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Goldman’sSwirlogramPostsWorstReadingInOver A Year
With G10 Macro data themostnegativein 8 months, it is perhaps unsurprising that Goldman’s Advanced Global Leading Indicator dropped further – to its lowest in at least a year. Firmly in "slowdown" phase, Goldman remains adamant that "weather-related" inputs will mean this will all be fixed any day now (apart from the fact that the trend has been down for months now). Noneofthefactorsimproved, as momentum also slowed notably.
ViaGoldmanSachs,
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TheFebruaryAdvancedreadingsignals a furthermonthofactivitygrowthdecelerationandcontinuestolocatethecycleinthe ‘Slowdown’ phase. While the speed of deceleration does not appear to have increased by much, the overall level of Momentum has fallen significantly over the past six months. However, given the weather-related distortions to US data, we will wait for the Final release with the full set of components for a firmer signal.
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NoneofthesevenAdvancedGLIcomponentshaveimprovedinFebruary so far but the level of deterioration has differed widely. Weakness was most pronounced in the Philadelphia Fed headline and New Orders less Inventories components (the Advanced proxies for our Global PMI and NOIN aggregates), which both declined sharply.
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The February Advanced GLI places the global industrial cycle in the ‘Slowdown’ phase, characterised by positive but decreasing Momentum. This phase is generally less supportive for risky assets than ‘Expansion’. The February Advanced reading continues to signal deterioration in the global data, following a strong run over the summer. The drop in growth levels since August is certainly worrisome…
However, given that US data will likely be distorted by weather effects for some time, this could weigh on the GLI in the near term.
So we’ll ignore it?!?
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