GDP K-waves using spectral analysis


#1

Extrapolating dates for the sum of first and third harmonic of 51.6 year GDP K-wave gives low in 2011 and high in 2017. See “Profit Magic” for relationship between GDP and stock prices. The next downturn in the economy and stocks is likely to be a doozy. You didn’t think we could have all this candy without a stomach ache, did you?

Link to full paper is below.


#2

Corporate bond spreads are governed by bond math (they have a coupon and maturity) so they behave better than stocks when doing cyclic analysis. Plus, along with Treasury yields, they typically lead stocks at major turning points.

Below are Baa-rated long maturity corporate bond spreads along with a (very) rough phasing analysis. The peaks in spreads represent troughs in stocks and the economy so I’ve inverted the scale.

I will post a ST analysis for the same when I get time.