CNN jumped to report a recent was a fluctuation in the yield inversion curve in the stock market, saying that the inversion yield curve is almost a foolproof predictor of an impending recession. The Trump administration criticized the takeaway as biased and misinformed news.
CNN’s online archives show that the network published an article in 2005 that highlighted the inversion yield curve. That article is a stark contrast to the media coverage this week, as the wording was more cautious, less sensational and less hysterical.
The 2005 article, entitled, “Riding the yield curve,” said that the 2005 yield inversion curve “could be seen as a bad omen.” However, the article continued, “But before you rush to hoard your money under the mattress in anticipation of another recession, relax.” It acknowledged that the inversion curve did occur before the 2000 stock market downturn, but that is due to volatility in the stock market.
In a subsection with the title, “No need to run and hide,” the article encouraged investors to “[s]it tight for now.” Although a recession did hit in 2007, two years later, the wording is a stark contrast between the 2005 article and the media coverage in 2019.
Compare the more cautious approach in 2005 to the wording in a CNN article from this week, with wording such as:
- “…another worrisome sign,”
- “The bond market is flashing a big neon caution sign,”
- “That’s a sign that the US consumer may be on edge — and it’s clear that investors are nervous about the outlook for the US economy as well.”
Also, within the same 2019 CNN article, economic advisors “dismissed the inverted yield curve fears.” One said that “We have to be careful about not over-interpreting signals,” and another said that “inversion shouldn’t be a huge surprise” due to rates falling “for some time now.”
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Author: Spencer Irvine