Yellow Alert: Yield Curve

Gary North

The yield curve has inverted -- just barely. This is the #1 recession indicator.

This first occurred a month ago. Then it flipped right-side up. Then it inverted again. It may flip again.

My advice: It is time to become highly defensive about your investments. This is especially true of stocks.

Bonds usually do all right in a recession. They may even rise when long rates fall. This has happened in recent weeks. But stocks are high risk.

The stock market is ignoring the inverted yield curve. But it did in late 2000, too. That optimism did not last.

You may have heard about the Kondratieff wave, another popular recession indicator. I have reported on this here:

//www.garynorth.com/members/1540.cfm

All in all, I suggest that you do not get excited about the recent mild stock market rally. The S&P 500 is barely over 1300. It was over 1550 in 2000.

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