After reviewing macro and markets for the week, Jeff Mayberry and Samuel Lau take a close look at the Conference Board’s Leading Economic Index (LEI), a composite of 10 indicators used to anticipate turns in the economic cycle (13:07). The podcast co-hosts assess the LEI’s predictive track record since its inaugural print in January 1996, and they analyze its components. Those constituents have changed over time. The most recent such change was the substitution of the M2 money supply with the Leading Credit Index (20:47).
The week of Aug. 16-20 was a relatively quiet one for U.S. stocks (slightly lower) and bonds (slightly higher). Jeff Mayberry, however, notes energy equities, a persistent frontrunner YTD, were the worst performer on the week (6:23), ceding leadership to real estate and financial stocks. Commodities ended the week mostly in the red (4:22). The week’s $5 decline in West Texas Intermediate crude to $62 a barrel, Samuel Lau observes, reflected reduced travel and mobility, particularly in China, due to the spread of the Delta variant of the COVID-19 virus (4:45).
The Aug. 18 release of the FOMC minutes (9:49), Jeff and Sam noted, raised the possibility, if the broad economic recovery continues, of a commencement of tapering by the Fed of asset purchases later in this year. That compares to market expectations of reduced QE starting in 2022. If the Fed does decide to taper this year, Mayberry notes, Fed Chair Jerome Powell doesn’t have a lot of “runway” to prepare the markets. So perhaps, the cohosts speculate (30:17), Powell will signal how he’s leaning in his next scheduled public appearance: 4 pm Eastern/1 pm Pacific Friday Aug. 27 on the Kansas City Fed’s YouTube channel.
The views and opinions expressed herein are as of the date recorded and should not be construed as an offer to buy or sell any securities. Such views/opinions may differ from those of DoubleLine Capital or other of its affiliates and are subject to change without notice. DoubleLine has no obligation to provide any updates or changes. The following audio presentations represent DoubleLine’s intellectual property. No portion of these presentations may be published, reproduced, transmitted or rebroadcast in any media in any form without the express written permission of DoubleLine. DoubleLine has no obligation to provide any updates or changes. To receive permission from DoubleLine please contact [email protected].
Neither DoubleLine nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed.
DoubleLine is not providing any financial, economic, legal, accounting or tax advice in these podcasts. The receipt of these podcasts by any listener is not to be taken as constituting the giving of investment advice by any DoubleLine entity or individual to that listener, nor to constitute such person a client of any DoubleLine entity. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.