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A Mesmerizing Chart

By John Del Vecchio

In the spirit of a picture is worth a thousand words, this week we leave you with a fascinating chart showing the changes in the yield curve from 1990-2018.
It’s truly mesmerizing.

Click on the image to view the animated data visualization chart.

A Mesmerizing Chart
A Mesmerizing Chart

Recently, the yield curve has flattened out as interest rates have risen but the curve has shifted more dramatically due to changes in short-term bonds. Of course, rates increased from an artificially low starting point. While an inverted curve has correctly forecasted prior recessions, plenty of fiscal stimulus has been pumped into the economy in the form of tax cuts. Consumer confidence has also surged. But, so have debt levels. Real incomes are stagnant. The Federal Reserve is shrinking its balance sheet.
So, while the circumstances today do not resemble the past, it probably won’t be different this time. Just look at the stock market. Small cap stocks are in a bear market. Hardly anyone noticed. Rougher times are likely ahead.


Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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