Why the yield curve panic is a buying opportunity

There was some confusion from readers in response to my bullish pivot in yesterday's post (see How the market could melt up). Much of the confusion was attributable to the bear porn that has been floating around since last Friday from the inverted yield curve when the 10-year Treasury yield fell below the 3-month.

One example came from Ben Carlson at A Wealth of Common Sense, though Carlson did qualify his analysis that the timing of a stock market pullback has varied:

The timing of these market corrections varies widely. In late 1980 and early 2000, the inverted yield curve signaled a quickly approaching stock market peak. In the other three instances, it was almost two years until stocks broke down.

Troy Bombardia has also weighed in with his own analysis of past inversions.

I beg to differ. The underlying mechanism of this inversion is very different from previous episodes, and that's why I don't think a recession is in the cards.

The full post can be found here.