Anyone know why the Stock Market Has Problems

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usasmokingsale
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Joined: July 5th, 2019, 4:32 am

Anyone know why the Stock Market Has Problems

In theory, current stock prices should reflect expectations of future earnings of the companies in the indexes, but how could these values jump 1 percent on Monday and tank 3 percent - a huge sell-off - on Tuesday? They couldn't Whole Cigarettes Newport. Instead, they jumped when Trump tweeted out a truce in the trade war, and they tanked the next day when the Chinese essentially responded,"Yeah that's not quite how it went down."

The market was also spooked by the flattening of the yield curve, meaning the shrinking difference between long-term and short-term bond yields. Such movements are driven by the Fed raising short-term rates and investors, worried about the near-term economy, demanding more long-term bonds (thus driving down long yields). Since yield curve inversions - long yields below short yields - are reliable predictors of future recessions (on average, a bit more than a year later), its flattening is not something you can shrug off.
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