Just finished our weekly macro scoring session. Here’s a recap:
Despite the headline narrative that the economy is looking to improve going forward, the data we track isn’t yet offering much by way of confirmation.
Our US macro score (PWA Index), declined 3.7 points to an overall -11.11. Its 14th consecutive week in the red.
Here are the weaker-trending indicators that saw a change in their respective scores (red shaded areas denote past recessions): click any insert below to enlarge…
Chicago Fed National Activity Index back in the red (from yellow 0, to red -1):
The Bloomberg Commodity Index currently rolling over (from yellow 0, to red -1):
Copper price dipping notably (from green +1, to yellow 0):
One data point improved:
Monthly truck tonnage bounced back nicely (from red -1, to yellow 0):
Although the signal was not confirmed by the weekly rail data (still scores red):
To sum it all up, the business data remain concerning:
While the consumer continues to hold up just fine (which explains the “great economy” narrative you keep hearing):
As we’ve previously illustrated, it’s generally the business data that roll over first as expansions peter out. Doesn’t necessarily mean that recession looms around the next corner — similar scenarios resolved higher in 2011 and 2016 — it simply means that prior to the next recession, and bear market in equities, this is the sort of setup that’ll develop.
As for the rest of the world, actually, on balance, things are looking up:
While global data remain the definition of mixed, our macro scores improved for China, France, Japan, Mexico, Russia, Singapore, South Africa, South Korea, Canada and the UK. Brazil and Indonesia being the only countries we score that exhibited (week-over-week) declining macro setups:
As for the huge longer-term elephant in the room — the corporate debt setup — it’s growing more concerning by the day.
More on that to come…