Weekly Market Commentary 9/29/14

Grading on a Curve (the Yield Curve, That Is)92914

Kids are back in school and have started taking tests. Some of those tests
are graded on a curve, meaning that students are graded based on their
score relative to the rest of the class. In terms of stock market indicators,
one that gets an A+ and ranks at the top of its class is another type of
curve — the yield curve. In fact, this indicator receives a perfect score (seven
for seven) in signaling recessions over the past 50 years.

The goal for all investors is to find indicators to help anticipate big down
moves, and the yield curve has been about as good as it gets on that
score. One of the Five Forecasters featured in our Mid-Year Outlook 2014:
The Investor’s Almanac Field Notes, the yield curve passes the test as
an indicator that has consistently signaled increasing fragility of the U.S.
economy and a transition to the late stage of the economic cycle, an
oncoming recession, and ensuing market downturn.
Many market participants have become worried (if not obsessed) about

Read Full Report here Weekly Market Commentary 09292014