Understanding The Difference Between A Correction And The Start Of A Recession

Understanding The Difference Between A Correction And The Start Of A Recession

Article Summary

  • Stocks have fallen about 10% off their highs but haven’t yet hit the 20% decline marker that defines a recession.
  • Economic data are mixed but no indicator is clearly flashing a recession signal yet.
  • The yield curve is one of the most reliable recession indicators. With the Fed rate hike decision looming, the markets await how that might impact long and short term interest.

Wall Street has been behaving erratically over the past few weeks ever since the Chinese contagion finally reached U.S. shores. As of the close on September 8, 2015, the S&P 500 has shed nearly 110 points, a 5.29% loss, in the past month even after recovering from a drop of nearly 230 points earlier. Meanwhile volatility has soared more than 85% over the same time frame and is currently holding steady around 25…

 

Read full article at Seeking Alpha
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