The business cycle is alive and well

Those of you who follow my blog know I pay close attention to the relationship between business sales and inventories (see previous posts).

When the inventories rise faster than sales there is only one option left for business - cut production in order to reduce costs.

The current imbalance between inventories and sales has been going on for months. It is no surprise therefore to see industrial production peaking in December 2014 and declining since then, as I anticipated ( see above chart, shaded areas indicate recessions).

The bottom line is the current imbalance between inventories and sales will cause industrial production to decline further. This trend is bad news for profits and commodities. Bond yields are likely to decline during the slower growth phase of the business cycle.

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Thank you for visiting this site.

George Dagnino, PhD
The Peter Dag Portfolio
Since 1977 
Author, Profiting in Bull and Bear Markets

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