Press the play button below to watch Austin Root explain our 5th Bear Market Signal:
Thank you again for joining us at the Bear Market Survival event.
I hope you’ve enjoyed reading through some of the bear market risk factors and signals that we’ve highlighted over the last couple of days.
For our 5th signal, we thought it’d be helpful to go through a short video and a couple of charts.
The bear market signal I'd like to focus on today is the U.S. treasury two-year yield.
When the two-year yield falls after rising and hitting resistance levels, we think it’s not a good sign for the market...
But before we get into that, let’s take a step back and talk about the ten-year U.S. treasury yields.
As you know, interest rates have been declining for many, many years... from highs in the mid-teens back in the 1980s, down to the low single digits today. As you can see in the chart below, it’s been a slow, steady decline up until recently.
And why is this happening?
Well, there are a couple of reasons for this...
Growth in the U.S. has slowed considerably — and this might be counterintuitive — but as the U.S. government grows its debt balance, rates have actually declined.
The reason for that is because the incremental benefit that the government gets by borrowing one more dollar and putting it to work is also declining.
So while it may seem odd that interest rates have declined, they have so because the productivity of that debt associated with it has declined as well.
But let's focus on the two-year yield...
There have been three times in recent history that the two-year rate or the yield on that debt, has tried to break through a resistance level and failed.
And what happened those three other times?
We had a massive bear market and recession.
So what’s happening now?
The two-year yield has started to decline... it has failed to break a resistance level recently as you can see in the chart above.
Now, we can't promise that this risk factor will be directly associated with a bear market, but it’s an important factor you should be aware of.
Our next Bear Market Signal highlights a possible "class war" that could lead to the biggest social conflict in half a century. Click the "Bear Market Signal #6" button below to learn more.
Jim Rogers is an American businessman, investor, traveler, financial commentator and author based in Singapore. Rogers is the Chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund and creator of the Rogers International Commodities Index.
Porter Stansberry founded Stansberry Research in 1999 with the firm's flagship publication, Stansberry's Investment Advisory. He is also the host of Stansberry Investor Hour, a weekly broadcast that has quickly become one of the most popular online financial radio shows. At Stansberry Research, Porter oversees more than twenty of the best editors and analysts in the business, who do an exhaustive amount of real-world, independent research.
Austin Root is editor and portfolio manager for the Stansberry Portfolio Solutions products and American Moonshots. He is also director of corporate development at Stansberry Research and a senior analyst for Stansberry's Investment Advisory.