This is a scary chart showing a scary indicator.
The reason it is scary is because this measure has an uncanny record of pointing to a recession since the 1940s (shaded areas indicate recessions).
Slow growth is - of course - bad news for commodities and profits. Bonds should benefit, however, in this environment.
Can the stock market ignore the message of this indicator and keep moving higher? How long can it ignore the economic reality as anticipated by the above gauge?
Details will be discussed in depth in the next issue of The Peter Dag Portfolio.
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George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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