• 1,108 days Will The ECB Continue To Hike Rates?
  • 1,108 days Forbes: Aramco Remains Largest Company In The Middle East
  • 1,110 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,510 days Could Crypto Overtake Traditional Investment?
  • 1,515 days Americans Still Quitting Jobs At Record Pace
  • 1,517 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,520 days Is The Dollar Too Strong?
  • 1,520 days Big Tech Disappoints Investors on Earnings Calls
  • 1,521 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,523 days China Is Quietly Trying To Distance Itself From Russia
  • 1,523 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,527 days Crypto Investors Won Big In 2021
  • 1,527 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,528 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,530 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,531 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,534 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,535 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,535 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,537 days Are NFTs About To Take Over Gaming?
Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

Real Time Recession Indicator: 6.10.13

Our real time recession indicator is constructed from various leading economic indicators and two pricing models. The indicator continues to show that the US economy is NOT in a recession. However, 2 out of 6 components continue to show weakness in the economy.

The following data is used in the construction of the indicator: 1) Aruoba-Diebold-Scotti Business Conditions Index (ADS); this is from the Philadelphia Federal Reserve and it is designed to track real macroeconomic activity at a high frequency; 2) the Chicago Fed National Activity Index (CFNAI); this is from the Chicago Federal Reserve, and it uses 85 different variables in its computation; 3) There are two components from the Economic Cycle Research Institute the Leading Economic Indicator (LEI) and Weekly Leading Index (WLI). Two pricing models are used. One is the Faber model, which looks at price in the SP500 relative to its simple 10 month moving average. The second is proprietary, and it looks at price relative to past pivot points and trend lines formed by those pivot points. The final composite indicator is shown in figure 1, a weekly chart of the SP500.

Figure 1. Real Time Recession Indicator

Real Time Recession Indicator

A close below SP500 1200 would put our pricing model into recession territory. A monthly close below SP500 1500 would put the Faber model into recession territory. Our proprietary pricing model is based upon pivot points or swings in the markets. The SP500 has been straight up for about year, and I suspect there will be a long period of digestion to consolidate the past year's gains. This will bring our model in line with the Faber model.

In any case, for our present purposes, the data is not consistent with a recession. However, the indicators are not strong either.

 

Back to homepage

Leave a comment

Leave a comment