Higher Volatility and Credit Spreads Ahead

Oct 14, 2015 | Leading Indicators, US Economy

All of our leading indicators for credit spreads and volatility point to wider volatility and higher credit spreads over the next two years.  The credit cycle is long in the tooth, and the best predictor of future credit spreads is the lagged growth in lending. For a...

US Unemployment Rate is Not its Former Self

Sep 23, 2015 | Global Economy, US Economy

Structural factors are ensuring that the unemployment rate in the US today is not what it was in periods past.  Yellen has seemed to be more in the camp that the decline in the labour participation rate (PR) since the crisis has been mainly cyclical in nature and...

Manufacturing and Services PMIs Diverge

Jun 2, 2015 | Leading Indicators, US Economy

There has been a sharp divergence between ISM services and non-services in the US. Many of our leading indicators for manufacturing have pointed to weakness. This suggests demand is tilting away from manufacturing and towards the service sector.  The breakdown of the...

US Growth Coming in As Expected

Apr 29, 2015 | US Economy

(The following is from our December Leading Indicator Watch (LIW), released December 4th, 2014.  The LIW is a monthly report giving a summary of all or our main leading indicators, allowing clients to forecast early on where the business cycle in major countries is...

US Home Prices to Continue to Rise

Apr 28, 2015 | US Economy

(from our Leading Indicator Watch from March 5th, 2015) Our leading indicator for US house prices is supportive of an improvement in price growth. One of the inputs that drives our leading index is the number of months’ supply of new homes.  The continued fall in...

US Manufacturing – More Weakness to Come

Apr 15, 2015 | US Economy

US manufacturing has slowed in recent months, and we expect more to come.  We had noted the discrepancy between the PMI and ISM surveys earlier this year as it looked like the ISM was outputting data inconsistent with our leading indicators.  The ISM has now fallen...

Growing number of lower paid workers in US

Feb 5, 2015 | US Economy

The participation rate in the US has declined much less for those at lower levels of education: Source: Macrobond That the lower educated are disproportionately supporting employment growth, through lower paid jobs, may help explain why, so far, we have not seen...

P/Es Waning As A Source of US Equity Returns

Nov 5, 2014 | US Economy

After some very strong years, multiple expansion in the S&P is struggling to contribute to returns in the index.  So far this year, P/E multiple expansion has only contributed 32% to S&P returns (top chart).  More reliance is being placed on top-line growth to...