Weather bells ( financial ones )

[anonymous-user]

I watch the price of oil recently ( about a year now ) to give me the overall heads up of how the markets are heading short=term. I have historically used different methods but that seems to work in the current markets. . . . what does everyone else follow to give themselves the overall picture? Just an interesting thought and we might all learn something simple we didn't know?

[dalenorth]

So you think the markets are going to tank?

[red_slr]

Next to my business is a very large commercial large scrap yard.

I can see it out of my window. When they are busy the economy is generally doing well, the markets do well.
When they are quiet its normally signs of trouble ahead.

Normally they have 5-10 trucks an hour going through the gates. The last few weeks lucky if its 5 a day.

They have been closing the gates around 330pm...

Take from that what you will.

[Derek Chevalier]

I've no idea of any indicators that you could profitably act on (by the time you see the news the market will have already priced it in), but I do remember winning the non-farm monthly sweepstake twice in a row on the trading floor (quite by chance). My gloating was short lived as I was forced to "liquidate" the winnings down the local watering hole.

https://en.wikipedia.org/wiki/Nonfarm_payrolls

[jeff m2]

Yep, payrolls are a better indicator than unemployment numbers
Specific to oil, you can look at the fed stockpile and the well count.

BUT....everyone else has already looked at them

I try to not be too clever, I look at what isn't currently humming and move a bit there.
So, currently Western Europe and UK are not setting any records whereas Eastern Europe has done well (Russia & Greece)
Brazil & Argentina are up (a lot)....stay or go?

I'm never gonna be the one that buys Stoneco, I take a modest route that also gives me a little downside protection.

Bloomberg can give you a fair idea of what's going on, what's hot and what's not
https://www.bloomberg.com/markets/stocks/world-ind...
You can select Asia and Europe indices at the top of the page

[red_slr]

Shiller PE ratio also interesting

https://www.multpl.com/shiller-pe

[jeff m2]

red_slr said:

Shiller PE ratio also interesting

https://www.multpl.com/shiller-pe

Now we're getting technical

I'll see your Shiller and raise you with the Baltic dry. (which is in the toilet)

[putonghua73]

I've been ruminating on this point for the last 6 months. The ones that I've focused on are:

1. Where are we in the business cycle (trough to peak US non-farm payroll numbers)
2. Market valuations e.g. Shiller P/E (CAPE) ratio e.g. S&P 500 (currently c29.7 - 74.7% higher than the historical mean)
3. US bond rates / inversion (10yr / 2 yr)
4. GDP growth
5. Monthly PMI

This poses a number of questions such as which ones are forward [bond rates / inversion] and lagging [non-farm payroll], which ones are reliable, which ones correlate (reinforce), and do any provide indicative timings?

Other ones to consider may be if credit default swap pricing blows-out (DA will know a hell of a lot more about this one). Jeffrey Gundlach cites a Morgan Stanley report that shows a deterioration in the credit quality of US corporate debt (approx x5 bigger than sub-prime), where currently c38% of corporate bonds would be rated as 'junk' in current market conditions based upon leverage ratios.

Such indicators are less about specific timings, and more to factor in on one's decision-making in terms of reviewing one's investment position e.g. shifting to more defensive sectors, or conversely believing that market sentiment is too bearish and is oversold [opportunity].

[Derek Chevalier]

putonghua73 said:

Other ones to consider may be if credit default swap pricing blows-out (DA will know a hell of a lot more about this one). Jeffrey Gundlach cites a Morgan Stanley report that shows a deterioration in the credit quality of US corporate debt (approx x5 bigger than sub-prime), where currently c38% of corporate bonds would be rated as 'junk' in current market conditions based upon leverage ratios.

Back when I was on the credit desk I remember bear Stearns trading upfront while still (I think I'm right in saying) being AAA rated. Not sure how much of a leading indicator the CDS market is these days.

https://www.reuters.com/article/bearstearns-swaps-...