  • 8 days Why Universal Basic Income Won't Work
  • 9 days Is This The Real Golden State?
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

  1. Home
  2. Markets
  3. Other

Equities And Treasuries Forecasting Past Recessions

One thing the 2007 recession taught us is how horrible the equity market was at forecasting economic contraction. The S&P 500 peaked in October 2007, just two months before the recession officially began. By contrast the 2001 recession saw the S&P 500 peak nine months earlier.

For whatever reasons this market has become far more short term focused. Macro events have less of an impact on price versus short term technicals or trade set ups. Whether it is due to the explosion of computer algorithm trading, intraday traders, ADHD no one knows.

The following chart highlights the last two recessions. Notice the forecasting ability of both equities and treasuries.

2001 Recession - begins Q1 2001

Treasuries peak January 2000, 11 months earlier

Equities Peak March 2000, 9 months earlier

2007 Recession - begins Q1 2008

Treasuries peak June 2006, 18 months earlier

Equities peak October 2007, 2 months earlier

Treasuries peaked most recently in April 2010, 13 months ago. The S&P 500 so far has peaked May 2011. Economic activity has rolled over since April. Are we looking at economic contraction in the next few months? The treasury market indicates we very well may.

 

Back to homepage

Leave a comment

Leave a comment