ECRI reported the WLI at a level of 126.8 and the six months smoothed annualized growth WLIg at +3.5%, as shown in Fig 2. Three weeks ago the IBH model generated a sell-basic signal and 2 days later a sell A signal, indicating that the model had exited the S&P500. For those who are new to the IBH model, sell-basic is a warning signal to get ready to sell, it is not a sell signal, and it can be voided when a subsequent buy signal appears, before a sell A. Sell C does not need a sell-basic signal. The various indicator lines after peaking appear to be heading lower. So far the S&P has gained since the sell signal.
MAC Fig 3 shows the spreads of the moving averages. The sell spread (red graph) has declined further from last week, but the buy spread (green graph) is forming a trough. No sell signal has so far been generated from this model. The model stays invested.
The Bond Value Ratio is shown in Fig 1. The BVR has been flat from last week. In the longer term BVR will reach the long-term trendline and long-bond investors will have suffered considerable losses by then. The model stays invested in low beta bonds.
The Yield Curve:
Figure 5 charts (i10 – i2). The trend is neither up or down, but the model expects the yield curve to steepen. FLAT and STPP are ETNs. STPP profits from a steepening yield curve and FLAT increases in value when the yield curve flattens.
The Elusive Recession of 2012:
Today the unemployment rate was reported at 7.7%, down from 7.9% last month. Our unemployment recession model has not signalled the start of a recession since the beginning of 2008. Here is a link to the update on this topic. Also attached is my composite recession indicator COMP. It is also well out of recession territory and the trajectory is upwards.