Leading Indicators Turn Negative, Declining Inflation Expectations, and a 12-Week Dow Record
June 24, 2022 | FIRESIDE CHARTS
Leading economic indicators are starting to turn negative, as the market prices in a lower peak to the current Federal Reserve hiking cycle. Long-term market-based inflation expectations have fallen recently, while short-term ones forecast that PCE has already peaked, and CPI will peak in August. Commodity prices, which are highly correlated to CPI and inflation expectations, are well off their highs. Markets do seem to move faster as the current drawdown has occurred much more quickly than average. Do you know what the top crop in your county is?
1. Leading indicators are starting to reflect what we already know, the economy is slowing down:
Source: The Daily Shot from 1/17/22
2. Markets are expecting the Fed to move aggressively on interest rate hikes, which may necessitate fewer hikes overall:
Source: The Daily Shot from 6/20/22
3. Long-term inflation expectations are coming down but this may simply reflect recent moves in commodity prices:
Source: The Daily Shot from 6/22/22
4. “Fixings” are derivative instruments linked to future inflation releases:
Source: Morgan Stanley Research
5. The price of copper is heavily followed as a barometer for economic activity:
Source: The Daily Shot from 6/22/22
6. Agriculture prices are off their peak as well:
Source: The Daily Shot from 6/23/22
7. The Dow fell a record 11 out of the past 12 weeks. While there are real reasons for concern, the pace of the market’s fall seems extreme:
Source: Goldman Sachs; @SamRo
8. Follow this link for the same data on fruits, vegetables, berries, and nuts: https://erdavis.com/2022/06/07/whats-the-most-common-crop-in-the-us/
Source: @erindataviz
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.