May | 2024 | RecessionAlert

Archive | May, 2024

Markets : Complacency about personal finances, stock-market & economy has bottomed.

By RecessionALERT on May 14, 2024 in Reflections

Composites created from U.S geography limited internet searches for 8 search-terms we have found most aligned to uncertainty and fear regarding personal finances, the stock market and the economy have bottomed and appear to be on the rise: Both the equal-weighted composite and our preferred measure, the “search-volume weighted” composite bottomed in January 2024. This latter measure weighs each search term by the actual number of searches measured for the month as opposed to using the “relative to its history” […]

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MODELS: A leading indicator for U.S stocks

By RecessionALERT on May 1, 2024 in Reflections

The most powerful leading indicators we have found for U.S stocks over the medium-term horizon are the net percentage of 39 OECD countries with rising leading economic indices (LEI’s) and the net percentage of 39 central banks that are easing rates. They achieve maximum correlation with the NYSE annual percentage change with 7 and 10 months lead respectively. If we aggregate these two, we derive a leading indicator for U.S stocks, with a 0.57 r-square to NYSE (pretty darn good […]

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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.