“Ignore the signal at your own risk.”

That was the stark warning from Cam Harvey, godfather of yield curve analysis, when queried by Bloomberg this week on the unprecedented length of the current three-month/10-year inversion.

Long story short, the curve has never stayed inverted for this long, or least when measured in trading days.

That should portend economic doom (or at least gloom), but maybe this time is different.

Don’t scoff at my use of that most-maligned of all vilified phrases. This time really may be different. He might rather forget this, but Harvey himself suggested his infallible indicator may be wrong this cycle. In January, he told Bloomberg that, “My yield-curve indicator [is] eight for eight in forecasting recessions since 1968 with no false alarms [but] I have reasons to believe that it is flashing a false signal.” By June, he changed his mind.

I’m not sure anyone’s wittingly “ignoring” the yield curve’s recession warning. Consensus subjective recession odds over the next 12 months are still loitering around 60%, after all.

But where are you supposed to go? You can’t run from a recession the same way you can flee a hurricane, Jamie Dimon’s bad metaphors aside. You can go to cash, and people have, particularly given the highest T-bill yields in decades. Inflows to money market funds are on track for a record $1.5 trillion in 2023. You can buy bonds in anticipation of the downturn, and people did that too. Treasurys are on pace for a $207 billion haul this year. As the figure below shows, that’s the largest ever, and it’s not close.

And you can turn defensive in your equity allocation. People presumably did that as well. It helps that mega-cap US tech counts as “defensive” on some interpretations. Given those stocks’ weight in the index, you can just buy the benchmark and claim that’s “defensive” — you’re long duration, and you’re long strong balance sheets and quality.

Other than that, there’s not a lot you can do short of… well, short of shorting risk or being long vol, which can be expensive propositions. Just ask 2023.

Still, we carry on day after day pretending everyday investors have the wherewithal to somehow profit from recession canaries, even though everyone knows the surest bet when it comes to “playing” a recession is just to wait for the world to end and buy the S&P on the apocalypse dip.

For what it’s worth, the table below from BofA’s Michael Hartnett tries to show what macro outcome (i.e., what type of “landing”) various assets are currently priced for.

“We think markets may rally into the first negative US payrolls print but this is likely followed by a slump on a second negative payrolls print,” Hartnett wrote.

Between now and whenever those negative NFP headlines show up, he said investors “should be long assets that have discounted a hard landing,” given that they “have less to lose in a recession and big upside” if this time is different and a downturn is averted.

Hartnett, like Harvey, doesn’t seem inclined to believe in miracles. “Respect the lags,” he exhorted, adding that “the stuff monetary policy is meant to impact is starting to inflect,” including high yield defaults, credit card delinquencies, the saving rate and the unemployment rate.

All that’s missing is the bull steepener.