Leading Indicators Suggesting Weakness in U.S. Equities

The Conference Board released its Leading Economic Indicator Index for July, which was 0.1%, missing expectations of 0.2% and slower than improvements earlier in the year. The number suggests a slow recovery, although any further deterioration would likely cause weakness in the equity markets.

Unemployment is typically considered a lagging indicator of economic growth, although the unexpected strength of initial unemployment claims for last weak, coupled with a recent rising trend, would seem to portend future economic weakness. (http://www.bloomberg.com/apps/quote?ticker=INJCJC:IND)

Looking around at other leading indicators, I remain convinced that investors should be prepared for a storm in equities.

The Conference Board:
Gauge of Leading Indicators (July) - Positive 0.1%
Consumer Confidence (July) - Negative 3.9%
CEO Confidence (2Q) - 0.0%


U.S. Google searches:
Durable Goods - negative 9.3%
Real Estate - negative 10.4%
Air Travel - negative 9.0%
Auto Buyers - negative 39% (albeit lapping Cash-for-Clunkers program)
Furniture - negative 9.8%

Trailing 4-weeks Domestic Equities fund flow - Negative $10 billion