If I understood well, the "orange" should be the Credit Impulse (is the orange line that leads the blue line)... otherwise I really do not get why the EPS should be -2X% for EPS if the Credit Impulse is still +1%
Hi Alf, just a few quick questions. What exactly is going away next year (or month) on this Substack once the subscription period starts? All contents? Will I see have access to nothing but your Twitter tweets if I don't subscribe? Thanks for the article, as always!
If I sign up, should I expect a full ETF portfolio allocation with "instructions", e.g. having to deploy 20k, 6k in x, 4k in y, 10k in z or is it more generic and vague?
I care for the educational material, but won't allocate 300€+ unless I can reproduce a specific portfolio you "signed". Basically, I want the practical side to be covered above all. I've been sitting in cash for the most part for over a year and I'm getting anxious seeing it devalue (even if this is one of the best of the last few years to be in cash).
Also, you showed portfolio performance from last year, but I don't believe you shared trading performance from previous years. Is this available somewhere? Thank you!
I agree it’s noisy however given how extreme this is and how well it’s correlating to the QT, makes it a bit more ominous. And it’s a nice addition to your other indicators.
Hi! It's pretty complicated, as it aggregates 17 different data sources for 5 different jurisdictions and many are not available on Bloomberg. But I'll keep refreshing it on The Macro Compass - basically it's a prop indicator.
Thx Alf but I look at all these macro indicators suggest that markets should be much lower…but my over-riding question is that give the market is a forward indicator why markets are where they are!!??? What am I missing?
where are you getting your data from? I just checked your 2 first charts. The US Credit Impulse Index for 3Q22 is up at 5.75% and increased from the previous Q at 3.18% (I understand you used Global not US, could not find global data, my source is Bloomberg). The S&P 500 EPS for 4Q22 according to YCharts is 48.71 growing to 53.24 in 4Q23. And according to the Conference Board The Leading Economic Index® (LEI) for the U.S. Increased in October The Conference Board Leading Economic Index® (LEI)for the U.S. increased by 0.9 percent in October to 118.3 (2016 = 100), following a 0.1 percent increase in September and a 0.7 percent increase in August. I am sorry, but I am very confused
A) The Global Credit Impulse takes data from the 5 largest economies, it adjusts them for inflation (it's real credit creation) and most importantly...it takes the correct (!) data. Most credit impulses mismeasure money creation.
What a fantastic 12 minutes of educational listening this morning. Going back to read what you posted as well. I want to see the charts. :) I thought for sure we'd be in recession as early as Q1 2021 based upon the world's reaction to the thing. I had no understanding about the lag in the equation. I'm leaning thanks to folks like you. Thanks for the education, Alf.
This is the best newsletter I've read from you the last 6 months.
Wonderful way to explain, and honestly I feel it's because you took the level and "bank-language" to a lower gear. Makes it either to understand.
Thank you!
Thanks for the feedback, Martin!
Hi Alf,
I think the chart #1 is color inverted?
If I understood well, the "orange" should be the Credit Impulse (is the orange line that leads the blue line)... otherwise I really do not get why the EPS should be -2X% for EPS if the Credit Impulse is still +1%
Thanks!
Yes Diego, unfortunately I inverted the colors in the legenda.
Hello Alf!
Thanks for the article!
I'm thinking of subscribing to your platform, however I'm afraid I won't be able to act on your ideas with the brokers I'm currently using,
Do you have any broker recommendations to take full advantage of your offer please?
I use Interactive Brokers (not paid advertising, I just think they are a decent broker to use)
You are a sweetheart, thanks !
Again an amazing summary. Thank you Alfonso! Amazing work!!!
My pleasure, Josef!
Lucid. Fact based. Actionable. Historical context and best of all ….
It justifies me chasing long bond yields lower over the past. 2 weeks.
Coming from Batman, that's quite an endorsement! :)
Hi Alf, just a few quick questions. What exactly is going away next year (or month) on this Substack once the subscription period starts? All contents? Will I see have access to nothing but your Twitter tweets if I don't subscribe? Thanks for the article, as always!
Hi Miguel!
I am planning to release some content occasionally here, say once a month?
But the good, very good stuff is going to be behind the paywall
If I sign up, should I expect a full ETF portfolio allocation with "instructions", e.g. having to deploy 20k, 6k in x, 4k in y, 10k in z or is it more generic and vague?
I care for the educational material, but won't allocate 300€+ unless I can reproduce a specific portfolio you "signed". Basically, I want the practical side to be covered above all. I've been sitting in cash for the most part for over a year and I'm getting anxious seeing it devalue (even if this is one of the best of the last few years to be in cash).
Also, you showed portfolio performance from last year, but I don't believe you shared trading performance from previous years. Is this available somewhere? Thank you!
I agree it’s noisy however given how extreme this is and how well it’s correlating to the QT, makes it a bit more ominous. And it’s a nice addition to your other indicators.
Thank you again for your work!
My pleasure!
Hi, can I ask what the Global Credit Impulse indicator is built up of? Is it possible to replicate with tickers in Bloomberg?
Many thanks,
Hi! It's pretty complicated, as it aggregates 17 different data sources for 5 different jurisdictions and many are not available on Bloomberg. But I'll keep refreshing it on The Macro Compass - basically it's a prop indicator.
Is time to short again the russell 2000?
I am not outright short equities at the moment, as the technical rally into year-end might extend a bit further. But yes, medium term yes.
very concise and easy to read & understand. Please keep it this way.
Thanks fo the feedback!
M2 contracted 1.5% in the 7 months through October, with a lag of 12 months, 5 months out from there is a good bet.
Indeed. Although I find M2 to be a very polluted indicator of real-economy money creation, but the direction of travel is indeed that one.
Thx Alf but I look at all these macro indicators suggest that markets should be much lower…but my over-riding question is that give the market is a forward indicator why markets are where they are!!??? What am I missing?
Many technical reasons behind this rally, explained in one of my previous articles - go have a look.
Medium-term, I think we are going lower again.
where are you getting your data from? I just checked your 2 first charts. The US Credit Impulse Index for 3Q22 is up at 5.75% and increased from the previous Q at 3.18% (I understand you used Global not US, could not find global data, my source is Bloomberg). The S&P 500 EPS for 4Q22 according to YCharts is 48.71 growing to 53.24 in 4Q23. And according to the Conference Board The Leading Economic Index® (LEI) for the U.S. Increased in October The Conference Board Leading Economic Index® (LEI)for the U.S. increased by 0.9 percent in October to 118.3 (2016 = 100), following a 0.1 percent increase in September and a 0.7 percent increase in August. I am sorry, but I am very confused
Hi Bob!
A) The Global Credit Impulse takes data from the 5 largest economies, it adjusts them for inflation (it's real credit creation) and most importantly...it takes the correct (!) data. Most credit impulses mismeasure money creation.
B) The LEI is the YoY change in the index.
C) SPX EPS is the YoY change again.
What a fantastic 12 minutes of educational listening this morning. Going back to read what you posted as well. I want to see the charts. :) I thought for sure we'd be in recession as early as Q1 2021 based upon the world's reaction to the thing. I had no understanding about the lag in the equation. I'm leaning thanks to folks like you. Thanks for the education, Alf.
My pleasure, Marty!
Oh it's beautiful Alf! Not the implications but the writing.
Thank you!
In the last chart with annual returns per asset classes, fixed income does include interest payments or the returns just reflect the price increases?
It's total return, Diego. Hence it also includes coupons etc.