Global Leading Indicator

“Final print for December put GLI solidly in ‘Slowdown’ phase – a number of caveats that make this turn down perhaps a bit less threatening. (i) The amount of deceleration is relatively small – around 1bp – and growth remains solid at around 40bp/month, close to multi-year highs. (ii) The global new orders-to-inventories index improved. (iii) Average returns for risky assets remain positive in the Slowdown phase, and are positively correlated with an average level of GLI growth. Thus, if this Slowdown episode (now in its third month) proves to be transient (as we expect), and if the cycle returns to Expansion over the next few months, equity returns are likely to remain positive throughout that period.” (Goldman Sachs)

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