Risks have reduced in the last quarter. The Economic Cycle model is showing that Economic Expansion conditions are accelerating and Late Cycle conditions are no longer the dominant force. It is hard to know how long this Economic Expansion phase can retain its strength, but we are now likely looking at a second wind for the US economic cycle. The Recession Probability model has actually decreased, a very positive signal. Economic momentum is positive, and despite the market near all-time valuation highs, we recommend remaining invested, albeit cautiously. We do not believe portfolio leverage would be wise in light of high market valuations, but a move to cash would be too early.

The economic cycle is showing accelerated Economic Expansion phase conditions, implying momentum is clearly continuing.

Recession probability has taken a large step down to 37% from 43% in the prior quarter. In the past, recessions have occurred with at least 70% probability of recession on our model.