Charting the Correlation: The Business Cycle & Equities

Published on
December 2nd, 2019
Duration
30 minutes


Charting the Correlation: The Business Cycle & Equities

The Expert View ·
Featuring Nick Reece

Published on: December 2nd, 2019 • Duration: 30 minutes

Nick Reece, senior financial analyst and portfolio manager at Merk Investments, joins Real Vision to discuss the intersection of the business cycle and equity markets. Reece reveals his indicators and explains where data for the business cycle and equities diverge. Then he details his thesis that, despite heightened odds of recession, equity markets might still soar higher from here. Follow Nick on Twitter, @nicholastreece. Filmed on November 21, 2019 in New York.

Comments

Transcript

  • PP
    Peter P.
    5 December 2019 @ 19:36
    For fucks sake. This guys chart book and opinions are available for free on their website. Most of what is on RV is available for free. No wonder they are giving this away for $1. I wouldn't pay for this shit.
  • CE
    Chris E.
    3 December 2019 @ 16:59
    This is a great interview, lots of data reference to back up the views albeit without a clear picture of where the economy may go next. Nevertheless, I found this content ideal and perfect timing as I prepare my own end of year report with very much the same sentiment. I'm aware that RV have discussed elsewhere but the sticky issue of non-yielding debt and Raoul's favourite topic of teetering IG debt are in my opinion serious factors that may trump classic recession indicators.
  • wj
    wiktor j.
    3 December 2019 @ 10:33
    also a note to keep in mind. The crash DOESNT have to start in US. US data may be good but it wont help if China, Japan, EU crashes. There are so many risks outside of US.
    • ZL
      Zach L.
      4 December 2019 @ 01:45
      Agreed. No country it's an island.
  • wj
    wiktor j.
    3 December 2019 @ 10:28
    Remember its only suckers that buy into the last 10% of the market before a crash. 10% 300 points give or take. I would still say it all depends on the dollar strength. But if unsure what to do stay out is my advise. What for a major pullback.
  • JW
    Justin W.
    3 December 2019 @ 02:03
    We haven't been above 65% since Jan 2018 on the MMTH. Am I missing something? Is he using proprietary data when talking about that chart?
  • JJ
    Jesse J.
    3 December 2019 @ 01:49
    Oh man, I'm in trouble. If this guy isn't sure which way we're going, there is no hope for me. Great information though. I really appreciate sharing your work and research; I don't fully grasp all of it but I think I got the overview pretty well. I'm not going to try and time the market I think. I'll bail too early and jump back in too late. I'm just going to stick with my companies and dollar cost average my way through it. Heck, what else is a guy to do.
  • JF
    J F.
    3 December 2019 @ 01:10
    RV tech question: Why is the 2x audio speed so mid-tempo-ed(?) on the iOS app vs. desktop website?
  • AV
    Alberto V.
    3 December 2019 @ 01:07
    Have been away from RV for a while, glad to see you guys have implemented reading the on-screen questions out loud, very convenient when someone's not keeping an eye on the video while doing other stuff. :) One thing I spotted: would have been nice to see the chart at 12m45s-remaining time mark match what's being discussed i.e. the earnings per share for the S&P500 vs the earnings' 12-month moving average (two lines are shown but one is the S&P500 index price)
  • PC
    Peter C.
    2 December 2019 @ 23:28
    be great if all music is removed.
  • DP
    David P.
    2 December 2019 @ 21:40
    The S&P 500 value is what about a half dozen people in the world decide it to be!!! Until they can't
  • RA
    Robert A.
    2 December 2019 @ 19:26
    Excellent video! Having been a Founder and Director of a Bank that was sold 25 years later and currently advising another Local Community Bank that is in the process of being sold to one of several suitors (in the South East) this Presentation is so prescient it’s scary. Great job by Jim curating for us from his fantastic rolodex.
  • JG
    John G.
    2 December 2019 @ 19:22
    Yeah that is one point David M. but another and I do know if the interviewee knows this but some of the data that he was explaining was wrong. So you could tell that is not his indicator but the firm's indicator. For example, David M you mentioned the 200-day MA breadth metric that he quoted. He continued to reference S&P 500 all time high "breadth snapshots" where at this specific time they would look and determine if a S&P 500 company was above or below 200 day MA.. They would take make sure the percentage was above 65% at the same of an S&P 500 all time high.. Take a look at that chart when they upload it.. You notice anything weird about the bullets that are supposed to be identifying all-time highs? Look how many bullets at are the end of 2009, all year 2010 and 2011. In none of those years did the S&P 500 set all-time highs as the index just got back to square one in Q1 2014 post-GFC. Something is greatly wrong there. Editor and/or interviewee has to clarify that especially if you are going to insert it as a crucial indicator.
  • dm
    david m.
    2 December 2019 @ 16:41
    I think one could make a case that tracking the ratio of stocks above their 200-day moving average is less reliable these days because of the passive-indexing phenomenon.
    • AV
      Alberto V.
      3 December 2019 @ 00:39
      IMHO if passive-indexing is indeed inflating the ratio of stocks that remain above their 200d MA these days, that would just speak to there being a 'new' (partial) driver behind that indicator, but I see no reason for tracking it: it just means that 'now' it would take those passive-indexing flows to turn net negative. i.e. mathematically a downturn cannot happen if the ratio of stocks above their 200d MA remains the same as it currently is indefinitely, by definition.
    • AV
      Alberto V.
      3 December 2019 @ 00:41
      Errata Corrige: [...] I see no reason for *NOT* tracking it [...]
  • IS
    Ionel S.
    2 December 2019 @ 11:54
    2s10s inversion actually happen this summer from August 22th to September 03rd with the low at -5.3 bp as of August 27. Bloomberg quick check...
  • MN
    Michael N.
    2 December 2019 @ 09:00
    nice interview thank you. is there a way for a normal retail trader to get a look free somewhere at margin debt and percentage? is it only accessible by institutions. thanks
    • NS
      Nicholas S.
      4 December 2019 @ 06:05
      This is where the real advantage is.