JULY – CRED gave us a reading of 65.0, up from 57.5 the prior month. The reading increased as continued strength from our business indicators and employment data led the way.
The CFNAI, a gauge of overall economic activity, had a strong bounce after a weak June; both hard business data (New Orders, Industrial Production) and soft business data (Business Optimism, ISM Indices) remained very strong. These strengths have been more than enough to offset high valuations, a strong US Dollar, and creeping inflation. Therefore, we see a healthy business cycle persisting. The long-term impact of tariffs, higher interest rates, and a supply-constrained housing market have added to the continued economic headwinds. However, global indicators are OK despite issues in Turkey and consumer confidence remains elevated as retail sales rose at the fastest pace in six months.
About The ClearRock Economic Dashboard™ (“CRED”) – CRED is a proprietary financial tool we have built and refined over the past 10 years. CRED is a monthly barometer designed to measure the strength of the global economy. It synthesizes twenty financial data points to produce a monthly diffusion index of economic health. We represent the index using a “speedometer” with a scale of 0 to 100. A reading of 50 is neutral, which indicates that the economy is growing at its long-term historical average. A reading below 50, signals that the economy is slowing, which may lead to a contractionary phase in the economic cycle. Conversely, when CRED gives us a reading above 50, the economy is growing faster than its historical trend rate, and is likely expanding.
We use this tool to answer a simple question: where are we within the current business cycle? Answering this question is a core part of our investment management process and is an important factor in driving our asset allocation decisions. We believe that getting the big picture right is key for achieving long-term portfolio growth and, most important, helping our clients reach their financial goals.
It is important to note however, that CRED is only one of the many resources that helps our Investment Committee make more thoughtful decisions. Our deep industry and investment experience, coupled with our network of external independent research sources, we believe has allowed us to build a sound, disciplined, and repeatable investment process.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from ClearRock Capital, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.