Interesting update here on Goldman’s global leading indicator. They’re now saying it points to a global contraction:
“The first of these frameworks relates the phase of the cycle, as represented by our Global Leading Indicator, to the performance of asset markets. Last week’s final reading of our May GLI now shows that the global economy has been in the ‘contraction’ phase (negative and falling momentum) since April. This is typically the phase that is most damaging for risk assets and most helpful for government bonds.”
And from a different piece Goldman notes that the GLI “point to an increasingly worrying outlook for the global economy”:
“Momentum Negative, Headline Barely Positive. Our May Final GLI headline came in at 0.1%yoy, up from last month’s revised reading of -0.1%yoy. Monthly momentum deteriorated further to -0.06%mom from a revised -0.03%mom in April. The revised series shows that momentum peaked in January at a lower level than originally indicated, and has shifted into negative territory over the last two months. The final May momentum reading with the full set of components is notably weaker than the preliminary print, reflecting the fact that global data continue to underperform their US counterparts (which receive a heavier weight in the preliminary GLI calculations). Overall, the sequential GLI shifts point to an increasingly worrying outlook for the global economy.”
Source: Goldman Sachs
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.