This post covers some indicators of US recessions, that typically negatively affect stock market valuation, US dollar valuation, interest rates, and implicitly real estate.
For details on my concerns see American Assets declining ahead.
Fed Funds and Recessions
The chart above shows with the red lines when USA had a recession. The blue line is when the Fed Funds rate. Notice each time before a recession the Fed Funds Rate moves higher.
This is yet another indicator of a recession approaching. I do think AI/Robotics will be the sector to purchase in next upswing. While a recession isn't guaranteed, as we see from raising rates in 1995, it has a pretty good track record.
US Dollar Valuations
Below is US Dollar valuation as per DXY. If the USD breaks below 96, we will have broken an up trend in USD since 2010. The next levels of support is 78 and 70. A break below 70 is an unknown target. DXY is not a complete picture, as its about half Euro and other currencies, not including Asia. Currencies are valued against other assets such as other currencies, gold, bitcoin, or other assets. So even though DXY is weaking, its not a full picture, but does indicate vs major currencies like the Euro its weakening.
Holding above uptrend 2011 line will show USD is maintaining value relative to 2010 to now.
I think at minimum USD will lose 20 of value from it's high in 2022.
10 year US bond Yields
10 year treasury is linked to US mortgage rates, which in turn affects real estate prices.
The US interest rates bottomed in 2020, and marked a breakout of the 38 year downtrend since 1982.
A break above 5.25% indicates we are likely to see much higher rates in the years ahead.
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