Global Leading Indicators, September 2025 - Tariffs, what tariffs?

The September 2025 edition of the global LEI chartbook can be found here. Additional details on the methodology are available here.

One point on the methodology that I may not have made entirely clear: the aggregate LEI diffusion referred to below—and shown in the first charts of the chartbook—is not the same as a standard diffusion index. It is calculated as the sum of two figures: the number of LEIs that are high and rising minus those that are high and falling, and the number of LEIs that are low and rising minus those that are low and falling. This approach is designed to provide a more accurate turning point signal than a simple diffusion index. For the September 2025 edition specifically, the value for the G20 LEI, shown on page three of the chartbook, has been extrapolated to reflect a small rise. This mirrors the increase in the G7 indicator, as the G20 value had not yet been updated when the data was pulled from the OECD.

I seem to have a knack for releasing these chartbooks just as markets are hit with a curveball. The August edition came out in the wake of the soft August payrolls report, which opened the door to a dovish shift by the Federal Reserve and rattled investor sentiment with renewed concerns about a potential slowdown—or even a recession—in the U.S. economy.

Read More
The siren song of dollar weakness

A weaker dollar seems to be the answer to everyone’s prayers at the moment—or more specifically, investors want exposure to the exceptionalism of U.S. capital markets without the currency exposure that comes with it. From the BIS, via FXStreet:

Many investors still want to remain invested in US equities (belief in US exceptionalism is alive and well!), but at the same time, they see growing risks for the US dollar, not least due to the US government’s attacks on the Federal Reserve. A significant depreciation of the dollar could reduce the returns on the actual equity investment or even wipe them out entirely. So what is the solution? Hedging against dollar weakness. Ultimately, these hedges are effectively bets on a weaker US currency and, if widely adopted, create selling pressure on the dollar."

Read More
Equity Sector Rotation Chartbook, September 2025 - Running hot, and narrow

The September 2025 edition of the S&P 500 equity sector rotation chartbook can be found here. You can read more about the methodology and underlying assets here. This chartbook has been prepared with 1y total return, which is a departure from the first version with six-month returns. I honestly didn’t think about this when I pulled the data from Investing.com, as I normally work with 1y total return data for portfolio construction and the like. This shouldn’t make a huge difference to the main conclusions, though in some cases it might obviously shift the sectors around in the key diagram, compared to a six-month return framework. If you have a preference for future versions of this chartbook, let me know.

Read More
Things to think about #15 - Thomas Sowell & the post-literate society

I have been inspired, by listening to recent conversations on the Glenn Show, to delve into the writings of Thomas Sowell. This is a daunting task since the man has written a huge number of books, articles and essays. The Thomas Sowell Reader, however, seems to be a representative collection and a decent place to start. I am enjoying the reading experience so far. TS writes from a conservative, and fiercely pro-free market, perspective, at least in this the volume mentioned above. This invariably will put some readers off. But you’d be hard pressed to find a better example of punchy, yet eloquent, non-technical exposition of economics, social and political issues. The essay on the economics of discrimination and the small tract on “unfunded mandates” are particularly feisty and enjoyable.

Read More