The yield curve, which plots yields across Treasury maturities, is still by far the most accurate predictor of recessions, according to new research released Monday by the San Francisco Federal Reserve.
The spread between 2- and 10-year yields is a widely watched section of the curve for its indications of economic health.
An upward sloping curve, with longer-term yields higher than their short-term counterparts, is typical, especially in an expanding economy. An inversion between these two maturities — in other words, if the yield on the 2-year is higher than the 10-year — reliably predicts low future output growth and indicates a high probability of a recession, the Fed branch said in its report. An inverted yield curve has correctly signaled all nine recessions, with only one false positive in the 1960s.
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For a few surreal minutes, a mere 12 words on Twitter caused the world's mightiest stock market to tremble.
No sooner did hackers send a false Associated Press tweet reporting explosions at the White House on Tuesday than investors started dumping stocks eventually unloading $134 billion worth. Turns out, some investors are not only gullible, they're impossibly fast stock traders.
Except most of the investors weren't human. They were computers, selling on autopilot beyond the control of humans, like a scene from a sci-fi horror film.
"Before you could blink, it was over," said Joe Saluzzi, co-founder of Themis Trading and an outspoken critic of high-speed computerized trading. "With people, you wouldn't have this type of reaction."
For decades, computers have been sorting through data and news to help investment funds decide whether to buy or sell. But that's old school. Now "algorithmic" trading programs sift through data, news, even tweets, and execute trades by themselves in fractions of a second, without slowpoke humans getting in the way. More than half of stock trading every day is done this way.
On Thursday, a bankruptcy court will review a proposal that would return 93 percent of the missing money to customers like Mr. Desai. And the trustee who has submitted the proposal, James W. Giddens, has quietly identified a way that, if sent to the judge and approved, could plug the remaining shortfall for customers in the United States, according to people involved in the case.
The broad push to make MF Global customers nearly whole, a goal now surprisingly within reach, is a remarkable turnaround from the firm’s 2011 bankruptcy filing when such a recovery seemed impossible.
The new year will begin with heavy clouds suspended over
much of the global economy, but with the prospect of
brightening later in 2013.
Uncertainty over the “fiscal cliff” will weigh on U.S. growth in
the short-term, but assuming this hurdle is safely negotiated,
confidence should improve next year. By mid-2013 stimulus
should also more visibly be boosting China’s economy, and
even the euro zone should be growing again.
The Economist Intelligence Unit’s latest global forecast—
largely unchanged from last month—is therefore for a
limited pick-up in Gross Domestic Product growth next
year, with improvements in key economies setting the
stage for a stronger recovery in 2014
