Summary
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On average, since the 1980 recession, consumer confidence has bounced back two months ahead of recoveries and the stock market has registered gains of about 20% just over three months before the official upturn. The interval by which the leading economic index--composed of ten different indicators—precedes recoveries has varied across recessions.
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Investors have begun to hunt down opportunities on the stock market. However, at 11%, the gains registered by the S&P 500 are still not sufficiently convincing to herald the onset of recovery beyond all doubt.
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Although the stock market is sending out a feeble signal of recovery, it is doing so alone. Consumer confidence has yet to react and the leading economic index is presently being driven by a specific factor.
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We reiterate our scenario and are of the opinion that the behaviour of the indicators analyzed in this week’s newsletter will signal a recovery, but only in the second half of the year.
