Pro Macro: The GMI Business Cycle Dominoes

Published on: April 28th, 2023

Recent positive surprises in activity data can be attributed to idiosyncratic factors but have dealt the market a misleading hand. To assess where we really are, parsing the leading and lagging indicators of the business cycle can keep us on the straight and narrow.


  • YC
    Yi C.
    28 April 2023 @ 21:02
    Hi Raoul, great piece as always! Would you be able to shed some light on how the GMI Financial Condition Index is constructed? What are the components inside the index?
  • RG
    Razmig G.
    28 April 2023 @ 23:23
    Concise yet full of knowledge & very clear. I appreciate this one alot. Thanks Raoul.
  • SP
    Stephen P.
    29 April 2023 @ 02:32
    Raoul - brilliant piece as always! It would be great to see optimum investment timing overlaid on your visualisation matrix.
  • AK
    Alexander K.
    29 April 2023 @ 11:13
    Absolutely Fascinating. Raoul - is there anyway of roughly predicting prices of certain indices based on this data?
  • TK
    Tahsin K.
    29 April 2023 @ 15:41
    These charts are compelling. Still, so hard to pull the trigger on NASDAQ at current prices. I feel like those who didn't do it 4-6 mo ago missed the boat.
    • TD
      Troy D.
      1 May 2023 @ 06:54
      I have similar concerns Tahsin, though I believe that Raoul would say that Nasdaq is on an exponential trend and that given the business cycle is In the process of turning, that the tailwinds will be behind Nasdaq and tech for many months ahead and into 2024. Thats my take anyway. Happy for anybody to school me if this sounds incorrect.
  • TD
    Troy D.
    1 May 2023 @ 06:48
    Thanks Raoul, thats a wonderful piece. I'd certainly like to understand why the Chinese business cycle leads by so much, and whether the the rollover of this indicator in 9 months time around Feb 2024, as shown in. the chart, is suggesting a shorter cycle than usual (or am I putting too much emphasis on this one indicator perhaps) It just looks like a sharp turnaround in the China Credit Impulse when compared to the previous cycles. Cheers.
  • MG
    Miguel G.
    1 May 2023 @ 17:55
    Short but to the point well done. Raoul, one push back and I could be wrong but Im curious as to how your frame work changes if incorrect on the fed pivoting. What if your whole macro forecast is correct, but inflation stays stickier than expected say 3-4% by year end? Would your guess be that the fed stays tight for far to long and then runs the risk of creating more damage to the economy than necessary. FWIW I agree with everything in your report but my CPI has a floor between 3-4%. I could be wrong but just curious to how this would change things in your outlook.
  • RJ
    Ross J.
    2 May 2023 @ 21:55
    Lovely jubbly
  • IK
    Ivan K.
    3 May 2023 @ 02:37
    Thanks Raoul, extremely useful
  • BH
    Bjorn H.
    26 May 2023 @ 00:26
    Thanks Raoul. Where do you think i) the exponential age stocks and ii) cryptos sit vs ISM? Same as SPY or further out?
  • VB
    Vernon B.
    30 May 2023 @ 02:06
    Thank you fir the extremely insightful report, Raoul. This is very educational.
  • DS
    David S.
    23 July 2023 @ 11:34
    this is excellent