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Monday, July 18, 2022

More indicators are flashing recession!

Bank of America called for a mild recession this year.

Is there any validity to BoA's call?  Let's look at some indicators.

The Eoci had entered the negative territory.  From the chart, we can see that a negative Eoci has a high probability of a recession (shaded).

The consumer composite indices are in a downtrend.  A downtrend has a high probability of a recession (shaded).

Whenever the M2 growth rate hit zero or breached zero, a recession would happen.  The M2 growth rate has breached zero now.

Let's take a look at the yield curve again.  The 10-2 year yield curve is still having an inversion (negative).

There are also other yield curve inversions now and this is not good for the US.  As a yield curve inversion presages a recession, the increases in the yield curve inversions will increase the probability of a recession (shaded).

Last but not least, the fear index is rising.

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