47. The Recipe for a Market Sell-Off: Carry Trade, SAHM Rule, Recession Fear
Market MakeHer Podcast
The Sahm Rule: Recession Signal Explained
Jess Inskip explains the Sahm Rule, its unemployment calculation, and why it signaled a flag recently.
The stock market has been having quite the week since our last episode on the Fed’s decision to NOT do a rate cut and the resulting effects of the not-so-great unemployment numbers that came out last Friday.
Recipe for disaster?
Is the stock market crashing? Why was there a sell-off and what is a market sell-off? And is this a good time for us self-directed investors to invest more, like, is the stock market on sale?
What were the sell-off ingredients?
- The Carry Trade (Yen Got Stronger)
- The Sahm Rule (Recession Indicators)
- Recession FEAR (Emotional Investors)
Sell-Off Decline: Pull-Back, Correction, Bear Market?
We all know that the stock market recently tanked and there was a huge sell-off. Was this a pull back or a correction, are we in a bear market.
The difference is a decline of:
Pull back = 5-9%
Correction = 10 -19% (Stock Market Is Currently Here)
Bear market = >20%
✨The recent turbulence was the most severe since the 34% decline that occurred in Q1 2020.
✨ Market corrections happen almost every year. Since the early 1980s, there's been a greater than 5% drawdown in the S&P 500 Index in every year but two (1995 and 2017).
✨ The stock market has historically recovered quickly from corrections. The average time to recovery from a 5%-10% downturn is three months. The average time to recovery from a 10%-20% correction is eight months.
✨80% of corrections since 1974 have not led to a bear market.
✨ There's a 73% probability of a double rate cute (.50%)
How do we know we are in a recession?
Great Analogy: https://www.tiktok.com/t/ZTNgX6jUW/
Related Episodes:
Ep. 46) Fed Update: What is Event Risk? Could it Trigger a Sell-Off?
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About Us 🌚🌞
Market MakeHer is an investing education podcast taught by a 15-year finance expert to her friend, a beginner investor. Our mission is to demystify the stock market and make financial literacy accessible to all self-directed investors! We teach complex investing topics in a different way - from "Her" perspective.
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