Early Cycle Indicator – Earnings boom ahead
In these three short videos, Capital Goods analyst Dan Cunliffe outlines his latest Early Cycle Indicator research. US inventories have now corrected 20%. This has happened 15x since 1970, followed by a >50% sector rally and is a major buy signal. Our ECI indicates >11% sales growth from 1Q21 vs 6-8% consensus and points to the strongest earnings boom since 2009, as our short cycle data is troughing at the same time as longer cycle capex. This historically underpins a return of inflation (PPI). Thus, we now expect material upgrade risks ahead, especially for value names. German data, driven by auto, posted its second consecutive record high order/inventory ratio in the data's history. European data could hit new highs as other economies catch-up. Click below to watch the videos. Click here to read the research.
This communication is for use only by a person or entity that qualifies as a "Professional Client" or "Eligible Counterparty" within the meaning of the FCA's rules. It is intended for use only by persons having professional experience in matters relating to investments. Any other person who receives this should not act on the contents. Disclaimer here