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U.S Stock Market Valuations continue to warn

By RecessionALERT on March 11, 2019 in Reflections

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 relatively accurate short-run estimates despite their low overall long-term correlations and both are foretelling mediocre returns (click image for larger view): To this end, as is tradition, we offer […]

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Stocks valuations pose “clear & present” danger.

By RecessionALERT on December 10, 2018 in Reflections

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 from certain quarters. Whilst we see no immediate danger signals from the econometric models (apart from the narrowing yield curves in the bond market) we do see danger posed […]

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SP-500 Liquidity Crunch Warning

By RecessionALERT on April 13, 2014 in Reflections

Losses on the SP-500 on Friday 11th saw all our measures of breadth-liquidity fall into contraction, warning of a highly vulnerable market subject to further liquidity tightness and raised volatility. To many of my staff that actively trade the SP-500, this is treated as a bona fide correction warning. If you are scratching your heads as to where to find this chart updated on a daily basis in our charts menu, we will only be launching it in the coming […]

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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.