November | 2018 | RecessionAlert

Archive | November, 2018

2nd derivative of WLEI posts warning

By RecessionALERT on November 16, 2018 in Reflections

The RecessionALERT Weekly Leading Economic Index (WLEI) is essentially a first derivative indicator (rate of change). We can create the second derivative by measuring the percentage of time the WLEI has historically spent above the current reading. The history shows us that this is a good leading indicator for another WLEI metric, namely the percentage of WLEI components in recession territory (we call this the “WLEI Diffusion”): The 2nd derivative is diverging from the WLEI Diffusion, and as we mentioned, […]

Read full story · Comments are closed

SP500 was ahead of itself but tailwinds could be back

By RecessionALERT on November 2, 2018 in Reflections

During the 6 months running from March to September 2018, the SP500 was running counter to the seasonal average returns profile of the 4-year U.S Presidential Cycle: It appears the seasonality averages eventually got their way and the SP500 fell hard in October 2018, in what was supposed to be a strong month. In all likelyhood the tailwinds of one of the strongest periods in the Presidential Cycle will come to bear and we should expect good returns for the […]

Read full story · Comments are closed

IMPORTANT DISCLAIMERS: Although many of our models rely heavily on back-testing, optimisation and probability methods, please note that past performance is NO GUARANTEE for future returns. No system devised by man can predict the future, let alone the future of the markets and economies. What we have are sets of mathematical models that use historical data and varying theories to pinpoint places in time when the STATISTICAL LIKELYHOOD of calling the start and end to recessions is the greatest. In the midst of all the best mathematical models, you can have geo-political events, wars, terrorist attacks, natural disasters and even nuclear accidents that tip everything upside down. This is always a risk factor you need to factor in on any recession call no matter how confident you are in a signal. The SuperIndexes are created through mathematical and statistical optimisation techniques that best fit the historical NBER data. There is no guarantee that out-of-sample performance will match that of prior in-sample performance.