Listening to the mainstream media, you would get the idea that a 2013 recession in the US hinges on the outcome of the 'Fiscal Cliff' talks in Washington. However, traders at intrade seem to have a different perspective on things. I have to admit, I really do not know how much anyone can read into this, but the relative track of the following two price charts are very interesting.
Debt limit talks in US is resolved by Dec 31, 2012.
US Recession in 2013
Using comments from the media and financial TV as a base, you would think that as the odds increase for a settlement of the fiscal cliff before the Dec 31 deadline that the odds of a recession would recede, i.e. a negative correlation. Now I am just eye-balling the charts, but there appears to be a slight POSITIVE correlation in the prices, if any correlation at all. Does this imply that traders think a settlement of the fiscal cliff will lead to a recession in 2013? Is the fiscal cliff settlement even relevant to recession odds?
Debt limit talks in US is resolved by Dec 31, 2012.
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