Equity Danger Signal

Description:

Third priority - when EYP is negative and yield curve is inverted

Action:

Liquidity broken → Bonds or gold

Priority:

5 of 8

Trigger Condition

Real 10Y ≥ 0% (no System Stress)

AND Real EY ≥ 0% (equities not broken)

AND EYP < -1% (equity carry inferior to bonds)

EYP < -1% AND Yield Curve < 0%

Key Insight

Expensive equities + inverted curve means current earnings don't justify valuations AND future growth cannot be financed.

If Real 10Y > 0%:

Bonds offer positive real yield with lower risk

Example: Inverted curve signals stress ahead

If Real 10Y ≤ 0%:

Both equities and bonds under stress

Example: Real assets preserve purchasing power