There’s been a lot of recssion talk on CNBC. However, the leading economic indicators have been strong. They typically bottom out about three months before the economy turns higher. The leading indicators bottomed in June so I would expect the economic data to start picking up next month.
Source: Economic Cycle Research Institute @ www.businesscycle.com
However, it seems that pessimism from rising oil and natural gas prices is trumping everything. The WSJ article on natural gas/oil price trends indicated that we are headed for the ‘perfect storm’ and are probably already in it. But higher oil and gas prices have had little effect on economic growth.
It interesting that sentiment is becoming very negative while the indicators are turning positive. While I’m concerned with the technical breakdowns in the indexes, I think sentiment is turning very negative relative to the health of the overall econonmy. Once the indexes find a bottom, the increasingly negative sentiment should help start a sustainable rally.
Once the indexes find a bottom, the increasingly negative sentiment should help start a sustainable rally.