Friday, March 20, 2020

Macro Update

As you might suspect, our analysis continues to exhibit macro deterioration. And, as I know you suspect, the worst, alas, is yet to come...

With regard to the dozens of data points we crunch each week, the deterioration at this point can be chalked up simply to a continuation of the trend that began all the way back in early 2018:

Click to enlarge...

This week's macro score is -25.00; our 22nd straight week below zero (heightened recession risk). I.e., conditions were weakening long before we became familiar with the term "coronavirus".

Our financial stress index -- whose data points (with two exceptions) are now capturing present conditions (as we can track credit spreads in real time), just scored -66.66. That's a remarkably low score that says credit conditions are, frankly, bad, the world over.

I've yet to officially score our indices for the 22 countries plus the Eurozone we track. I'll circle back with a short post when I do; suffice to say that they won't be pretty either.

In the meantime, here are some of the real-time (or close to it) data (red shaded areas highlight past recessions):

Click each graph to enlarge...

Weekly Jobless Claims:

Industrial Materials Prices:

Copper Price:

Caterpillar Global Sales:

High Yield Credit Spread:

US Corporate Investment Grade CDS Spread (cost of insuring high-quality corporate bonds):

Inflation Breakevens:

Merrill Lynch Global Financial Stress Index:

You get the picture...

Please have a safe weekend!

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