Not to be too alarmist, but one of the indicators that we monitor quite closely and has preceded previous recessions, the ratio of inventory to sales (at the wholesale level) in the US rose to levels not seen since 2009 in January. Inventories rose and sales fell.
When inventory is not leaving the shelves, prices need to be lowered to encourage sales and move inventory. Revenues fall and production gets reduced. This is not good for the economy and / or earnings.
We will have to keep a close eye on developments in this indicator.
Meanwhile, the Bank Of Canada continues to "stand down" from adjusting monetary policy until they get a chance to review the upcoming budget from the new Liberal government which is to be delivered on March 22.
Tomorrow, we shall see what the European Central Bank has cooked up to try to stimulate the economy and revive inflation in the Euro area.
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist