Gluskin Sheff economist David Rosenberg says this chart is one of his favourite warning sign charts for an imminent recession. He also says it’s a favoured chart of former PIMCO economist Paul McCulley.
Speaking at The Big Picture conference, he says that the year-over-year change in the 3-month moving average of core CAPEX (investment) orders is the purest look at what businesses are doing with their cash, and whether they’re willing to invest.
He says that the chart shows that (likely due to the fiscal cliff) companies are nervous and are holding back investment, hence the 3-month moving average going negative compared to last year’s.
Photo: Bloomberg, Business Insider
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