Yield curve recession edo antunnadu

[Sreeven]

Konchem ardham aithe cheppandi

 

[Bulls_Rose]

2020 nundi antunaru 

[csrcsr]

1 hour ago, Sreeven said:

Konchem ardham aithe cheppandi

 

Short term bonds ki interest ekva undi compared to long term, signifies confidence is low ani , usually its the otherway ivida kuda ade chepindi some where in video

 

[ManchamKodi]

7 minutes ago, csrcsr said:

Short term bonds ki interest ekva undi compared to long term, signifies confidence is low ani , usually its the otherway round ivida kuda ade chepindi some where in video

 

neeku em ardam aindhi uncle

[Hitman]

Calling @Konebhar6. Please help పిల్లలని కొంచమ్ safe గా బయట పడే లా 

[ManchamKodi]

5 minutes ago, Hitman said:

Calling @Konebhar6. Please help పిల్లలని కొంచమ్ safe గా బయట పడే లా 

పిల్లలనu safe opt will work at gas stations. H1b will beg employers not to cancel H1b and h4ead will start kitchen videos for paying rents.

 

[Konebhar6]

@Hitman @Sreeven

What is the Yield Curve 
It plots the yields of bonds with different maturity periods (3-mo, 2-yr, 5-yr, 10-yr, 30-yr, etc.). The slope of the curve predicts whether interest rates will remain flat/cut or increase and gives good clarity on economic conditions.

There are 3 types of Yield curves - Normal, Inverted, and Flat.

Normal Yield Curve (upward-sloping)
Short-term interest rates < Long-term rates
E.g. 2-yr bond gives 1% and a 10-yr bond gives 2.75%

It indicates an expanding economy -> WHY -> Long-term yields are higher because of less demand. People/businesses are getting better returns on their investments by borrowing money from banks at lower interest rates for their businesses than long-term bonds. If yields are higher it means Bond prices are lower.

What To-Do -> Invest in stocks esp. growth stocks. 

What Not To-D0 -> Do not buy Bonds during this time. 

 

Inverted yield Curve (downward-sloping)
Short-term Interest rates > Long-term rates
E.g. 2-yr bond gives 3% and a 10-yr bond gives 2.25%

It indicates an economic recession -> WHY -> Long-term yields are lower because there is too much demand to buy them. People/businesses do not want to borrow money from banks at higher interest rates and don't want to risk investments. If yields are lower it means Bond prices go higher. Buy Bonds during this time. 

What To-Do ->Buy bonds, gold, annuities, and fixed-income investments. Buy dividend-yielding stocks and stocks in defensive sectors (Healthcare, Consumer Staples, Utilities, Low price Retailers like TJMaxx, Dollar Tree, Burlington, etc.). Move 401k cash funds into bonds. Cash is king. Markets will make newer lows. 

Defensive sectors will do well-

What Not To-D0 -> Avoid Growth stocks. 

An Inverted yield curve is very rare. It's a warning of recession. Hence the focus on it. They are putting the pressure on Fed to reduce interest rates by 50 basis points to avoid recession.

 

Flat

Short-term interest rates = long-term rates
Implies uncertainty in the economy.
E.g. 2-yr bond gives 3% and a 10-yr bond gives 3.05%

[Konebhar6]

Dividend stocks will do well in a recession. As an example let's take Pfizer (PFE). The stock has not been doing well after COVID sales have declined.

Company Perspective Now - In recent quarters they have shown that they replaced COVID sales with other drugs in the pipeline. They need more drugs that generate money to grow. They need more money to put into research. They cannot add more money to research as they have to borrow at higher interest rates now.  

Investor Perspective Now - Stock has not grown much. The only appealing part is their dividend which is ~5.8% yield. But they can safely get 5% yield from a savings account. Why Invest in the stock?

What will happen with Interest rates drop and why Dividend stocks will gain -> With Interest rate drops, your yield at the bank will keep reducing. After a year the yield might be 2% which is not that great. But smart investors or money managers already realize this. They increase their position in PFE now before others rush. If you plan to move your money into PFE after a year, because the MFs buying PFE might go to 35 or 40, the yield is not 5.8% anymore. Your yield will probably be around 3.5 or 4. 

Why PFE will do good - With interest rates drop, they can borrow money at lower Interest rates towards drugs research and increase their pipeline.

The point is to identify the sectors and stocks that will do well with interest rate drops. 

[Mancode]

No recession 

It's a stagflation created by bad policies

[*Prince Charming]

LTT

[Konebhar6]

The ground reality is very different. 

Inflation is wayyyy too much. Compare the prices of everything from 2-3 yrs back. Expenses increased a lot and the standard 2.5% salary hike does not cover them. 

Lack of liquidity in the market combined with higher interest rates is killing the growth of a lot of companies. Healthcare sector is impacted. Energy prices are at 1-yr low. With recession in horizon, energy prices will go lower. At least thats good news. It will bring down the prices of a lot of items including gas (of course CA is an exception. Gas is  $4.7/Gallon still). Jobs are not available. A lot of companies are still looking at laying off employees for lack of growth. 

My guess is that we will see a tougher 2025. 

[argadorn]

25 minutes ago, Konebhar6 said:

The ground reality is very different. 

Inflation is wayyyy too much. Compare the prices of everything from 2-3 yrs back. Expenses increased a lot and the standard 2.5% salary hike does not cover them. 

Lack of liquidity in the market combined with higher interest rates is killing the growth of a lot of companies. Healthcare sector is impacted. Energy prices are at 1-yr low. With recession in horizon, energy prices will go lower. At least thats good news. It will bring down the prices of a lot of items including gas (of course CA is an exception. Gas is  $4.7/Gallon still). Jobs are not available. A lot of companies are still looking at laying off employees for lack of growth. 

My guess is that we will see a tougher 2025. 

Last year dress konnanu Labor Day sales after 1 year same dress 10 dollars ekuva undhi. Old model 10 dollars up ridiculous after 1 year first  time chusthuna in 16 years 

[Konebhar6]

1 minute ago, argadorn said:

Last year dress konnanu Labor Day sales after 1 year same dress 10 dollars ekuva undhi. Old model 10 dollars up ridiculous after 1 year first  time chusthuna in 16 years 

Agreed.

Cash is king. Keep in cash as much as possible for 2025. A lot of opportunities will come whether stocks or housing.

[SwamyRaRa]

8 hours ago, Konebhar6 said:

Agreed.

Cash is king. Keep in cash as much as possible for 2025. A lot of opportunities will come whether stocks or housing.

Ltt

[BattalaSathi]

On 9/4/2024 at 5:15 PM, Sreeven said:

Konchem ardham aithe cheppandi

 

"curve" ante whato whatu ani lungi ethi lagethuku vacha...chass disappointed..