S&P 500 Enters Bull Market Despite Recession Warning Signs
• The S&P 500 is in a new bull market, up over 10% in 2022, driven by AI and expectations of falling interest rates • However, two reliable recession indicators are flashing warning signs the inverted yield curve and the Sahm rule • The yield curve has inverted before every recession since the 1960s when the Fed raised rates to fight inflation • The Sahm rule says a 0.5 pp increase in unemployment over 12 months signals a recession; we're nearing that threshold • Reasons this time may be different longest gap between inversion & recession, low unemployment rate, high consumer sentiment