CLI and SPX
Here you are. A lovely chart.
Let me break this down and explain the meaning of this.
The top chart show the OECD's composite leading indicator for the USA.
Broadly speaking, this an index which tracks economic activity within the USA. It's designed to be a forward looking indicator for the health of the United States' growth
Now as we can see we appear to have hit a fork in the road a little bit so lets break down what this means.
The CLI has hit 98.74 this month, this number is the lowest since the recovery phase of the great recession since September 2009.
That's significant because it means economic performance in the USA is on-par with the performance after it had been damaged by the great recession.
You'll see as well that this level is below the levels set during the soft landings of 2015/16 and 2012/2013.
Yet equities, so far, are unfazed.
As a matter of fact, taking the broader view here, the current 98.74 reading is basically on-par with the downmove that occurred during the dotcom fiasco in 2000/2001
Since the previous big downmoves on the CLI corresponded with periods of downside volatility on the SPX then it seems reasonable to expect some big downmoves sometime soon (presuming of course no change of fortune for the world and USA economy) and of course especially if the CLI moves further south.
Considering how entrenched this slowdown is and how pervasive it is becoming then I strongly suggest people consider investing defensively and looking for short opportunities because it seems reasonable to expect price to sooner or later correct to represent the underlying fundamentals.
Let me break this down and explain the meaning of this.
The top chart show the OECD's composite leading indicator for the USA.
Broadly speaking, this an index which tracks economic activity within the USA. It's designed to be a forward looking indicator for the health of the United States' growth
Now as we can see we appear to have hit a fork in the road a little bit so lets break down what this means.
The CLI has hit 98.74 this month, this number is the lowest since the recovery phase of the great recession since September 2009.
That's significant because it means economic performance in the USA is on-par with the performance after it had been damaged by the great recession.
You'll see as well that this level is below the levels set during the soft landings of 2015/16 and 2012/2013.
Yet equities, so far, are unfazed.
As a matter of fact, taking the broader view here, the current 98.74 reading is basically on-par with the downmove that occurred during the dotcom fiasco in 2000/2001
Since the previous big downmoves on the CLI corresponded with periods of downside volatility on the SPX then it seems reasonable to expect some big downmoves sometime soon (presuming of course no change of fortune for the world and USA economy) and of course especially if the CLI moves further south.
Considering how entrenched this slowdown is and how pervasive it is becoming then I strongly suggest people consider investing defensively and looking for short opportunities because it seems reasonable to expect price to sooner or later correct to represent the underlying fundamentals.
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