Leading indicators showing red flags
We look at a large number of leading indicators across several key economies. In particular, we focus on indicators relevant for the 3 key economic regions of the global economy (i.e. US, China & Europe). We then turn those indicators into traffic lights, color coding each one red-amber-green dependent on its message. Increasingly those indicators have been turning amber and red in the past 12 – 18 months. Amongst those indicators, market-related ones are typically the earliest to raise red flags – highlight growing risks. One of the key catch all indicators is the steepness of the Yield curve (measured as 10 less 2 year US yields). In the US, this curve has continued to flatten dramatically in recent months (& is now at its flattest since the GFC) – this highlights the rising risk of slowing global growth.
Longview Economics, founded in 2003 by Chris Watling, is an independent research house based in London, providing three distinct yet interrelated groups of research products: Short and medium term market timing; Long term global asset allocation...