With John Hampson
The latest Conference Board leading indicator updates were Japan at -0.2 (improvement on last month), UK at +0.2 (improvement), Korea at +0.2 (drop back). Other country updates ahead this next 7 days.
The latest OECD leading indicators show all round improvement, summary here:
Fidelity’s recession risk scorecard for the key economies show a mixed picture:
ECRI’s US leading indicators remain in an uptrend and positive:
Global narrow money as a leading indicator continues to show growth into the Spring but thereafter it could weaken:
Global equity fund flows show too much frothiness in shares currently:
Note that in March 2000, such excesses pinpointed the cyclical/secular top for stocks, whereas in 2007 it did not highlight a cyclical top. As we do not see a congregation of other cyclical stocks topping indicators at this point, I believe this is a warning flag rather than a sell-all signal.
Economic Surprises look like this for the USA and Europe respectively:
Europe surprises (white line above) are finally moving into the positive, whilst US surprises are dropping fast.
Lastly, US earnings came in at a 65% beat rate for the first week, but we need to await more to be confident of a theme.
If I draw together all the above data, the picture is one of weak global growth ahead into the Spring, with mixed fortunes and rotating leadership. The differences between major countries and between leading and surprises continue to suggest a picture that needs watching closely. I suggest there is slim chance of a global recession right now, but will be looking for evidence of countries uniting in weakness ahead to bolster that likelihood. On the flip side, I will be looking for a more united picture of improving fortunes across the globe ahead to provide evidence that we can push for the growthflationary finale into the solar peak that my solar/secular research predicts.
One more chart to finish. NOAA’s global climate report revealed that 2012 was in the top hottest years globally on record. But within that it was the hottest year on record where La Nina occurred (which has a cooling effect). The chart of the last 60 years looks like this:
The question is whether the cluster of bars over the last 10 years is a topping pattern or whether the uptrend is still in tact and 2013 potentially becomes a new record hottest year without La Nina around and a possible weak El Nino in play. Were the latter to occur that would help deliver an acceleration in soft commodities.
I have updated all models this morning. Geomagnetism is forecast to continue to be tame the next 3 weeks, which is supportive for pro-risk; and the recent higher daily sunspots counts add weight to the likelihood that the sunspot peak remains ahead and that excitement in humans should accordingly build.