https://www.bloomberg.com/view/articles/2017-12-18/yield-curve-inversions-and-stocks-are-a-toxic-mix
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Every time the government drives up rates an inversion is possible
Economy is going to slow for sure. Unemployment is extremely low right now and it may not be sustainable. However, tax reform may give extra fuel to the economy and the recession could be delayed by a couple of years. May a recession in 2020?
For stocks, it could make sense to sell and then buy back at lower price. Rental properties are hard to sell high then buy low, we may have to ride the cycles even though we know exactly when the housing market will decline.
People have been talking about “melt up before melt down”, which brings the question - when a meltdown happens, would it be more or less than the melt up (to justify staying out of the market).
Here is another interesting piece:
https://www.bloomberg.com/news/articles/2017-11-09/in-2017-investors-can-either-buy-bubbles-or-be-left-far-behind
I am happy sitting out the next bubbles
Brokerage firms and IRS would be very happy.
Depends on the start point.
Starting point is now.
The question was, assuming the melt up is X%, and melt down is Y%, would Y be enough to erase X?
The gamble is will stock market crash be enough to leave out potential gains until the crash happens. We know it’ll happen, we don’t know when.
Historically, we don’t get a recession until 2.75-3.25% of interest rate increases. That points to 2019. Although, we’ve never cut taxes during a bull market.
Do you think tax cuts are already priced in or not?
I say not.
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I don’t think they are. I think most companies will use Q4 earnings calls to provide updated 2018 guidance based on the tax law changes. That’s why I think we go higher in 2018.
Weird, we usually get tax cuts while we invade countries so the next administration pays the bills.
I learned during my life in the financial industry that something is very true, “nothing is for free”. And the idiotic tax reform has a wonderful bill to be paid in the future, but the corporations aren’t going to foot it. That’s for sure.
It reminds me of the stupid “ooh well, why are we bailing out such and such?” That was when the market needed capital. Now? Really?
There is no urgency to hike rate. Inflation is forever lower than target. If economy proves to be less strong than Fed expected they can always stop the hike.
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Flatten a little from 3 months ago.
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One more hike and we will be inverted. 
Yield spread is narrowing, only 0.3%. Either we are nearing the end of rate increase, or we are heading to an inversion next year.