Postscript to OECD CLI for January
Posted on 09 March 2010
David Rosenberg provides a brief “How to use the ECRI leading index for asset allocation” guide in this mornings Breakfast with Dave. For ease of reference, following is the relevant bit, but you can always subscribe to his newsletters at Gluskin Shelf:
This is a handy indicator for asset allocation and sector rotation. For example,when the ECRI index is above zero and rising to a peak, as was the case from mid-June to October 2009, the S&P 500 is on average up 22%, led by basic materials, consumer discretionary, financials, industrials and technology.
In the quadrant we are in now, which is from the peak down to zero, the S&P 500, on average, rises 1.3% and leadership alters towards consumer staples, health care and telecom. On the cyclical side, industrials, energy, and tech still manage to outperform and do not relinquish that status until the ECRI index (smoothed) falls below the zero line. In bond-land, all anyone needs to know is that we are now in the ECRI quadrant where the yield curve flattens.
And while we are referencing how others use these leading indexes, click here to view the December article where we tested Albert Edward’s suggestion that Japan’s experience through the 90′s would be instructive with respect to leading indicators.
1 Response to Postscript to OECD CLI for January
Leave a Response
Click on icon to subscribe
Copyright
DataDiary is published under the Creative Commons license regime
I saw that comment from Rosenberg, which is surprising as I seldom click through to read his whole article. Interesting.
Perhaps it’s time to start selling down my US discretionary retailers…but the strength and momentum of the retail rally is still so strong.
How about that coffee?