- The Yield Curve / Federal Funds Rate Timer signals the switches from stocks to gold and vice versa near or during recession periods.
- Only three parameters are needed; the Effective Federal Funds Rate and the 2-year and 10-year U.S. Treasury yields to determine the periods when the yield curve is inverted.
- The timing rules are based on the state of yield curve and on the trend of the Effective Federal Funds Rate.
This timer signals switches from stocks (S&P500 Total Return) to gold and vice versa near or during recession periods.
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Table of links to our trading models
- A truer picture of the employment situation is extracted from the Unemployment Insurance Weekly Claims (UIWC) report.
- Persons receiving some form of unemployment benefit account for 12.6% of the labor force.
- Monitoring of the weekly insured unemployed could provide early indication of recovery from the COVID-19 crisis.
- The current UIWC report shows that the economic recovery from the COVID-19 crisis seems to improve.
The 11/26/2020 DOL Unemployment Insurance indicates a continued improvement in the insured employment situation even though the initial claims remain high and have increased over last week, but seemingly trending towards the long-term average.
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In a previous article, I discussed the seasonal effect in equities and showed that they perform best from November to April, the “good” period, and that replacing equities with fixed income during the “bad” period of May thru October is a winning strategy over the longer term.
Since future returns from fixed income are uncertain, the strategy proposed here is to always invest in sector equity ETFs. I defined two super-sector groups, classified as aggressive and defensive, each with four sector ETFs which have historically performed best from November to April and relatively well from May to October, respectively.
This simple strategy invests alternately in the aggressive and defensive super sectors during their respective six-month periods, switching from aggressive to defensive at the end of April, and vice versa at the end of October.