• The Conference Board’s leading index declined again last month.

 

 

  • Here are the drivers of the index in January.

 

 

  • The leading index continues to signal a mild recession ahead, …

 

Source: Oxford Economics

 

  • … which is consistent with the February Philly Fed’s regional manufacturing outlook indicator.

 

 

  • Deutsche Bank’s model shows a 90% chance of recession over the next 12 months.

 

 

  • The pace of contraction is moderating in the manufacturing sector.

 

 

  • Demand remains soft.

 

 

  • Existing home sales were terrible last month.

 

 

  • Inventories are up 15% from last year

 

 

  • Mortgage applications continued to sink last week, …

 

 

  • … as mortgage rates climb back toward 7%.

 

 

  • Labor demand still exceeds supply.

 

 

  • Economists have been upgrading their GDP growth forecasts for 2023, …

 

 

  • Economists are also reversing their lowered projections for inflation in 2023.

 

 

  • Financial conditions are tightening again, according to Morgan Stanley’s model.
  • The market is coming to terms with “higher for longer.” The surge in US terminal rate was not followed by steeper rate cut expectations.
  • The recent decline in the money supply has been unprecedented.

 

 

  • The Q4 GDP growth was revised lower, driven by softer consumer spending.

 

 

  • The underlying economy was softer than the headline GDP figures suggest.
  • Final sales to private domestic purchasers, the “core” GDP was almost flat last quarter.
  • Google searches for “soft landing” have accelerated over the past year, reaching the highest level since 2008.
  • Households’ excess savings are still quite large.

 

 

  • Manufacturers’ outlook is deteriorating.

 

 

  • Home purchases by investors are down sharply versus last year.

 

 

Market Data

 

  • Is the decoupling of stocks and bonds sustainable?

 

 

  • Analysts see flat earnings for the full year in 2023.

 

 

  • Q4 earnings surprises were the lowest since the COVID shock.

 

 

  • ETF investors have been dumping HY bonds and moving into cash.

 

 

  • Gold has been retreating as yields climb.

 

 

  • The 2020/21 vintage IPOs have been a disappointment for investors.

 

 

Thought of the Week

 

“Having a dog named Shark at the beach was a mistake.”

 

Picture of the Week

 

I was very surprise to see this: Support for Russia

 

 

 

All content is the opinion of Brian J. Decker