The yield curve has been inverted for 21 months

Yet the recession is still a no-show

Is this time different?

A thread 🧵 2/ Today’s yield curve inversion is the longest since the 1920s

The stock market is showing extreme signs of GREED

It’s only the 6th signal in 25 years

A thread 🧵 2/ Over the past 100 days, the S&P 500 has returned a staggering 27%

This type of rally over a 100-day period has only occurred 6x in the last 25 years

Surprisingly, these rallies signaled more strength to come

Gold is now breaking out to new highs

History shows this is a MAJOR warning signal

A thread 🧵 2/ On 1st Oct 2007, Gold broke out to ATH for the 1st time in 1.5 years

Thereon, the US unemployment rate began rising rapidly and economy growth slowed down

Which ended in the 2008 Financial Crisis

Institutions are showing extreme signs of GREED

The last time was in Nov ‘21

Right before a 25% bear market

A thread 🧵 2/ Fund managers are now leveraged long

This index shows the exposure fund managers have to the stock market

Near 0 = less exposure

Near 100 = high exposure

Above 100 = leveraged exposure

Never forget, this time is different

A thread 🧵 2/ But, comparing Cisco to Nvidia in terms of PE ratio reveals a big difference

Nvidia's PE ratio stands at 26.2 despite a significant price rise

It's not cheap, but far from a bubble

In contrast, Cisco had a peak PE ratio of 472 in 1999

I was wrong

The yield curve has been the most inverted since the '80s

Yet the recession is still a no-show

A thread 🧵 2/ The yield curve has been signaling an incoming US economic downturn for a year

An inversion has systematically preceded recessions since 1963

However, despite its predictions, the economy is still going strong

Over half of US states are in a recession

And consumers have now run out of excess savings

This won’t end well

A thread 🧵 2/ In Q4 2023, 22 US states saw economic contractions, while only 20 are growing

One of the lowest levels since 2020

Historically, such low numbers have been associated with recessions

Market internals are flashing a MAJOR signal

Stocks just witnessed another major breadth thrust and it’s a powerful signal

A thread 🧵 2/ In November 1928, the stock market surged 18% in just 4 months

Preceding the peak in 1929

Wall Street is extremely optimistic

Average Americans have NEVER been this pessimistic

One of them is wrong…

A thread 🧵 2/ 1974, 1980, 2008 and 2024 all have one thing in common → The consumer is extremely pessimistic about the economy

1974 - Oil shock

1980 - Interest rates hit 15%

2008 - Housing crash

Cash now yields higher than stocks for the first time since 2000

Historically, it’s a signal for market tops

A thread 🧵 2/ Investors now hold a staggering $6 trillion in cash, the highest in 30 years

Inflation is following the EXACT blueprint of the 1970s

Analysts are wrong about what’s coming next

A thread 🧵 2/ In the past 5 years:

1. USD purchasing power dropped 20%
2. Home prices surged from $250K to $400K
3. The economy witnessed a massive inflation wave

Bezos just sold $6B+ of $AMZN last week

Insiders are selling at levels unseen since 2023

This is NOT a signal to be ignored

A thread 🧵 2/ The number of news articles mentioning the term “soft landing” is at the highest level since 2007 and 2000

Both were moments right before a recession hit

S&P 500 is up more than 5000% since 1970

But is only up 500% when adjusted for inflation

USD debasement should be a MAJOR concern for investors

A thread 🧵 2/ USD has seen consistent strength in the past 15 years

However, the USD can remain strong against other currencies while all currencies collectively decline

The USD chart doesn't reveal loss of purchasing power

M2 money supply is contracting sharply

Is the US economy heading for deflation?

A thread 🧵 2/ Recent years have seen significant declines in certain asset prices

Used car prices fell by 25% since 2021

And egg prices dropped by 50% in 2023

In 2022, most fund managers expected a recession

But the economy hasn’t witnessed one yet

What's happening?

A thread 🧵 2/ Simply defined, a recession occurs when the unemployment rate rises

This is a key metric used by the NBER, an official organization that labels recessions

The current yield curve inversion reached the same depth as 1928

Is a recession unavoidable now?

A thread 🧵 2/ Yield curve inversions are a reliable indicator for recessions since 1969

Recessions tend to follow about 12 months after an inversion

However, they tend to follow about 5 months after a steepening

Interest rates have broken out of a 40 year downtrend

This can have massive implications for the US economy

A thread 🧵 2/ In the 1980s, mortgage rates & savings accounts were at 15 - 18%

Fast forward to 2010s and rates had plummeted

However, in the last 1.5 years, we've seen a significant rise in interest rates

The US government has a big spending problem

Total US debt has now surpassed $33 trillion

These levels have NEVER been seen before

This won’t end well

A thread 🧵 2/ US national debt surged from $31.5 trillion to $32.3 trillion in Q2 2023

In 1966, it took 17 years for the debt to increase by $1 trillion

Now, it's just 3 months

Oil JUST broke below major levels 🛢️

An ominous sign for the economy

A thread 🧵 2/ The World Bank recently warned of a potential 75% increase in oil prices due to escalating tensions in the Middle East

That would push oil to a historical high of $145 per barrel

But despite these tensions, oil prices have been dropping for the past month

Credit card defaults are rising FASTER than the 2008 Financial Crisis

The situation is worse than you think…

A thread 🧵 2/ From 1940s to 1970s, Americans saved around 10% of their income annually

But today, savings relative to income is contracting

People are spending more than they earn

Total US Debt just crossed $33 TRILLION

China and Japan are dumping US treasuries at a record pace

This won’t end well

A thread 🧵 2/ Government spending as a % of GDP is the highest in US history