Archive | January, 2017

Cause for Concern? Coincident-Lagging Economic Ratio is at a 41-Year Low

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The Conference Board’s Coincident-Lagging Ratio has done a pretty good job of identifying recessions since 1958. That is, until now. In each of the last eight recessions, the Coincident-Lagging Ratio bottomed near the end of the recession and was declining throughout the recession. It has been a pretty reliable indicator giving only three false signals, excluding […]

Are Cyclical Stocks Trying to Tell Us Something About the Direction of the Dollar?

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Over the past decade, global cyclical stocks and the dollar have tended to move in inverse directions. Whenever the dollar weakens, like in the first half of 2009 and the second half of 2010, cyclical stocks have tended to outperform the broader market. Cyclical stocks have been outperforming since 7/7/16 and that outperformance really accelerated after […]

Is the European Investor About to Become More Omnivorous?


With yields in Europe well below 2% for the better part of the last five years, foreign bonds–especially US Treasuries, trading at an increasingly higher spread to German counterparts–offered an appealing alternative. Appetite for USTs is one that remained strong for 50 straight months as yields in Germany fell nearly continuously. In November, however, European […]

Euro Area Debt at Four-Year Low


Consolidated debt in the Euro Area fell to the lowest level in four years, according to 3Q2016 figures released today. The overall average for the monetary union fell to 90.1% of GDP in the third quarter, with continued wide dispersion among its members. Greece remains closer to 180% of GDP– nearly three times the ECB’s […]

Bonds and Equities Are Syncing Back Up Again

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On 11/4/16, the 65-day correlation between between the S&P 500 and US 10-year treasury yields was as negative as it had been at anytime since June 2007. The 65-day rolling correlation was -30% compared to a 73% correlation that had occurred just a few months earlier in June. The negative relationship seems to be short lived […]