BAML: Stocks Are “On Borrowed Time”

by | Aug 14, 2019 | Headline News | 11 comments

Do you LOVE America?


    So far, the only key indicator of a strong economy, the stock market, has remained seemingly immune to what’s going on in Main Street America’s economy.  But according to Bank of American Merrill Lynch (BAML), the stock market is “on borrowed time.”

    The flattening of the main measure of the U.S. Treasury yield curve already spelled trouble for stock-market investors that have been on the back foot from escalating geopolitical concerns and simmering trade tensions, analysts at Bank of America Merrill Lynch said in a Tuesday note ahead of the inversion.

    The inversion of the main measure of the yield curve, or a negative spread between short-term and long-term yields, means a recession indicator is flashing red, according to a report by Market Watch. As more of these indicators go off the warning bells of a recession get louder.  But the stock market has appeared strong in spite of evidence that corporate buybacks are about the only thing propping it up right now.

    Once the 10-year Treasury note’s yield curve inverts, the stock market’s downturn is inevitable, say economic analysts.  The yield on the 10-year Treasury note was down 5.7 basis points at 1.619%, according to FactSet, while the 2-year yield was off 4.1 basis points at 1.628%. “The equity market is on borrowed time after the yield curve inverts,” the BAML strategists wrote.

    An inverted yield curve often serves as a prelude to a recession because it indicates when monetary policy and financial conditions are too tight for the broader economy. A yield curve inversion along the 2-year/10-year spread has come before the last seven recessions. Market Watch

    The times between the inverted yield curve’s appearance and the economic recession vary, meaning you could have some time (6 months to a year or so) to prepare yourself for the inevitable.  This everything bubble won’t last forever, and when it finally bursts, if you have not prepared your personal finances, you could be in a world of financial distress.

    “After an initial post-inversion dip, the S&P 500 index can rally meaningfully prior to a bigger U.S. recession-related drawdown,” BAML strategists said. But it sure seems like this is all hinging on hopes of yet another Federal Reserve interest rate cut.


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      1. Just bought a 4 week Tbill @ 2.09%.
        My Tax dollars at work!

        • Still loaning hard earned money to bankrupt people for pennies eh rellik? One day you will learn my friend…. and it will be an expensive lesson.

          • Stew,
            Due to my physical location PM’s aren’t a good safe investment.
            Most all my money is in real estate, tools, and farm stuff.
            I make enough on Tbills to pay my Federal tax bill.
            I don’t intend to get rich, but I will always have food, water, and a roof, soon I will have off grid power.
            I’m a prepper not an investor. I don’t have that kind of excess
            money and am too old to take on risk that needs years to recover from.

            • That was over the short term and, from what you’re telling us, not scared money.

              Some are sold at discounted rates.

              I also like the moral statement it makes, that you’re dealing with debtors, afterall.

      2. “the only key indicator of a strong economy, the stock market”

        The stock market has absolutely no correlation to the economy you fuc*ing dumbass. Try again.

        • Stew,
          Well stated!

        • Stuart

          “the only key indicator of a strong economy, the stock market”

          Yep. The stock market is divorced from the economy and it wasn’t amicable.

      3. freight volume has everything to do with the economy. its dead economy is finished. we are doomed. trump backed down on new china tariffs. it wouldve affected consumer goods. china is winning. trump will be exposed for his crimes soon and all hell will break loose.

        • The seeds of this recession/depression/economic collapse were planted in 2008 and 2009 by the GW Bush and Obama administrations. Trumps trade war may hasten the collapse a bit, but it is not the root cause. Trump will pay the price if it happens before the election, but when is hard to predict.

      4. I got out most of the market after it dropped 1% and am currently short which was great this wed.

        still early, the fed still has a few things up their sleeve but we probably now less than a year out from serious consequences that site like economic collapse have been preaching for years.

      5. Hmmmm, well the silver I bought in 96-2000 is quadrupled in price since then. And there is no reporting or taxes and 100% private. Compare that to yer apples lol…

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