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2018 Cycle Calls
In 2018 the U.S. entered the fourth growth rate cycle (GRC) downturn since 2010, which was critical to understand since every GRC downturn since has seen at least one correction of 10% or more.
Highlights of ECRI 2018 cycle calls follow below, or download our recent track record PDF. To enquire about risk management services, set up a call or meeting.
The Fall of 2018 Saw Markets Pricing in Cycle Downturns Called Earlier by ECRI
The Fed's Williams told @CNBC that they're going to go into the New Year with "eyes wide open," but they're just staring at the stars. Watch interview: https://t.co/RFqWKIrW0k pic.twitter.com/wmGdum0XSG
— Lakshman Achuthan (@businesscycle) December 21, 2018
Slowing Growth Stoking Financial Stress
“The danger of more market volatility remains, regardless of hopes for seasonal strength. This is because upswings and downswings in financial market risks are related to cycles in economic growth, which our leading indexes anticipate.” – Client report, November 2018
Global Industrial Slowdown to Worsen
“The global industrial slowdown we first forecast a year ago is in full swing and set to worsen. Meanwhile, with purchasing managers indexes actually lagging last November’s peak in global industrial production growth, the consensus was caught behind the curve.” – Client report, October 2018
Global Slowdown Set to Spread
“The major central banks are poised to tighten monetary policy in the face of the global slowdown.” – Client report, September 2018
Chinese Dragon Under Threat
“In the midst of the trade war, China’s economy is starting to look more fragile on a cyclical basis. This is the message from our leading indexes, which help cut through the noise currently generated by geopolitical tensions.” – Client report, September 2018
The Summer of 2018 Saw Markets Miss the Inflation Cycle Downturn
U.S. Inflation to Surprise to the Downside
“Contrary to consensus expectations, there is rising risk of a downturn in inflation, according to ECRI’s U.S. Future Inflation Gauge.” – Client report, August 2018
Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, joins the cast of characters to review pertinent signals in growth, interest rates and inflation. https://t.co/n9uXvDujIL
— GRANT'S (@GrantsPub) October 16, 2018
U.S. Home Price Growth Set to Fall Further
“[W]ith (U.S. Leading Home Price Index) growth plunging to a 9¼-year low, real home price growth is set to fall further.” – Client report, July 2018
A home price growth downturn is much more than a "possible" risk. See #ECRI U.S. Leading Home Price Index report: https://t.co/wBW4HGmVJA pic.twitter.com/3XilwXzj0P
— Lakshman Achuthan (@businesscycle) October 15, 2018
Chinese Export Outlook Darkens
“Chinese export growth was set to fall well before trade tensions mounted. That is the clear message from ECRI’s Chinese Leading Exports Index, which also gauges the cyclical susceptibility of China’s exports to negative shocks, like tariffs, that could intensify the slump.” – Client report, July 2018
More than half a year later the consensus is catching up to ECRI's early warning on global growth. https://t.co/d55xgHMcKT https://t.co/8n1M3SJV3t
— Lakshman Achuthan (@businesscycle) October 15, 2018
Clouds Gather over Eurozone Horizon
“A combination of falling economic growth and rising inflation poses a challenge for ECB policymakers.” – Client report, July 2018
Eurozone growth downturn and inflation upturn is no surprise. Read #ECRI here: https://t.co/N3lqnXSWJX pic.twitter.com/oQLv3yR7nA
— Lakshman Achuthan (@businesscycle) November 1, 2018
Pullback in U.S. Future Inflation Gauge
“ECRI’s U.S. Future Inflation Gauge ... has backed off a bit since February. While this pullback remains modest, it bears watching for early signs of a fresh cyclical downturn in underlying inflation pressures, which would truly baffle Phillips curve devotees.” – Client report, June 2018
In The Spring We Ratcheted up the Alarm on EM
Rising Cyclical Risks for Emerging Markets
“ECRI’s indexes reveal a growing confluence of cyclical risks for emerging market economies.” – Client report, June 2018
Bloomberg discussion about how emerging market weakness fits into ECRI’s public global cyclical outlook, including U.S. monetary policy. https://t.co/r8IntqWprK pic.twitter.com/lvqEyrsxFn
— Lakshman Achuthan (@businesscycle) September 4, 2018
Global Growth Downturn to Widen
“The global growth outlook has dimmed further, undermining hopes that the recent weakness in growth will be transitory. This is the message from ECRI’s international leading indexes, which capture cross-country cyclical contagion.” – Client report, May 2018
Global Industrial Outlook Weakens
“Spiking commodity prices have misled the markets into optimism about the global industrial growth outlook. In fact, those prospects have already dimmed, according to ECRI’s leading indexes, which are designed to discern cyclical signals from noise.” – Client report, April 2018
The latest oil price spike may turn out to be a head-fake, because the global economy is already slowing. #OPEC https://t.co/HW0nn1EZAK pic.twitter.com/dKRePCvSLZ
— Lakshman Achuthan (@businesscycle) June 26, 2018
As 2018 Began We Knew that a Cyclical Downturn in Global Growth was Happening, Pre-Tariffs
Chinese Industrial Growth Prospects Dim (pre-sanctions)
“Today, our Chinese Leading Industrial Production Index is pointing to a deepening industrial slowdown, accompanied by intensifying disinflationary pressures in the Chinese industrial sector.” – Client report, March 2018
Trade war and recession risk. Watch full Bloomberg TV interview: https://t.co/HQQslCkkYz pic.twitter.com/M3j84NmJKq
— Lakshman Achuthan (@businesscycle) July 6, 2018
Global Growth Prospects Fade
“The point is that global growth has started to slow.” – Client report, February 2018
#ECRI Opinion: The groupthink on synchronized global growth upturn is in danger of being blindsided by the cyclical downturn getting underway. @BV https://t.co/yZBCNPjiws pic.twitter.com/bz0nlVHmQS
— Lakshman Achuthan (@businesscycle) March 9, 2018
Cyclical Concerns Cloud India’s Structural Promise
“ECRI’s leading indexes show reduced room for policy maneuver, with growth prospects dimming as inflation pressures simmer.” – Client report, February 2018
India GDP firms despite a series of economic shocks, as ECRI’s leading indexes reveal which way growth is headed next. #EM https://t.co/jMkrEVBTAE pic.twitter.com/AR5DyX5lr2
— Lakshman Achuthan (@businesscycle) March 20, 2018
Global Export Growth Slowing
“At this stage of the global growth upturn … some pundits would mistake it for a structural shift away from low trend growth and lowflation. But the cyclical avalanche whose rumblings we now hear can be even more damaging when a complacent consensus disregards them.” – Client report, January 2018
Full interview and summary of key points on global growth downturn, #bond market signals, #profits growth and what's happening in #Korea. https://t.co/YXrRfLxRy0 pic.twitter.com/OgLiyYY3p6
— Lakshman Achuthan (@businesscycle) March 7, 2018
Long Leading Indexes Lead Purchasing Managers Indexes
ECRI’s long leading indexes have statistically significant leads over composite PMIs for the G7 economies and China. [Looking at a] recent case in point … [t]he IHS Markit composite PMI [has] dropped to a nine-month low; the ISM composite PMI … to a three-month low. With USLLI growth being a leading indicator of both PMI measures, these … are likely to amount to cyclical downturns that are not obvious to those who are unaware of the USLLI’s behavior. This is one way to gain an advantage over the consensus at cycle turns, which are typically recognized only well after the fact. For investment managers and corporate decision makers alike, that can make all the difference when dealing with the competition.” – Client report, January 2018
Download our recent track record here in PDF.
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