Hard Landing Harbingers
"Ignore the signal at your own risk."
That was the stark warning from Cam Harvey, godfather of yield curve analysis, when queried by Bloomberg this week on the unprecedented length of the current three-month/10-year inversion.
Long story short, the curve has never stayed inverted for this long, or least when measured in trading days.
That should portend economic doom (or at least gloom), but maybe this time is different.
Don't scoff at my use of that most-maligned of all vilified phrases.
someone is rumored to have once said “timing is everything”.
Since the hard landing/soft landing/no landing assets all exist in the same universe (the one we exist in) and investors are able to freely and easily move between them, this is another way of saying dumb money vs smart money. Who is in what camp and who will be right? Who knows….?
Another site that I read regularly that uses various technical indicators shows “smart money” is very pessimistic and “dumb money” is neutral with about an average spread between the readings. The most reliable reading for sizable market moves has been when the spread between smart money and dumb money is wide, as in wider than now. It isn’t based on any group of people, but based on metrics that they have determined that best signal near term tops and bottoms.