Macroeconomic indicators are overflowing with optimism rarely seen. Especially in the United States, where the recovery is more pronounced, among other things because the vaccination rate is higher. In the US, the Manufacturing PMI stands at 64.7.
What has happened when there has been unleashed macroeconomic optimism?
Although it has occurred a few times in history, the data show us a certain trend, although it is not very strong.
On average, the S&P 500 is down -3.1% at 6 months when the Manufacturing PMI is at 60 or higher. However, the relationship is not strong enough to conclude that there is a clear consequence.
Fuente: Refinitiv Datastream. Datos desde 1965. Elaboración propia Anchor Capital Advisors.
What we can observe is that more than 60% of the returns are negative, and the negative returns are more pronounced on average (-7.7%) than the positive ones (+ 4%).
The conclusion we can draw from all this is caution. When we invest at record highs and in a positive macroeconomic enviroment, the odds (albeit weak) play against us. Probably, this is due to the fact that the stock market cycle is about 6 months ahead of the economic cycle. Markets always discount expectations, and sometimes expectations fail.