Commentary

We post occasional thoughts and interesting observations about our U.S recession forecasting methodologies on this blog. To see all the posts on a single page, click here.

Yield Curve inversion suggests mild recession

By on August 16, 2019 in Reflections

Download article as PDF There has been acute interest in the inversions currently taking place on the term-spreads around the world: And this comes as no surprise, since more than half of the world’s sovereign yield curves have now inverted… Right now, 70% of the U.S yield-curve cluster comprising the 10/5/3/2/1 year bond yields are […]

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We likely avoided a full yield-curve inversion

By on July 31, 2019 in Reflections

Download article as PDF In our early June post “Is the U.S Yield Curve Inversion locked in?” we mused that only portions of the term-spread complex had inverted and most likely would remain that way, allowing us to avoid a full scale term-spread inversion. As the chart below shows, this is indeed the case – […]

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Is the U.S Yield Curve Inversion locked in?

By on June 2, 2019 in Reflections

Download article as PDF In our February 2019 commentary we forecast that the 10’s and 1’s yield-curve would invert in May. The data below is taken from that market commentary, with a warning that the indicated dates of recession have a very wide standard deviation over the historical record: The 10’s and 1’s term spread […]

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Unemployment is worse than it looks

By on May 21, 2019 in Reflections

Download article as PDF The U.S civilian unemployment rate reached new lows of 3.6% in April – numbers last seen 51 years ago in 1968: There are a number of ways to use the national unemployment rate to signal recession, but almost all of them are co-incident to slightly lagging in the warning they provide. […]

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What are odds of a SP500 reversal?

By on May 13, 2019 in Reflections

Download article as PDF The SP-500 has corrected 4.35% from its recent high achieved a couple of days after our repeated warnings of high correction risks. The question that naturally comes to mind now, as we embark on this corrective phase, is what the odds of the worst being over are. We have been working […]

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Global Growth Roundup – 4Q2018

By on March 27, 2019 in Reflections

Download article as PDF NOTE : The following charts are extracts from our monthly Global Economy Report available with a standard subscription. Global Economic Activity slowing at the fastest pace since 2011 The cumulative GDP growth for the 4 quarters of 2018 for all 41 major countries covered by the OECD display a stark contrast […]

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U.S Stock Market Valuations continue to warn

By on March 11, 2019 in Reflections

Download article as PDF We have updated the RecessionALERT Valuation Index (RAVI) forecast models for the SP500 using 4Q2018 data. Stock market valuations continue to pose a “clear and present danger” to positive economic and SP500 returns outcomes, and have worsened since our last warning . One and two year SP500 forecasts continue to offer […]

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Yield curve inversion forecast update – Feb ’19

By on February 25, 2019 in Reflections

Download article as PDF Based on the methodology discussed here we hereby update our U.S Yield-curve inversion forecast and subsequent recession and stock market peak forecasts. All the forecast dates have moved foward by 1 month as the yield curve continues to print below its regression mean: As a matter of interest, 60% of all […]

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World in depths of business cycle slowdown

By on February 19, 2019 in Reflections

Download article as PDF On 8th June 2018 we penned a warning that the worlds’ major 41 economies, as tracked by the OECD, were headed for a synchronized business cycle slowdown. You can read the article here : World headed for cyclical slowdown. Indeed, as you can see below, for quite a few months shortly […]

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WLEI updated and some news

By on February 8, 2019 in Reflections

Download article as PDF The U.S Weekly Leading Economic Index (WLEI) as at 01 Feb 2019 has been updated to our front page together with historical vintages file. Here is a snapshot of the last few vintages: We seem to be revising down each week but the overall shape of the WLEI still hints at […]

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Yield curve inversion forecast update – Dec ’18

By on January 1, 2019 in Reflections

Download article as PDF Based on the methodology discussed here we hereby update our U.S Yield-curve inversion forecast and subsequent recession and stock market peak forecasts. All the forecast dates have moved foward by 1 month:

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Yield Curve Inversion Forecast Update Nov 2018

By on December 12, 2018 in Reflections

Download article as PDF Based on the methodology discussed here we hereby update our U.S Yield-curve inversion forecast and subsequent recession and stock market peak forecasts. All the forecast dates have moved further back by 5 months:

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Stocks valuations pose “clear & present” danger.

By on December 10, 2018 in Reflections

Download article as PDF Those clients who have been with us since 2010 will know our refrain from issuing unnecessary and/or sensationalist warnings about the economy and markets. In fact, in 2012, the general consensus was that the US economy was about to fall back into recession, a view we opposed to quite some ridicule […]

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2nd derivative of WLEI posts warning

By on November 16, 2018 in Reflections

Download article as PDF 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 […]

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SP500 was ahead of itself but tailwinds could be back

By on November 2, 2018 in Reflections

Download article as PDF 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 […]

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World headed for cyclical slowdown

By on June 8, 2018 in Reflections

Download article as PDF Despite the U.S leading economic indicators appearing healthy, the global economy appears to be headed for a slow down, with only 34% of the 40 countries we track having leading economic indicators (LEI’s) signalling growth ahead, and the actual GDP-weighted Global LEI growth now below zero: The specific country details are […]

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Dealing with a runaway market

By on January 18, 2018 in Reflections

Download article as PDF Those of you who have been following us since 2010 will identify us a perma-bulls. Even in the depths of the ECRI 2012 /Hussman recession calls we were firmly bullish on the US economy and stock market – quite contrary to the popular consensus at the time. Those subscribers who have […]

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Negative returns for SP500 in next decade

By on August 1, 2017 in Reflections

Download article as PDF The RecessionALERT Valuation Index (RAVI) has been updated for 1Q17 and for the first time since 1999, is forecasting negative 10-year total returns for the SP500: The chart on the right shows that the RAVI continues to forecast SP500 decade-ahead total returns with relative accuracy, especially when one considers that the […]

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25 most important US economic indicators animated in 1 minute

By on July 26, 2017 in Reflections

Download article as PDF Here’s something fun we played with after just compiling our June Long leading US Index report for our subscribers

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Horrific revisions to HWOL data

By on March 8, 2017 in Reflections

Download article as PDF The Conference Board Help-Wanted-Online (HWOL) program is closely followed by us to get a feel for the labor market. It is one of over two dozen labor indicators we examine. The monthly HWOL data have been produced by the Conference Board since May 2005, replacing the Help Wanted Advertising Index of […]

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