I korthet säger WolfeTrahan att LEI är på väg att toppa ur och därmed kanske vänder börstrenden från bull till bear... som en spegelbild av mars förra året.
It was pointed out to us many times last week that the backbone of our thesis rests on a peak, or rollover, in leading indicators of the economy (LEIs). This is true. Interestingly, this is the exact same situation we were in a year ago when our then-bullish thesis was entirely dependent on a pick-up in leading indicators. Of even greater interest, it is the exact same series that argued for a pick-up in LEIs a year ago that are now saying they are about to rollover. While the timing of the peak is always difficult to pinpoint, most of these long-term anticipatory indicators are saying that March will mark the high-tide in LEIs.
A peak in LEIs usually presents a big challenge for portfolio managers. It is an environment prone to singles and doubles... not homeruns. In essence, there will be far less high-flyers in this environment than in years when LEIs are rising. Also, there are likely to be more dividend-paying stocks that beat the index than is typical. In the following pages, we review a long list (getting longer) of things that argue for an imminent peak in leading indicators. More importantly, we review what this development will likely lead to in financial markets. This does feel like an inflection point, and as always, time will tell.