The current reading of the Baa-Treasury spread, the dashed line, is consistent with a recession. The chart shows there were no false signals in the past 20 years.
Based on history, we should expect slow growth and high unemployment until at least this fall.
Prices for contracts over the next year are trading at about $30 a barrel. That’s about half the one-year average price of $60 a barrel. But it’s not zero.
Now is an ideal time for investors to raise cash instead of increasing exposure to risk.
For investors, this means another down leg in stocks is likely. There could be two or more additional down legs in this bear market.
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