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Reverse Combination

By: Janus Henderson Investors
Harvest Exchange
August 7, 2017

Reverse Combination

Global growth strengthened in late 2016/early 2017 and investors are upbeat about prospects. Monetary trends and leading indicators, however, suggest that momentum will cool over the summer, posing a risk to high-flying markets – particularly if the Federal Reserve continues to tighten policy.

Six-month growth of global1 industrial output reached a three-year high in April 2017 (Figure 1). Strength had been predicted by a rise in six-month growth of real (i.e., inflation-adjusted) narrow money2 to a peak in August 2016. Turning points in real money growth have led those in output growth by nine months on average historically.

Originally Published at: Reverse Combination