Since 2000, the S&P 500 has been highly correlated with our Fundamental Stock Market Indicator. Our FSMI is the average of Bloomberg’s Consumer Comfort Index and our Boom-Bust Barometer, which is the CRB raw industrials spot price index divided by initial unemployment claims, on a four-week moving average basis. It isn’t a leading indicator of the S&P 500. Rather, it’s meant to show whether the underlying economic fundamentals are consistent with the level and direction of stock prices. The FSMI rose to a record high at the end of May.
By the way, our FSMI is highly correlated with the ECRI Weekly Leading Index. The difference is that our indicator is open-source and consists of just three nonfinancial variables. The ECRI’s recipe is a secret, though it probably includes some financial-market variables like the S&P 500 and the high-yield corporate bond spread.
Today's Morning Briefing: Fundamentally Sound.(1) The bears’ favorite chart. (2) Investment strategists shouldn’t be preachers. (3) Lesson #1: Don’t fight the Fed. (4) Will the day of reckoning be when QE is terminated? (5) Is terminating the same as tightening? (6) S&P 500 is one of 10 leading indicators. (7) Our FSMI rises to record high. (8) S&P 500 rebound since Feb. 3 led by cyclicals. (9) Small business owners more optimistic and aiming to hire additional workers. (More for subscribers.)
By the way, our FSMI is highly correlated with the ECRI Weekly Leading Index. The difference is that our indicator is open-source and consists of just three nonfinancial variables. The ECRI’s recipe is a secret, though it probably includes some financial-market variables like the S&P 500 and the high-yield corporate bond spread.
Today's Morning Briefing: Fundamentally Sound.(1) The bears’ favorite chart. (2) Investment strategists shouldn’t be preachers. (3) Lesson #1: Don’t fight the Fed. (4) Will the day of reckoning be when QE is terminated? (5) Is terminating the same as tightening? (6) S&P 500 is one of 10 leading indicators. (7) Our FSMI rises to record high. (8) S&P 500 rebound since Feb. 3 led by cyclicals. (9) Small business owners more optimistic and aiming to hire additional workers. (More for subscribers.)
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