The MasterCharts: David Rosenberg: The Coming Negative Export Shock | PRAGMATIC CAPITALISM
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Thursday, August 09, 2012

David Rosenberg: The Coming Negative Export Shock | PRAGMATIC CAPITALISM

The Coming Negative Export Shock

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David Rosenberg has an indicator for us here that isn’t too mainstream.  He says the correlation between exports and new orders could prove prescient in forecasting a recession in the US:
“I think that there may be a time, before too long, when we will walk into the office to find that they US prints a negative GDP reading on the back of a negative export shock that does not appear to be in any forecast – let alone the consensus.  Look at the pattern of ISM export orders:
- April 59
- May 53.5
- June 47.5
- July 46.5
This is called a pattern.  And this is a level that coincided with the two prior recessions.  As the chart below vividly illustrates, there is a significant 81% correlation between annual growth in total US exports and the ISM new orders index (with a 4 month lag).  So either the market has already priced this in or it is going to end up coming as a very big surprise….”

Source: Gluskin Sheff

David Rosenberg: The Coming Negative Export Shock | PRAGMATIC CAPITALISM

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