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During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Updating Stock Price Corrections Call


ECRI’s Achuthan discusses how markets remain focused on the “news of the day,” which has been dominated by twists and turns in the trade war and shifts in Fed dovishness. For the most part this ignores the elephant in the room – the economic cycle.

Mobile users can view the interview here.

Five months ago on CNBC’s Trading Nation ECRI warned of the heightened risk of stock price corrections, because the economy was in a growth rate cycle downturn.


Both calls – the slowdown in economic growth and the related risk of stock price corrections – have been vindicated.

Even earlier, ECRI had made an inflation cycle downturn call, which we also shared publicly before the last rate hike, having first shared it with our clients last summer, while oil prices were still on the rise.


Since then, CPI inflation has clearly rolled over and has dropped to a 17-month low.  

So the good news is that the Fed finally blinked!


The not-so-good news is that a soft-landing is not yet assured, and therein lies the risk to stock prices.

Click here to review ECRI’s recent track record.

For information about ECRI professional services please contact us.

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Related News & Events

Interview: The Fed, Markets, Growth & Inflation

Reuters January 17, 2019

ECRI’s Lakshman Achuthan discussed our outlook for growth and inflation along with a discussion on markets and the Fed’s December blink. More

 

Colliding With the Economic Cycle – Again

ECRI January 4, 2019

As in 2016, the Fed’s rate hike plans have been on a collision course with the economic cycle. ECRI saw it coming. More

 

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