Chart 1: US Credit Spreads

Chart 2: ted spread

Chart 3: Vix index

Chart 4: aaa bulls(%) minus bears(%)

Chart 5: us market capitalization

LEADING MARKET INDICATORS

Financial markets are largely driven by fundamentals in the long-run, but near term fluctuations can be due to many factors. Here, we display some indicators which bear significance to the market in terms of the level of risk aversion, sentiment in the market as well as where investor money is moving to.

Investors should note that these indicators are not strictly classified in a particular category, as changes may reflect various happenings in the market. Also, these indicators are subject to individual opinion in interpretation, which may result in different views on the market. For our take on these indicators, click here.

LEADING Economic INDICATORS

Economic indicators are often mentioned in many research reports and are usually intended to either present an accurate picture of the current economic conditions or predict how the future economic climate would look like. How are economic indicators relevant to investments? Very simply put, company earnings usually rely on the health of the overall economy. The reason is that when an economy is booming, it is rare to see market earnings moving in the opposite direction. Usually, during a time that we see strong economic growth, market earnings do reflect certain levels of sustainable strength.

Markets will always go through periods of expansion and contractions. Historically, years of expansions exceed the number of contractions by a big margin. Investors could benefit from understanding if an economy is likely to slowdown or accelerate because it affects the health of overall corporate earnings. It is tough for any company to escape the crutches of pessimism during a sharp slowdown in demand. As such what we would be observing through the list of indices would be indications of rise and falls in future demand for consumption, manufacturing and business sentiment. These are leading economic indicators rather than coincident or lagging indicators.

Such indicators are said to be able to predict the direction of the economy in the next 6 to 9 months down the road. Generally, an uptick essentially means future economic expansion and a downtick means contraction. More explanation on leading economic indicators is provided here.