Salkku blog

Both Salkku Coincident and Leading Indicators for world markets were in neutral readings in November. A model based on Salkku Leading Indicator components is predicting positive returns for the next 12 months with fairly high probability.

We expanded our coincident and leading indicators to include world markets, which will be the main focus in these outlooks. Our coincident indicator shows neutral reading for world economy, and leading indicator shows neutral outlook for global stock markets in the next 12 months period. Neutral outlook predicts roughly average stock market returns over one year time horizon.

Salkku economic indicators have been redesigned. Previously only two economic indicators were used, namely PMI and government bond yield spreads. Now two types of indicators are analysed here, coincident and leading indicators. Our own leading indicator models are also being built, which uses a collection of indicators to train custom machine learning models.

Salkku government bond yield spread index has now fully inverted, indicating recession sometime in 2023/24 in developed economies. However, short term economic outlook has improved materially with World PMI composite index showing strong economic momentum since the start of the year.

Salkku economic indicators for Q1/2023 are indicating slowing economic growth all over the world. World Composite PMI has remained below 50 for entirety of 2022Q4. US, Eurozone and China are all showing contraction in activity. Moreover, Salkku aggregate index for developed countries government bond yield spreads inverted briefly in November, which indicates that recession in many developed economies is highly likely in 2023.

Salkku economic indicators for Q4/2022 are showing mixed signals. World Composite PMI has contracted significantly during summer months and world government bond yield spreads have tightened a bit during summer, but are still overall positive.

Salkku economic indicators for Q3/2022 are indicating solidly growing world economy. World Composite PMI is up on one and three month timescales and all regions are showing numbers above 50. World government bond yield spreads are still at healthy levels, roughtly the same as in Q2/2022.

Salkku economic indicators for Q2/2022 are indicating a mostly growing world economy. World Composite PMI is slightly down because of lockdown induced crash in China composite PMI but still over 50 indicating expanding global business outlook. World government bond yield spreads still widened compared to Q1/2022.

Salkku economic indicators for Q1 of 2022 are overall indicating a growing and healthy world economy. World Composite PMI is indicating improving outlook for business expectations for the start of the year. World government bond yield spreads widened compared to Q4/2021 and 6 months ago.

Q4 Salkku economic indicators are overall indicating growing, healthy world economy. Composite PMI is indicating improving outlook in Q4. Yield spreads widened when compared to end of Q2, but are still a bit lower than in Q1.

Q3 Salkku economic indicators are indicating growing world economy, albeit at a more moderate pace. World PMI has contracted and GDP weighted yield spread tightened since May.

Q2 indicators are still pointing at strong growth, especially in US, but also in UK and India. All of the biggest economies except Brazil and Japan are showing robust growth.

Year 2021 begins with strong growth outlook according to leading indicators. Virus fears have changed to optimism, as businesses and markets are anticipating a year of recovery from the pandemic. This is the baseline scenario now priced in stock market.

Leading indicators exhibit robust growth for world economy in the final quarter of the year. This quarter is usually a season of strong growth. We’ll see what effect the second wave of coronavirus infections has on economy. By now it should not come as surprise to anyone, and both companies and investors have had ample time to adjust to new set of circumstances. This means that second wave is already fully priced in stock market.

Leading indicators were still shrinking in May. COVID-19 cases were expanding fast, and economies were still largely at lockdown. Lockdowns have since been lifted, but preliminary indicators for June indicated continuing contraction. Only China seems to have been able to grow in June, so Q3 outlook doesn’t look very good. Stock markets have also voiced their view on the matter though, and indicate growing economies in many developed countries, including US and China.

Onset of global slowdown coincided with coronavirus rendered leading indicators useless, as stock markets took a sharp downturn at the beginning of March. Leading indicators LEI and composite PMI indicated slowing global economy already in February, but those readings came just after market crashed and were of little help for forecasters. Such is the nature of black swans.

World economic leading indicators pointed to expanding global conditions for Q1/2020 in November. Both LEI (Leading Economic Indicator) and composite PMI data signalled growing economic activity.

Invention of cryptocurrencies has inspired many people to explore the nature of currency and money itself (including this author). Even more interesting, and less discussed, aspect of economy is how growth is enabled by the same process of money creation. Cryptocurrencies provide us an interesting case study of how economic growth, and wealth creation in general, works. New development in cryptocurrency world called decentralized finance is set to disrupt the old world order.

Stock investors are bombarded by daily headlines about market ups and downs. Along with market developments, media frequently cites various economic indicators to build a narrative about market developments. It’s a good idea to make yourself as an investor aware of most commonly cited economic indicators. Investors would also benefit to make themselves aware of the choices financial publications make when they choose what indicators to report, how to incorporate those numbers to a wider economic narrative, and ultimately to be able to question themselves, do those indicators matter when it comes to investing?

World economic leading indicators imply still expanding global conditions for Q4/2019 in September. Both LEI (Leading Economic Indicator) and composite PMI data signal growing economic activity.

It seems 2017 was the year cryptocurrencies made their breakthrough to mainstream investing. This breakthrough was achieved with a combination of massive media coverage and price increases that have left many seasoned investors wondering what the hell is going on.

Salkku Cryptocurrency Index has been launched to help with assessing returns of most used cryptocurrencies, and to measure the value creation of the overall cryptocurrency ecosystem.

Saving money is a natural starting point for many people who have become interested in investing. Your amount of savings grows from saved money and paid interest. The buying power of those funds is also preserved as long as paid interest equals or surpasses current inflation.