Today Jim Bunning took the inside of the plate from Ben Bernanke in the I could also use a basketball analogy as I believe he played hoops at the University of Kentucky.
Bunning wanted a better understanding of Ben's inversion comments from yesterday.
Bunning cited recent implications of an inverted curve and wanted to know why, other than market interest rates being lower, Ben feels a slowdown is not being signaled.
Ben cited low unemployment, strong retail sales and increased industrial production. The expansion is still on a solid track, Ben said.
Hopefully, behind closed doors, they are more in touch with why the curve is inverted than they are letting on in public.
As I recall, things in the economy looked very strong in late 2000 when the curve last inverted. I feel more and more conviction that this time will not be different but, as I often say, I will be happy to be wrong.
2 comments:
Jim Bunning is a graduate (Econ Major) of Xavier University in Cincinnati. -- Go Musketeers!
Dr. Bernanke is just one among many who have dismissed the validity of an inverted yield curve as a reliable indicator of a recession. But, their reasoning requires the wild belief that bond investors, who see a healthy growing economy, are investing against interest by accepting lower long term yields rather than higher short term yields and rolling over the debt as it matures. Bond investors don't want to maximize their return? That makes no sense.
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