‘Intellectually Inert’
Some who dismissed the yield curve last time are sticking to their guns and dismissing it again. John Silvia, then-chief economist of Wachovia Corp., wrote an August 2006 note that called believers in the curve’s signal “intellectually inert.” “The fact that something, at some time, precedes something else, sometime in the future, does not mean rainy days actually predict sunny days.”
Now with Dynamic Economic Strategy in Charlotte, Silvia stood by his quotes in a phone interview last week.
“I said it, I believed it, and that’s it,” Silvia said. Research he did while at Wells Fargo & Co. in the last two to three years found the curve “doesn’t add any value to the predictive power of the equation in terms of forecasting recessions. End of story.”
This article provided by Bloomberg News.