The Fed Ignores the Yield Curve (But the Yield Curve Is Warning for a Recession)

By Olav Dirkmaat on December 20, 2017

In our latest Q3 report on the US economy, we signaled that the yield curve was flattening. The spread between long-term and short-term yields is perhaps one of the best indicators of a recession; whenever the yield curve inverts (which means short-term yields exceed long-term yields), a recession follows. Ever since our publication, the yield curve continued to flatten even further, getting dangerously close to inverting. “This Time Is Different” There is a saying that the four most dangerous words in finance are “this time is different.” Yield curve spreads are now at their lowest point since 2007, moments before the Great Recession began. Lately, however, the financial press began picking up this worrying trend. In articles published by Bloomberg and Financial Times, various commentators argued that the yield curve, despite its impressive historical track record, will not predict an economic downturn this time around. Not just reporters were keeping…

Click here to continue reading

The Real Relationship Between Capitalism and the Environment

By Daniel Fernández on December 19, 2017

Capitalism and the environment: friends or enemies?

Click here to continue reading

Two Reasons Why The Mexican Peso Appreciated in 2017

By Edgar Ortiz on October 24, 2017

The Mexican peso has recovered much of the value it lost in 2016. Find out the reasons that explain the pesos appreciation here

Click here to continue reading

Trump’s Tax Reform Dissected

By Olav Dirkmaat on October 17, 2017

Two weeks ago, the Trump administration presented a detailed version of one of Trump’s most important election promises: a tax reform. What are the consequences of Trump’s recent tax proposal for the US budget deficit and public debt?

Click here to continue reading

Gentrification—and tourism—have become the new target in the never-ending social struggle in favor of the disadvantaged

By Daniel Fernández on October 16, 2017

Gentrification is the new monster to be fought. The term already has such bad press, that almost no one is willing to say anything in its favor (defending gentrification and defending neoliberalism are now almost interchangeable). Can gentrification get a break? Find out more here.

Click here to continue reading

Italian Banks Are The European Economy’s New Sword of Damocles

By Daniel Fernández on October 8, 2017

What are the Eurozone’s riskier banking systems? Which countries should be concerned in the face of a possible contagion effect of the Italian crisis?

Click here to continue reading

The Accounting Cycle and Financial Bubbles: On the Current Indifference on Accounting Methods

By Olav Dirkmaat on September 25, 2017

As long as the stock market is booming, businesses get away with shady accounting practices. What do the recent cases of Netflix, Tesla and Alphabet suggest about what phase of the business cycle we are in?

Click here to continue reading

US GDP Growth a Solid 3%, But Is Trouble Ahead?

By Olav Dirkmaat on September 4, 2017

The US economy is growing at a 3% annual rate. But are things as they seem?

Click here to continue reading

Bank of Mexico: Bread Today, Hunger Tomorrow

By Edgar Ortiz on August 14, 2017

This year Banxico will report operating losses and the Mexican government will no longer have another “gift” in 2018.

Click here to continue reading

How OPEC Became Irrelevant: Traditional Oil Producing Countries Still Fail to Face the New Reality

By Olav Dirkmaat on June 13, 2017

The large traditional oil-producing countries — both OPEC and non-OPEC — are still catching up with the new reality. After deciding to extend the production cuts — agreed upon half a year ago — for another nine months, oil prices plunged below $50/barrel. Not quite the effect these oil giants were hoping for, but nothing out of the ordinary. After all, the fact is that supply and demand dynamics in the oil market have changed for good.

Click here to continue reading

Get our free exclusive report on our unique methodology to predict recessions


Edificio Académico E-505
Calle Manuel F. Ayau (6 Calle final), zona 10
Guatemala, Guatemala 01010
Telephone: (+502) 2338-7723/24

This project is made possible by a grant from the John Templeton Foundation | © 2015 - 2017 Universidad Francisco Marroquín | | (cc) BY-NC-ND