Macro study of U.S. economy - Market warning signals?
They do not scream "SELL" just yet, but these indicators offer strong caution of further market correction. Please take some time to study the charts so you understand the story they tell. I am not an economist; I am a trader who has been learning more about bonds and macro indicators.
(I have ignored the pandemic drop because it was extraneous to normal economic factors that move markets.)
ISM Manufacturing
> A leading indicator - below 50 indicates contraction
> Peak expansion in 2021 seems to have ended, yet wages have risen - this will pinch corporate profits
> If next month is lower, it indicates further slowdown (slowing expansion)
> Texas manufacturing for Jan'22 showed concerning declines
> Note the readings below 50 from Aug-Dec 2019 indicated a problem. Covid-19 did not cause markets to drop; it exaggerated the move.
HYG high yield bond ETF
> Includes many junk bonds - indicative of economy's credit situation (corporate, municipal, consumer)
> Yellow lines show the beginning of a significant drop that indicated worsening credit conditions
> Note the "valleys" below 85 match with SPY corrections
> Will this keep dropping to 81-80?
CCI - Consumer Confidence Index
> A leading indication of people's optimism about economy
> Red rectangles show significant drops that corresponded with SPY correction
> Does most recent CCI drop reflect more SPY correction?
(I have ignored the pandemic drop because it was extraneous to normal economic factors that move markets.)
ISM Manufacturing
> A leading indicator - below 50 indicates contraction
> Peak expansion in 2021 seems to have ended, yet wages have risen - this will pinch corporate profits
> If next month is lower, it indicates further slowdown (slowing expansion)
> Texas manufacturing for Jan'22 showed concerning declines
> Note the readings below 50 from Aug-Dec 2019 indicated a problem. Covid-19 did not cause markets to drop; it exaggerated the move.
HYG high yield bond ETF
> Includes many junk bonds - indicative of economy's credit situation (corporate, municipal, consumer)
> Yellow lines show the beginning of a significant drop that indicated worsening credit conditions
> Note the "valleys" below 85 match with SPY corrections
> Will this keep dropping to 81-80?
CCI - Consumer Confidence Index
> A leading indication of people's optimism about economy
> Red rectangles show significant drops that corresponded with SPY correction
> Does most recent CCI drop reflect more SPY correction?
