Update on traffic lights. 4 lights have turned back to green, with only number 4 remaining red. When that turns green I plan to be fully invested again. Refer to my current portfolio composition in my signature to get a sense to where I am at.
Traffic lights:
1. GREEN - US 10y-3m yield curve
2. GREEN - Global yield curve
3. GREEN - US initial claims for unemployment
4. RED - US LEI
5. GREEN - Euphoria (market sentiment)
1. US 10y-3m yield curve. This traffic light has worked well in the past as can bee seen below
However, the next decade will be interesting to observe wrt to this traffic light. The reason being, with the 3m at zero again, it will now only track the 1oyr again. The 10yr is currently 0.75. So unless inflation expectations rise, we are looking at an upper bound of 0.75, with only a 1% 10yr-3m spread for the US economy to play with. Much less than the 4.5% spread they have to play with to get them out of the previous 3 recessions.
2. Global yield curve.
View attachment 2151064
View attachment 2151070
3. US initial claims for unemployment
View attachment 2151082
End feb 2020
View attachment 2151076
End apr 2020
4. US LEI
Self explanatory, see graphs in technical notes and press release pdfs.
5. Market sentiment
Self expalnatory
