How I'll Set My 'Recession Alarm Clock'

It's official, folks... Federal Reserve Chair Jerome Powell is adjusting the central bank's posture. [Chaikin PowerFeed]( How I'll Set My 'Recession Alarm Clock' By Vic Lederman, editorial director, Chaikin Analytics It's official, folks... Federal Reserve Chair Jerome Powell is adjusting the central bank's posture. Powell told reporters yesterday that the Fed is still asking itself, "Should we hike more?" But then, he followed that question with a newly "dovish" statement... Slowing down is giving us, I think, a better sense of how much more we need to do, if we need to do more. The Fed is "slowing down." In other words, it's taking a breather to check its surroundings. Now, many Wall Street analysts see this development as a win for investors. After all, the Fed's rate hikes were designed to slow the economy. More specifically, the Fed hoped to slow inflation. And it's working... The year-over-year change in the Consumer Price Index has fallen from more than 9% in June 2022 to 3.7% today. So based on that development, the Fed is executing its plan. But that doesn't mean we're out of the woods yet... Existing U.S. home sales are in freefall. And new home sales are still below the level they hit in 2019. When you throw in current mortgage rates, the housing market is locked up today. Meanwhile, auto-loan defaults are at a level we haven't seen since the 1990s. And while credit-card defaults are still historically low, they're soaring off their recent lows. In short, the Fed is taking its foot of the economic brake pedal. But from housing to cars to credit cards, the cracks are clear. And recession clouds are still looming over the horizon. That leaves many folks wondering when the next recession will come. So today, let's discuss how I'll set my "recession alarm clock"... Recommended Links: [''Slowly, Then All at Once... This Is How Trust in Government – And Your Life Savings – Disappears']( Porter Stansberry just returned after three years with a big warning about 2023's historic bond market meltdown... and what's coming next. [Click here for details](. [''I Found the Answer to Retirement']( A man from New York came forward with his unique story of how he retired early and worry-free WITHOUT stocks... thanks to ONE single idea that anyone can use. Now he sees 16%-plus annual returns with legal protections... and he NEVER has to worry about another market crash again. [Get the full story right here](. Unfortunately, my crystal ball is broken. But we can use a long-term historical chart to give us an idea about when the next recession could come... It's the so-called "Fed spread" over the past three-plus decades. We talked about this indicator in late September. In short, the Fed spread is the difference in the yields on the 10-year U.S. Treasury note and the two-year U.S. Treasury note. An "inverted" Fed spread happens when the yield on the shorter-term Treasury soars above the longer-term Treasury's yield. And it's one of the best available recession predictors... The gray bars on the following chart represent official recessions. You'll notice that the Fed spread inverted shortly before every recession going back to the late 1980s. Take a look... [Chaikin PowerFeed] But today, I want to highlight another important point about this chart... In every case, a recession didn't officially start until after the Fed spread moved back above zero. In fact, history tells us that it can take several months for a recession to happen. Now, there is one monkey wrench in this idea. In the 1980s, we endured multiple recessions and wild yield-curve fluctuations. But today, the chart looks a lot like the past few decades... Folks, as you can see, the Fed spread is still below zero today. Based on what has happened since the late 1980s, that likely means we're still at least months away from a recession. So when will I set my recession alarm clock? I'll set it for "once the Fed spread moves above zero again." And even then, I'll know that doesn't necessarily mean we should sell everything right away. History tells us we'll likely have months of opportunity left in the market at that point. Good investing, Vic Lederman Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +1.72% 8 15 7 S&P 500 +1.90% 102 260 135 Nasdaq +1.82% 26 58 15 Small Caps +2.66% 416 1020 497 Bonds +2.28% Real Estate +3.10% 0 15 16 — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bearish. Major indexes are mixed. * * * * Sector Tracker Sector movement over the last 5 days Discretionary +6.73% Information Technology +6.12% Communication +5.09% Real Estate +4.35% Financial +4.09% Industrials +3.50% Materials +3.45% Utilities +2.74% Staples +1.73% Health Care +1.21% Energy +0.97% * * * * Industry Focus Software & Services 61 82 2 Over the past 6 months, the Software & Services subsector (XSW) has outperformed the S&P 500 by +0.82%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #2 of 21 subsectors. Top Stocks [rating] NTNX Nutanix, Inc. [rating] RAMP LiveRamp Holdings, I [rating] ACN Accenture plc * * * * Top Movers Gainers [rating] VFC +13.05% [rating] TFX +11.56% [rating] PARA +10.37% [rating] DXC +9.96% [rating] WBD +9.92% Losers [rating] BWA -13.07% [rating] OGN -10.51% [rating] APTV -10.32% [rating] XRAY -7.46% [rating] MRNA -6.52% * * * * Earnings Report Reporting Today Rating Before Open After Close CAH, CBOE, NRG AIG, EOG, FANG, HII, WBD BRK.B, IT, JCI, NI, SRE, VMC CDAY, JKHY, MCHP BDX, D, EVRG ABNB, AES, LNT No earnings reporting today. Earnings Surprises [rating] VTR Ventas, Inc. Q3 $0.17 Beat by $0.14 [rating] MRNA Moderna, Inc. Q3 $-9.53 Missed by $-7.48 [rating] ALNY Alnylam Pharmaceuticals, Inc. Q3 $1.74 Beat by $2.70 [rating] LLY Eli Lilly and Company Q3 $0.10 Missed by $-0.57 [rating] LYV Live Nation Entertainment, Inc. Q3 $1.94 Beat by $0.78 * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. 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