An inverted yield curve is an imperfect forecaster of a "general economic recession" but is considered FAR more accurate predictor of a "corporate profits recession".
I have to consider this at least somewhat perilous for the markets because 1) markets measure corp. profits, 2) corporate profits have been very high, however, that being based on 3) accomodative monetary policy and profligate gov't spending, both of which are supposedly coming to an end. All leading me to believe, and it is a belief, that what's driving the yield inversion is a short term demand for capital [demand for capital drives bond prices UP which drives their yields DOWN]....and yet....corp coffers are allegedly brimming with cash. So what's up with that?
It's lousy enough trying to formulate opinions in a world of pure and unrelenting media spin, but making financial decisions in that world is a frustrating game indeed.
IMO, markets head lower.
http://www.iseoptions.com/marketplace/statistics/sentiment_index.asp#
SCREAMINGLY bullish sentiment is not good.
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