Market Trek
with Brian Whitmer
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U.S. Stocks = 2x GDP? What the Most Expensive Stock Market in History Looks Like
U.S. Stocks = 2x GDP? What the Most Expensive Stock Market in History Looks Like
The U.S. stock market today is literally double the value of the U.S. gross domestic product. With commentary from EWI’s Brian Whitmer, this is a chart you want to see for yourself (you won’t see it elsewhere…).
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It’s Been 55 Years Since Emerging Markets Were This Cheap: See the Setup for Yourself
Market Trek: It’s Been 55 Years Since Emerging Markets Were This Cheap
See the Setup for Yourself
A huge change-in-trend is just ahead for emerging markets: specifically for gold, commodities and the economies of emerging market countries. We’re early in the transition away from the “digital era” and into the “materials era.” Discover why now is the time to act.
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Inverted Yield Curve: Is A Return to “Normal” Good for the Economy?
View Video Transcript Hey guys, Brian here. I hope your week’s going great.
In this video, I just want to do a quick update on the yield curve in the United States because it’s about to cross an important threshold.
Stay with me.
All right guys, welcome back.
The yield curve: the most popular way to view it is to subtract the tens from the twos. Under normal conditions, the tens yield more than the twos, and that keeps this line above zero.
The inverted condition is when the twos yield more than the tens. That puts the line below zero.
We care about this curve because it has been a reliable indicator of recession, and it’s been inverted since July 5, 2022. We’re pushing 780 some days here. There was an inversion in the late ’70s. That one lasted 624 days. So, this inversion has exceeded that by a long shot.
What we’re watching is a pattern since the ’80s where economic turmoil waited, right? It didn’t occur when the curve was inverted, it waited until the curve returned to normal. So, the curve inverts, nothing remarkable happens. Then, long yields rise back above short yields, and then the economy suddenly starts falling apart.
The first step in that progression, like I said, happened over two years ago now. The second step appears likely to happen soon, which is why I’m putting out this video now. I’m recording this on the morning of August 14. The tens are yielding 3.8 and change, twos around 3.9.
So, we are a whisker away from getting back to the normal condition.
Now, the press is framing things in an interesting way here. Reuters, I think, captured it best. Yes, longest inversion in history. But this time, the jury is out. This time, there is debate. This time, there’s optimism that the economy will escape contraction.
That optimism, in our view, is purely a function of the stock market, which is still near all-time highs. Maybe this time is different. We’re simply saying that the countdown to recession begins when the curve normalizes, and that clock is ticking.
Let me know what you think in the comments, and I’ll see you in the next video.
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Brian Whitmer
Global Markets Strategist
Editor, European Financial Forecast
Brian Whitmer was a civil engineer in another life, so he’s got a good sense of how things are constructed. Applying that skill set, he deconstructs today’s sundry financial vehicles, like CDOs, meme stocks, subprime mortgages, SPACs, et al, and contextualizes them for his subscribers. He edits the monthly European Financial Forecast and contributes the European stock section of our monthly Global Market Perspective.
Brian’s also got a bit of wanderlust, so he gets a first-hand, boots-on-the-ground feel for what’s really going on around the world.
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