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History tells us it’s about to get ugly.
More inversion days = deeper drawdown.
We’re already at +700 days.
This ONLY occurred in 1929.
A thread…..
2/ The yield curve has now been inverted for the longest period since 1929.
This signal has accurately predicted every economic downturn.
And also reflects the condition of the labor market.
3/ When the yield curve flattens, it's associated with:
- Strengthening labor market
- Declining initial jobless claims
4/ Conversely, after yield curve inversions the curve steepens.
This usually suggests a weakening labor market and rising initial jobless claims.
5/ Today, the yield curve has been inverted for an extended period of time.
Therefore, we're biased towards claims rising substantially as soon as the curve steepens.
6/ We won't be too concerned until initial jobless claims exceed around 260,000.
When that happens, it would indicate the job market is cracking.
And the stock market is at risk of a large correction.
CONTINUED…