We’ve been long term fans of Dwaine Van Vuuren at Recessionalert.com for his unbiased and accurate analysis of economic cycles. In his most recent update regarding the “Yellen Dashboard”, which is a list of labor statistics that Fed Chair Janet Yellen pays close attention to. We may be closer than we thought to the Fed transitioning from an easy money policy to tightening.
We already know that the Fed will stop Quantitative Easing (an extremely aggressive form of accommodative monetary policy) in October. Based on Dwaine’s analysis the first quarter of 2015 may be the time when the Fed will have the economic backdrop it wants to begin raising short term interest rates. This change in policy could set the stage for a Fed created Bear Market for equities in 2016 or 2017.
Recessions and the bear markets for stocks are born from peak economic cycles.