m Market Trends
- jim mason
Key Points
References
Key Concepts
Key Market Trends
200227 - Big Weekly Market Drop
Drop signifies four things (though his tongue may be planted firmly in his cheek on the last item):
- A significant change in economic fundamentals
- A significant increase in ‘risk’ to the fundamentals
- The market’s financial plumbing is breaking down
- A meteor or alien invasion to end global existence has been spotted but its arrival is unknown (or a virus pandemic)
Black Swan over reaction
Investors are worried that the outbreak of COVID-19, the infectious disease that originated in Wuhan, China, late last year, will hurt global economies and supply chains if the illness isn’t contained.
Also, Bernie fear will grow over the next 8 months hurting the market
government may kick in surprise plans to help stanch the bleeding in markets. Those might include:
• A health-care action plan
• An announcement of financial support by the Treasury Department
• Other fiscal stimulus packages
• An emergency interest-rate cut by the Fed
Macro Trends toward 2020
https://seekingalpha.com/article/4281031-puzzle-pieces-finally-come-together?ifp=0
We like the current easing environment, it implies the Fed is likely ahead of the curve on a recession, which also suggests the recession can be delayed, possibly for several years. Once again, assets to own here are inflation proof GSMs, Bitcoin and other select digital assets, certain stocks in certain sectors.
However, many bonds, and large cash positions will likely get eaten up by inflation, so I don’t expect the old 60-40 stocks/bonds allocation to hold up well at all over the next few years. Our Modern Diversified Portfolio had returned roughly 38.5% in H1 of this year, and I expect similar returns should follow going forward.
Potential Value Opportunities
OECD CLI - composite of leading indicators - find periods of correlation w market trends
https://www.oecd.org/sdd/compositeleadingindicatorsclifrequentlyaskedquestionsfaqs.htm
Find historical correlations to SP500 pricing
Look at CLI offsets to SPX
Look at BCI and CCI correlations to SPX
See if a triple confirmation has value up or down on trends / trend change
CLI
https://data.oecd.org/leadind/composite-leading-indicator-cli.htm
5. Where can I download CLI data?
CLI can be downloaded from the dataset "Composite Leading Indicators (MEI)" in OECD.Stat Extracts. In OECD.Stat Extracts you can modify the current data selection by using the top navigation bar to select specific "Subject", "Country" and "Time & Frequency". The data can be exported to Excel. For long time series we recommend using the text format. You may also consult the OECD.Stat Extracts' user guide.
6. Why is there a two months lag in data availability?
Most input data for a given month "t" are available at month "t+2". This is the reason why there is a 2 months lag between the reference date and the publication date of the data.
9. What are the components of the CLI?
The components of the CLI are time series which exhibit leading relationship with the reference series (GDP) at turning points. The component series for each country are selected based on various criteria such as economic significance; cyclical behavior; data quality; timeliness and availability. To get the list of component series for each country click here.
BCI - Business Confidence Index
https://data.oecd.org/leadind/business-confidence-index-bci.htm#indicator-chart
CCI - Consumer Confidence Index
https://data.oecd.org/leadind/consumer-confidence-index-cci.htm#indicator-chart
Potential Challenges
Candidate Solutions
Step-by-step guide for Example
sample code block