Claire Corlett

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Ken Fisher Explains Leading Economic Indicators (LEI) | Fisher Investments [2019]

Ken Fisher Explains Leading Economic Indicators (LEI) | Fisher Investments [2019]


People worry a lot about
“Will there be growth or recession ahead?” And it’s legitimate to see why people
would worry about that. It’s a perfectly logically concern. The best way to see
that looking forward is the Conference Board’s
Leading Economic Index series which is constructed from components,
varied slightly by country, that tend to predict those countries’
future economic growth or recession. And they’re called leading indexes
because the collection of them has a very good capability to predict
will the economy go up or down. And the fact is, simply said,
that if you look at America or you look at Western Europe
which is also calculated for several of those countries
plus the eurozone as a whole, or some other country’s singularly like
Britain or Japan, you can see that overall, right now,
we don’t have a problem with growth. We overall see a world
where a few countries are staggering and the bigger bulk of the bigger part
of the global economy is actually growing. But those indicators,
ones like the yield curve, tend to be forward predicting indicators
and they’re put together with weightings that are good at predicting the economy.
There’s a long history of them. If you go
to the Conference Board’s website, you can not only go through
each of the ten components for each country to see what they are,
but you can also see how they’ve performed in the past. If you do that,
you tend to become a believer, as am I, in their predictive ability to tell you
overall are we going up or down. I’m going to give you
a real simple guideline. If they’re high and rising,
you don’t have to worry at all. You’ll be able to tell
if you go to the Conference Board’s website
for LEI, simple Google search, if they’re high and rising.
You’ll be able to tell if they’re high. If they are high and rising,
click on the chart see the history. If they’re high and rising,
that country’s in good shape. The region’s in good shape,
good for the region. If they’re high but not rising,
there’s a little more worry. If they’re below 100, which is sideways,
and they’re… falling, you gotta be real concerned. Little bits of wiggles when they’ve been high and rising
typically aren’t concern as are little wiggles in anything. But when we look at the world today,
most of the world is high and rising. And that’s a good thing.

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