Decoding the Yield Curve: Insights on the Business Cycle and Stock Market from a Strategist

Chief economist and market strategist Michael Darda at Roth MKM warns that equity investors should not dismiss the predictive power of the yield curve inversion. Darda's analysis of seven decades of yield curve history shows that the inversion has preceded recessions by an average of 14 months, with a range of seven to 25 months. He cautions against assuming a "soft landing" for the U.S. economy and advises investors to be wary of post-inversion equity rallies, as they have historically been completely reversed before subsequent recessions or bear markets.