There are many indicators and some may make you laugh, others lead you on the right path, or can cost you a ton of money. Discussed here are a few quirky and whacky indicators along with one that may just be helpful.
Do you know the latest Bangladesh butter production numbers? They might be worth more than Wall Street’s latest price targets.
According to Forbes columnist David Leinweber, there’s a 99% correlation between a composite indicator of Bangladesh annual butter production, U.S. cheese production, and the total population of sheep in both Bangladesh and the U.S. and the S&P 500.
Obviously, the predictive properties of the ‘butter production index’ are purely accidental and if you’re trying to get the latest butter production stats, you deserve to be creamed.
‘Sports Illustrated Swimsuit Issue Indicator’
This indicator, first coined by Bespoke Investment Group, suggests that the S&P 500 will generate above average returns when the cover model is American.
The average S&P return from 1978 – 2008 when the cover model was American is 13.9%. The average annual return for non-American model years is 7.2%.
The 2013 model is American.
Men’s Underwear Indicator
Apparently men have a tendency to hang on to their underwear, but a good economy often triggers an (much needed?) underwear makeover.
Men’s underwear sales have shrunk from 3% of overall menswear in 2008 to 2.2%.
A penny saved is a penny earned, and when things are tight people like to save. Coupon usage has been declining since 2010.
Napa Valley Wine Auction Indicator
Wine auction attendees don’t fly economy to Napa. They fly in style, bid in style and live in style. Juicy auction proceeds reflect a good economy. The 2012 auction took in $700,000 more than in 2011 (up from $7.3 – $8 million).
The Great Recession affected even the youngest generation as diaper sales fell during the financial crisis. The current diaper sales of $5.4 billion are still below the 2008 figure of $5.7 billion.
Simon’s Headline Indicator
My headline indicator is a non-scientific assessment of media sentiment. It’s not ‘tangible’ and doesn’t have a written track record, but it’s nonetheless helpful. Media sentiment, as investor sentiment is used as a contrarian indicator.
The media is reporting the Dow’s new all-time highs, but it’s doing so almost begrudgingly. There’s little uninhibited excitement about the Fed-driven new high as these headlines show:
Reuters: Dow Surges To New Closing High On Economy, Fed’s Help
CNBC: Dow Breaks Record, But Party Unlikely To Last
Washington Post: Dow Hits Record High As Markets Are Undaunted By Tepid Economic Growth, Political Gridlock
The Atlantic: This Is America, Now: The Dow Hits A Record High With Household Income At A Decade Low
CNNMoney: Dow Record? Who Cares? Economy Still Stinks
What does this mean? I venture to say that the final high has not yet been seen.