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New Podcast: Debt Ceiling Risk | Recession Signals | 10/3 Yield Curve Inversion

By Derek Moore

Show Summary:

Derek Moore and ZEGA CEO Jay Pestrichelli are back again to discuss Cam Harvey’s 10/3 Yield Curve Inversion and its track record. What it has meant and can mean going forward. Looking at the Real Retail Sales importance for predicting recessions. What various Fed members and Jamie Dimon say about where interest rates are going. Plus, what is going on with wages and how real wage growth may or may not give the Fed cover to raise more. Then, they discuss banks going to the discount window and the new Bank Term Funding Program (BTFP) to borrow money. Finally, what do credit card interest rates and increased usage tell us about the health of the consumer, and why is no one talking about the upcoming debt ceiling deadline?

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 Topics Include:

  • Does What is the 10-year 3-month yield curve inversion?
  • Cam Harvey and the inception of the 10/3 yield curve as a predictor
  • How often has the 10/3 yield curve inversion predicted recessions?
  • Does the steepness of the yield curve say anything about the depth of recessions?
  • Debating whether the 10/3 inversion in 2019 predicted the 2020 recession?
  • Average time from yield curve inversion to the declaration of recessions
  • Cam Harvey interview saying this time might be different.
  • How real retail sales peaked back in March of 2021
  • Nominal retail sales disappointed while year over year hit lowest level in a while.
  • What is the Bank Term Funding Program (BTFP)?
  • Banks accessing the Fed’s discount window plus the BTFP.
  • Consumer credit usage makes a new high while credit card interest rates reach new high.
  • Jamie Dimon comments on higher rates for longer and implications
  • Real wage growth has been negative for the last 2 years.
  • What is the debt ceiling and what does it mean for the US Treasury?
  • US Treasury keeps a “checking” account at the Fed.
  • So, is good news “good news” again?

 Mentioned in this Episode:

 Atlantic article from 2011 explaining potential option to get around debt ceiling by US Treasury getting overdraft protection from the Fed 

 Can the Fed Fail? Q1 Winners Surprise the Crowd podcast 

 One Thing No One Ever Talks About within the S&P 500 Index | FANG Stocks 1 Rest of Market 0  

 Derek’s new book on public speaking Effortless Public Speaking 

 Derek Moore’s book Broken Pie Chart 

Jay Pestrichelli’s book Buy and Hedge