How can investors make sense of these mixed signals? Analysts at Bank of America-Merrill Lynch created the Global Wave, a compilation of seven global indicators designed to provide a comprehensive assessment of trends in global economic activity. The compiled data allows investors to predict equity market performance and equity rotation.
|Source: Bank of America-Merrill Lynch|
|Industrial Confidence||Global economic output|
|Consumer Confidence||Demand/consumption side of the economy|
|Capacity Utilization||Investment/productivity side of the economy|
|Unemployment||Global labor market|
|Producer Prices||Producer prices in the manufacturing sector|
|Credit Spreads||Credit spreads using the Merrill Lynch Global High Yield Index as a proxy (the U.S. High Yield Master II Index was used prior to 1998)|
|Global Earnings Revision Ratio||Number of stocks with earnings upgrades versus the number with downgrades based on BofA-ML’s three-month consensus|
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