Our real narrow money index continues to decline and is sending an increasingly bearish cyclical signal for the global economy and commodity prices. Our real narrow money index has now declined for 4 months running and is now tracking below 7% for the first time since October 2010.
The cyclical recovery in Europe is real and will likely have further to go in the second half of this year. However, amid upbeat cyclical indicators, it is important to keep a close eye on developments in the periphery and in particular Spain. The process of clearing bad debts is far from over in our view and the idea that Spain has, “turned the corner” lacks logic and evidence.
Industrial production in the G7 has edged up further and this is in accordance with the OECD LEI diffusion index. G7 industrial production is now growing again and based on the upturn in the OECD LEIs observed since late last year we would expect economic activity to be well supported in the next 3 months.
Margin debt on the NYSE continues to rise, both when looking at the rate of change as well as the level of negative cash balances (lower chart). Overall margin debt rose strongly going into 2013 and is now sitting only…
US coincident activity index turns up in line with leading indicators, more upside ahead