The business cycle shifted into the Contraction phase of Goldman's 'Swirlogram' framework that we introduced here three weeks ago [4]. The latest observations in their Global Leading Indicator (GLI) as well as the way we entered this Contraction phase suggest this could be a much more severe downturn. In their own words: "We do not yet see clear reasons for optimism in the data, and our GLI framework still suggests that the current phase of the cycle is in a challenging one."
Goldman's Global Leading Indicator, month-on-month, has turned negative...
and the Swirlogram has entered the Contraction phase...
[5]
but the angle at which we entered this Contraction phase is notably steep...
[6]
which has negative implications for forward 12-month S&P 500 returns...
[7]
As Goldman notes: "We think that the macro data are providing a clear signal. And hence, we think a negative bias remains warranted."
Source: Goldman Sachs