David R. Kotok quoted in this excerpt from Politico.
Boomflation ignores the yield signs
By BEN WHITE With help from Joanne Kenen
AHEAD OF THE CURVE — This week, a very wonky event took place in a corner of the U.S. bond market. The “yield curve,” which sounds a lot sexier than it is, “inverted.” Or one of the most closely watched yield curves did. Oh my.
Some economists and financial Twitter nerds (of which I am one) exclaimed: “This means a recession is coming soon!”
Well, maybe. But other indicators, including some favored by the Fed, are much less worrisome. Here are a few to amaze your friends at parties when you shrug off the latest inversion and show you know better.
Other bond yields — Comparing three-month yields to 18-month yields, or 10 years to three months, “both imply sustained growth compared to the inversion of the 10-year/two-year spread,” Brusuelas said. He added, “That is consistent with the strong labor market and solid consumer spending.” Veteran investor David Kotok of Cumberland Advisors emailed a similar sentiment: “I’m not very concerned. … If you look at longer-term bond spreads,” he said, “the curve is not flat.” So. Never mind.
Read the full story at Politico: https://www.politico.com/newsletters/politico-nightly/2022/03/30/boomflation-ignores-the-yield-signs-00021767
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