A landmark study looked back at more than 100 years of data and 23 countries to determine if there are reasons to believe the cross-sectional patterns in factor returns will persist, or whether they were just anomalies that tended to disappear after publication.
The Northern Trust Economics team shares its monthly perspective on the growth prospects and challenges ahead for key markets.
We make every effort to understand the way that investors go to extremes over what we call the “well-known fact” in the stock market. A “well-known fact” is a body of economic information which is known to virtually everyone in the marketplace and has been acted on by anyone with capital.
The domestic economy is functioning as well as any period since 2007, however we expect economic growth to slow next year. Measured by GDP, we expect the economy grew by a solid 4.0% in the second quarter and is growing at a rate of 2.7% with most sectors performing well.
Three of eight indexes on our world watch list have posted gains through Monday, August 13, 2018. The top performer this year is India's BSE SENSEX with a gain of 11.33%. In second is our own S&P 500 with a gain of 5.55%. In third is France's CAC 40 with a gain of 1.88%. Coming in last is Shanghai's SSE with a loss of 15.76%.
In the title of his quarterly message at the beginning of this year, our outgoing president Sam Stewart referred to a popular rumination of baseball legend Yogi Berra: Seems Like Déjà Vu, All Over Again.
Evidence shows that the yield-curve slope and equity returns provide signals of similar direction in the economy, allowing investors to nowcast with relative confidence. Today, those signals indicate that several developed markets—in particular, Japan, Germany, and the United States—are ominously close to entering a correction phase.
The S&P 500 bounced around this week, ending up 0.59% from last Friday and closed the day 0.79% below its record high. The index is up 5.72% YTD (as of Jan. 1).
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 147.4, down 0.5 from the previous week. Year-over-year the four-week moving average of the indicator is now at 2.38%, down from 2.51% last week. The WLI Growth indicator is now at 0.3, also down from the previous week.
Geopolitics dominates the news these days, over-shadowing what remains a fundamentally solid global economy. As always, Donald Trump is at the center of most of the “noise”...