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Leading Economic Indicators

Feb 07 2023

1966-67: When The Yield Curve “Failed”

  • Feb 7, 2023

Given the tendency of economists and strategists to dismiss the message of an inverted yield curve, it’s surprising there’s been no scrutiny of the “dog that didn’t bark”—the inversion of 1966. That’s the last time an inverted curve did not lead to a recession.

Feb 07 2023

The Economy Rallied In January, Too

  • Feb 7, 2023

The narrative for January’s strong stock market bounce is that not all key economic releases looked to be forecasting a recession. However, one must consider that this was only true for coincident and lagging data series.

Feb 07 2023

Irrationality Is Back, Right On Schedule

  • Feb 7, 2023

The hostile monetary backdrop makes recent stock market exuberance even more irrational than in early 2021. Yet, this is the middle of a seasonal window that historically boasts an elevated level of craziness: It is the year preceding a presidential election—a time when monetary and fiscal stimulus are ramped up. 

Jan 07 2023

The Yield Curve And The Problem Of Timing

  • Jan 7, 2023

Frequently, there’s money to be made in the stock market in the months following the initial curve inversion. After the inversions of August 2006 and June 2019, the S&P 500 rallied another 23% and 19%, respectively, into its final bull market high. If this cycle plays out in textbook fashion, the business-cycle peak would arrive in September.

Dec 07 2022

Not If, But When

  • Dec 7, 2022

Economists who believe a 2023 recession will be avoided, may not know it but they are “messing with perfection.” Since August, we’ve chronicled several developments that have, without fail, correctly forecasted past recessions, or confirmed that one was already underway. 

Dec 07 2022

Goodbye Inflation, Hello Recession?

  • Dec 7, 2022

Unlike the five prior cycle peaks, this year’s inflation peak materialized during an ongoing economic expansion. That implies the “post-peak” monetary policy has never been tighter than today—making a soft landing even more improbable.

Nov 05 2022

A Trade Contrarians Will Love

  • Nov 5, 2022

Time cycles have been spot on in 2022, with the stock market declining through the mid-year months (May-October) of a mid-term election year. But November 1st saw the opening of the market’s most bullish window according to the same patterns.

Oct 07 2022

Tightening Into A Slowdown: Month Eight

  • Oct 7, 2022

We think the U.S. economy will slip into recession sometime in the next year, but the level of “excess savings” provided by pandemic aid renders the already difficult task of timing more elusive than ever.

Sep 08 2022

Tightening Into A Slowdown: Month Seven

  • Sep 8, 2022

An economy can slow to a standstill on a “real” basis while growing rapidly in nominal terms; it happens in emerging economies all the time. But this dichotomous condition now afflicts most of the developed world.

Aug 05 2022

Job Market Suddenly “Laboring”

  • Aug 5, 2022

We cringe when we hear the Treasury Secretary or a regional Fed bank president dismiss the possibility of recession on the basis of “low unemployment and strong job gains.” Those measures are as “laggy” as any economic statistics the government publishes.

Aug 05 2022

LEI On The Precipice

  • Aug 5, 2022

The LEI’s 3.6% six-month annualized loss through September 2006 was the largest decline not followed almost immediately by a recession. This year, the LEI contracted by 3.7% over the six months through June—if a recession is avoided in the current experience, it would be the most misleading signal in the history of the LEI as currently constructed.

Sep 07 2019

Monetary Madness

  • Sep 7, 2019

We always do our own work and draw our own conclusions. Lately, though, we’ve wondered what the late “Monetary Marty” Zweig might say about the stock market’s current liquidity backdrop.

Aug 30 2019

Is A Strengthening Dollar A Form Of Policy Tightening?

  • Aug 30, 2019

Executive summary (for those leaving early for the holiday weekend): No.

We’ve found no reliable relationship between swings in the U.S. Dollar and subsequent variations in U.S. economic growth.

Jul 04 2019

Slowdown Or Recession? Confidence Is Key

  • Jul 4, 2019

The pattern of sharp sell-offs followed by equally sharp rallies continued in June. Most risky assets recouped nearly all the losses suffered in May, and then some.

Jan 08 2019

About That Great Jobs Report...

  • Jan 8, 2019

The December employment report temporarily eased fears of a severe U.S. slowdown. That’s a mystery to us.

Nov 07 2018

Too Soon To Expect Economic Weakness?

  • Nov 7, 2018

We believe stocks have begun to discount a major inflection point in the economy and corporate profits for 2019 and 2020.

May 05 2018

Cashing In On The LEI?

  • May 5, 2018

The consensus view is that the stock market will be fine as long as there’s no recession in sight.The same LEI that has displayed a fine GDP forecasting record has shown essentially no relationship with S&P 500 forward twelve-month performance. In fact the regression line shows a slight negative slope!

Feb 07 2018

Market Pressure Points?

  • Feb 7, 2018

Last month we detailed a handful of economic and monetary measures that were approaching critical thresholds from a stock market perspective.

Oct 06 2017

Better To Have And Not Need

  • Oct 6, 2017

"Need To Have” confirming indexes were nearly all perfectly aligned with the latest market high, and a second set of indexes we consider less critical, but “Nice To Have,” has also been in virtual lockstep.

Jun 05 2007

Keep An Eye On The LEI – Leading Indicators Have Topped, But Have Yet To Roll Over

  • Jun 5, 2007

The Index of Leading Economic Indicators has a proven track record of indicating when a recession may be near. Although this index has been trending sideways for quite some time, it has not yet rolled over.

Nov 03 2004

Keep In Front Of The Economic Curve

  • Nov 3, 2004

Stock market is a leading economic indicator, and typically turns down before the economy turns down. On average, 40% of the stock market decline occurs before the recession begins.

Mar 05 2002

A Bumpy Road To Recovery

  • Mar 5, 2002

Market begins to shake off “Enronitis” and as economic positives continue, the next rally could come quickly. And yes, it was a recession.

Feb 05 2002

Market Timing With The Index Of Leading Economic Indicators

  • Feb 5, 2002

Index of Leading Economic Indicators, a good coincident indicator for the stock market. Looks like it’s on the mend.

Oct 05 1997

View From the North Country

  • Oct 5, 1997

Stock market still considered lead economic indicator? Maybe not, considering the last three years, the stock market has been driven by Main Street. Changing role of portfolio managers: risk management function reduced to minimum if it even exists at all.

Nov 05 1996

The Stock Market and the Economy: Lead and Lag Relationships

  • Nov 5, 1996

In past issues, we have postulated that the next major stock market decline would not precede an economic downturn as it typically has in the past. Rather, the relationship would be coincidental, with the stock market and the economy turning down at about the same time.