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ALERT: “This Happened Prior To 6 Of The Last 7 Recessions”

Tyler Durden
July 12th, 2018
Zero Hedge
Comments (14)
Read by 4,763 people
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This report was originally published by Tyler Durden at Zero Hedge

“This less-followed indicator has a good enough relationship with recession risk during the last 50 years that it should not be ignored,” warned Jim Paulsen, Leuthold’s chief investment strategist, in a note to clients this week.

Having warned last week that “it’s been too quiet, for too long,” Paulsen now sees the potential catalyst for the market’s next move as low-rated investment-grade credit spreads blow out beyond an historically crucial level.

As Bloomberg reports, for the first time since just prior to the 2007-2009 recession, premiums on the lowest-rated tranche of investment-grade U.S. corporate bonds have risen to 2 percent after being below that level, according to data compiled by the Minneapolis-based research group.

The analysis looks at the gap in yields between corporate debt rated Baa by Moody’s Investors Service and those on 10-year Treasuries.

“We are not sure why a 2 percent credit spread has been so prescient in predicting recessions since 1970,” Jim Paulsen, Leuthold’s chief investment strategist, wrote in a note to clients Monday. That happened either during or prior to six of the past seven recessions, he said.

Given that the “subpar” economic recovery has relied on unconventional monetary policy and fiscal stimulus, “would it be shocking if it ended before traditional recession indicators provided warnings,” he wrote.

Of course, this trend fits with the recession-imminent warnings coming from the Treasury market…

But, according to CNBC, you can ignore that ‘never-been-wrong’ indicator because this time is different due to ECB/BoJ bond buying.

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Author: Tyler Durden
Views: Read by 4,763 people
Date: July 12th, 2018

Copyright Information: This content has been contributed to SHTFplan by a third-party or has been republished with permission from the author. Please contact the author directly for republishing information.


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  1. Deplorable Neal Jensen says:

    Some one tell me a logical reason why ANYONE is listening at to anything an ECONOMIST says? that’s like expecting a fresh runny dog turd to tell you true prophecy…

  2. crass says:

    … ad infititum, ad nauseum …

  3. runna muck says:

    this jack ass has been crying the sky is falling for years nothing,thats nothing let me say that 1 more time so it sinks in nothing he has said in 3 years has come true,im sticking with the dog turd

    • TharSheBlows says:

      Picked up another truckload of 1 Oz silver rounds, just .25 cents above spot price of $15.74 today. There are some good deals out there if you look. Buy Low Sell High. Dumped all my junk silver back in 2011 @$42 an Oz price.

  4. Beaumont says:

    Is this a leveraged short, at L2 or higher.

    • Beaumont says:

      It doesn’t seem that these people are being secretive.

      imhblo, casino cheats, outlaws, anarchists, tyrants, or that coffee guy at the top of the mountain, always wants to tell his story, graciously. Is the person doing you a favor.

      This is not an authoritative way to act, in spite of the haters, hating.

  5. Concerned Citizen says:

    C.N.B.C. can suck it, just like Trabek!!

  6. 2018 Is Now says:

    Whew! Glad it’s only a recession.
    I thought it was going to be scorched earth and the four horsemen riding.

  7. aljamo says:

    Don’t worry, the lying crooks running the ceaseless decline of representative government have barely dug into their barf bag of evil tricks to screw the public every which way but loose.

  8. Sheep Dog says:

    We never have exited the recession. Been ongoing since the Iraq war. The majority of the reporting to the American public is false. Inflation, 2%, my ass. GDP growth up 2%, my ass. If the cost of goods and services increase 10% every year, how can you have an UP economy when the growth is only 2%?

  9. Ghettocop says:

    I now call a lie, a Snyder since he has been consistanly wrong for so many years. Abe did you chop down the cherry tree? Father, I cannot tell a Snyder.

  10. “They” are waiting, waiting, waiting . . .

    for the perfect time to make their move.

    Then it will all come tumbling down and “they” can blame it all on Trump (who conveniently set himself as the Fall Guy).

    And while the vitriol runs amok, “they” will be sitting in the back, clapping themselves on the back for a job well done. Then “they” will provide the fix – a global economy to provide “peace and safety” to the world.

    For when they shall say, Peace and safety; then sudden destruction cometh upon them, as travail upon a woman with child; and they shall not escape. – 1 Thessalonians 5:3

  11. Sam Nelson says:

    The financial market is Rothschild Controlled, whatever Rothschild wants, Rothschild gets, a recession, a depression, an EMP, closing the Banks, shutting off the water, flooding Europe with the same kind of people killing the South African whites, who knows what will happen.
    The Great Depression was totally unnecessary, a game of let’s see how many of them we can get rid of, murder, as millions died because of it.
    The great Depression another way other than war for the Chosen to buy up the Goys businesses and companies real cheap, but, the Goys have nothing left the Master wants.
    Who knows when it will happen but rest assured it will happen, something really population dwindling, really big, starvation has always done real well for ‘them’ in the past, crop failure, drought, never mind big business owns all the big farms and the market.
    Where do we stand, in deep dodo, the Politicians and Judges, right, depend on them, do you know another joke?
    When, I don’t know, past due as far as my thinking goes, I worry about it a lot.

  12. I have to admit that I know very little about the stock market, but what I do know is that the financial system is a stacked deck.
    For me, a better indicator is what I see at the grocery store (and other stores).
    Warehouse, discount and stores that sell in bulk, tend to be quite crowded while the average supermarket has nowhere near the same number of shoppers.
    Dollar Stores are crowded, while the high end stores are not.
    Browsing in our local supermarkets, the meat counters look like meat museums (high prices, few people buying), as people buy up Top Ramen, pasta, cheap bread, etc.

    Maybe I’m old fashioned, but my philosophy is that if I can’t hold it, I don’t own it, and so I advise people, especially Millenials, to forego the new cars, name brand clothing, newest IPhones, I Pads, etc., and to stock up on food, seeds, tools, ammo, water purification systems, toilet paper, precious metals (if they can afford them), maps, and other essential items.

    The feces may not hit the ventilator in my lifetime, but things aren’t looking good.
    “We are on the verge of a global transformation, All we need is the right crisis.” David Rockefeller

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