by David Hill | May 17, 2018 | US Economy
Recent data from the labour market and the National Federation of Independent Business shows that wages will be picking up quickly this year. The NFIB compensation plans is now at the highest point in the last twenty years. Small businesses expect to raise wages, and...
by David Hill | Apr 6, 2018 | US Economy
The US manufacturing ISM is currently at levels last seen before the 2008-09 recession. While this reflects the recent optimism about growth prospects in the US, we see several headwinds to the industrial sector. The top-left chart shows the ISM against the VP...
by David Hill | Mar 12, 2018 | Leading Indicators, Uncategorized, US Economy
A key risk for investors remains an US inflation overshoot. US inflation breakevens have been rising since the start the year (top-left chart), however we believe this is more a reflection of market pricing returning to fair value than the start of a self-perpetuating...
by Simon White | Jul 21, 2017 | US Economy
Although coincident growth data is holding up for now, there are a number of macro “red flags” at present, in particular flattening yield curves (despite the recent bounce, US 2s10s is still 34bps flatter YTD) and falling excess-liquidity conditions. Yield curves are...
by Bill | Mar 24, 2017 | US Equities
(from our Weekly of 21st February) As we have been noting, the market remains in a risk-on regime, with positive momentum, falling volatility and confirmation from various inter-market relationships such as cyclical stocks outperforming high dividend stocks, high...
by Bill | Sep 9, 2016 | US Economy
A discussion of late has been whether the Fed should raise its inflation target. We think this would be a bad idea. Currently, with a 2% target, the Taylor rule implies the Fed Funds rate should be closer to 2%. With a 3% inflation target, the Taylor rule would...
by Bill | May 5, 2016 | US Economy
Heavy truck sales are oddly a good leading indicator for the economy. It is odd because a lot of industrial production is coincident with the business cycle. However, if you go back over forty years, you can see that recessions have always been preceded by a decline...
by Bill | Apr 15, 2016 | US Economy
Profit margins are declining, and we expect them to fall much further. As you can see from the chart below, Variant Perception’s leading indicator for wages does a very good job of leading US corporate profit margins by a little over a year and a half. The message is...
by Bill | Nov 18, 2015 | Uncategorized
The corporate profit cycle is now turning down, and our leading economic indicators point to further declines in return on equity (ROE) and profit margins. This is not a short-term call on equity markets but a major structural factor investors should bear in mind in...
