I’m only interested in how one can prosper from this knowledge.

I do believe we are in a recession (in the American market at least).

Have a great day!

Now, about a 50 rate cut, I have these numbers:

Date, Dow Jones that day and several days after, and some remarks:
——————-
Sep 11th 9441 to 9591 … 10.000.

Oct 2nd 2001 8840 to 8950 … 9500.

May 15th 2001. in four days 10.800 to almost 11.350.

Mar 20th 2001. Here the Dow slipped several days.

Jan 31st 2001 10.800 to over 11.200 in several days.

* It seems to work in the short term, about 400-600 dow points up.
* It is not a guarantee for a trend.
* As a colleague pointed to me yesterday, these examples were surprise, between-meetings rate cuts. Now the market could have priced half of the effect yet.
* Also, the Fed could very well cut 25 and talk about future cuts whenever necessary and watching the macro data.

Well, let’s wait and see.

Bourne, thanks for the links!
btw, your English is too good. Are you an expat or local?

Is a Recession Imminent?

FRBSF Economic Letter
2006-32; November 24, 2006

The Yield Curve and Predicting Recessions
Jonathan H. Wright
2006-7

Quoting the first one:
“Finally, not only are recessions hard to predict, it is even hard to tell that the economy is in a recession once it has begun. This is especially true in the low volatility regime that has prevailed since the mid-1980s. Here, the evidence suggests that it may be useful to supplement data from the surveys with data from indicator models that attempt to measure the current state of the economy”.

This said, an analyst here in Spain has found the chances of U.S. recession to be 27-30% using Wright’s model, between 25-40% across several models. Not very high, but is not negligible. The ECRI data seems to be quite reliable and points to slow down, but still not recession.