Where are we now in the economic cycle in Jan 2010?

Fidelity's Investment Clock can be a useful tool to help understand where we are in the economic cycle. The clock currently shows we are in the "Overheat phase".

In the past month, some growth indicators have dipped back slightly. Other lead growth indicators are expected to peak in this quarter and Q2. The combination of these signals suggests scaling back cyclical positions. Equity markets are already factoring in a peak in lead indicators and have been rising less rapidly. This may see stocks enter a period of slower growth.

The Investment Clock generates future growth and inflation readings based on past trends and the current momentum of lead indicators. These indicators are updated on a monthly basis to build an expectation of how the global economy may perform over the coming three to six months. The growth reading suggests the relative weighting of cyclical and defensive assets within a portfolio, while the inflation reading suggests the weighting of financial assets versus real assets. 

The above article has been sourced from FIL Investment Management (Australia) Limited. 

Important Information

The above information provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The above information doesn’t take into account your personal objectives, financial situation or needs. It’s important for you to consider these matters before making any financial decision and I recommend you seek help from a financial adviser.