There is an almost limitless set of data out there you can
compare to stock prices in an effort to understand what is happening. The most
common measures have been used for decades and lags the market considerably which
brings into question its effectiveness. But here at Capital 19 we like to find
new ways of doing things and so have been looking at new datasets. What we
found is intriguing.
The first one we looked at was the Dallas Federal Reserve Mobility and Engagement Index, which tracks the degree to which Americans are moving around by tracking where their mobile devices are. Below you can see this dataset almost perfectly mirrors stock prices with a three-week lag.
Another similar set of data is the TSA Passenger throughput data. Similar to the broad mobility index, this dataset has also closely matched stock prices
How to use this data?
What we can see here is stock prices LEADING the datasets by
about 3 weeks, providing compelling evidence of why stocks are a LEADING
indicator of economic activity in general. Stock prices would suggest economic
activity to pick up over the next few weeks.
As investors, the biggest value from these datasets is to
prove equity prices are correct. We often find ourselves starting to doubt how
prices can be so high when things are so bad economically, but as you can see
from the graph, we have nothing to fear, stock prices have led the recovery all
the way and these datasets are confirming the bull market. Stay long and do not
doubt the strength of the American economy.
Disclaimer: Capital 19 Pty Ltd ABN 17 124 264 366 AFSL 441891 (‘Capital 19’) believes the information contained is reliable, however, no warranty is given as to its accuracy and persons relying on this information do so at their own risk. This communication is for general information only and was prepared for multiple distributions and does not take account of the specific investment objectives of individual recipients and it may not be appropriate in all circumstances. Persons relying on this information should do so considering their specific investment objectives and financial situations. Any person considering action based on this communication must seek individual advice relevant to their circumstances and investment objectives. Subject to any liability which cannot be excluded under the relevant laws. Any opinions or forecasts reflect the judgment and assumptions of Capital 19 and its representatives based on information at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future.
The investment manager certifies that all the views expressed in this document accurately reflect their views about the companies and securities referred to in this document and that their remuneration is not directly or indirectly related to the views. Capital 19, its directors, representatives, employees or related parties may have an interest in any of the companies and securities in this document and may earn revenue from the sale or purchase of any financial product referred to in this document or any advice. Past performance is not a reliable indicator of future performance. Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this document is prohibited without obtaining prior written permission from Capital 19.
