Recession Warning Zone!

Recession

Warning Zone! 

Recession Indicators

• DYI’s Recession warning checklist:

• Two year Treasury notes invert ten year Treasury Bonds.

As of 1/30/19 10 year T-Bond is 2.70% and 2 year T-Note is 2.52%

Difference is 0.18

Indicator is in the Warning Zone

• Widening credit spread…Comparing yields between the 5 year Treasury note and Vanguard’s High-Yield Corporate Bond Fund.

5 year T-Note is 2.49% and Vanguards High Yield Corp. Bond Fund is 6.34% has been widening for a months. Place a check mark for this recession indicator. 

• Falling stock prices…S&P 500 fifty day moving average below the two hundred day moving average.

Not even close...So far clear sailing from this indicator.

• Falling Home Builders Index…The indexes fifty day average below its respective two hundred day average.

The 50 day is moving very close to the 200 day.  I would place this indicator in the Warning Zone!

• Purchases Managers Index:  PMI below 50

Current PMI has been dropping.  As of December 2018 is 54.10 that has dropped from its highest [for this cycle] back in August 2018 at 61.30.  With this obvious deterioration DYI has placed this indicator in the Warning Zone.  

DYI:  When all five indicators are present recession is imminent – within 90 days – or already present but not recognized by the majority of the investment community.

Out of the 5 indicators only 1 is clear sailing...3 are very much in the Warning Zone...1 is most definitely signalling  recession.

DYI is on HIGH ALERT for an upcoming recession.  

DYI