SOCGEN: The News Cycle Is Screaming Trouble Ahead

SocGen has some bad news. Literally.

Their proprietary “Economic Newsflow Indicator” tracks articles in papers that discuss areas of strength in the economy. According to the SocGen asset allocation team, led by Alain Bokobza, the indicator often leads industrial production.

Therefore a ton of bad news right now might mean trouble ahead for the global economy.

Bokobza writes:

If austerity is thought to keep debt pressures manageable at best, growth is understood to be a much more efficient way to dissipate that pressure. Unfortunately, the general downturn in our global economic newsflow indicator is an omen for more stress on government budgets and financial markets…this path seems inevitable.

Here is the indicator, which shows the newsflow falling off ahead of industrial production, which hasn’t dropped as far quite yet:

SocGen proprietary newsflow indicator

Photo: Societe Generale

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