Are Fears About an Imminent Recession Overblown? Historically, a recession is coming when the Leading Index for the United States is below 1. Today, it stands at 1.37. “The leading index for each state predicts the six-month growth rate of the state’s coincident index. In addition to the coincident index, the models include other variables…
Sharpe Ratio and U.S. Treasury Strips Curve Historically, high sharpe ratios have been usually unsustainable. Image: Arbor Research & Trading LLC
U.S. ISM Recession Probability Chart showing that historically, a level greater than 44.5% has indicated a recession. Current U.S. ISM levels suggest a recession probability of 10%. Image: Pictet Asset Management
U.S. President’s Approval Rating vs. U.S. Unemployment Rate at End of First Term President Trump’s approval rating is historically low compared to the unemployment rate. Image: J.P. Morgan
Valuation – S&P 500 Forward P/E Ratio Chart showing that the forward P/E ratio of the S&P 500 remains at high level, above its historical range. Image: Fidelity Investments
Performance of MSCI ACWI Around Global Health Emergencies Historically, the global stock market has bottomed, when the WHO has declared a global health emergency. Image: Ned Davis Research
Performance of S&P 500 Index Around Global Health Emergencies Historically, market reactions to previous major health scares have shown short-term volatility, but no disruptions over an extended period of time. Image: Ned Davis Research
12-Month Earnings Yield Less Fed Funds Rate The 12-month earnings yield less Fed funds rate is just back to its historical average. Image: KKR Global Macro
Chicago Fed National Activity Index and Recessions The Chicago Fed National Activity Index fall to -0.35 in December, and stayed at a negative reading. Anything negative is below-average growth. In recent history, anything at or below -0.7 (red line) was equivalent to a recession. “A zero value for the index indicates that the national economy is expanding…
U.S. Output Gap and Inflation This chart shows that actual U.S. GDP is higher than potential GDP. Historically, a positive output gap leads to inflation. Image: Richardson Wealth
Dow Jones Price Since 1980 Historical chart of the Dow Jones from 1K to 29K. Image: CNBC