Investors may want to brace for a hard landing. According to the Economic Cycle Research Institute, the recent bank failures reinforce a recession is imminent and there is a chart reflecting it. “We’re seeing lots of symptoms [of a significant downturn] when you have crises,” the institute’s co-founder, Lakshman Achuthan, told CNBC’s ” Fast Money ” on Wednesday. Achuthan highlighted a special weekly leading index sent to clients. It provides insights for the third week of March, which coincides with the latest bank turmoil. “On the left-hand side of the chart, you see the index coming down. It’s a forward-looking index,” said Achuthan. “That decline you see across the chart is a recessionary decline. It’s pronounced. It’s pervasive. It’s persistent.” Achuthan’s institute, also known as ECRI, considers itself a leading authority on economic cycles. Its mission is to uncover cyclical risks and opportunities before they’re widely recognized on Wall Street. ECRI’s weekly leading index, which is based on a combination of government economic data, soft surveys and market prices, shows a firming in the beginning of this year. That’s when soft-landing chatter grew louder. But it ultimately didn’t hold. “It was a flash in the pan,” said Achuthan. Despite his warning, there appears to be optimism on the Street. The major averages rallied on Wednesday , with each of the three indexes gaining at least 1%. The Dow Jones Industrial Average , S & P 500 and the Nasdaq Composite are all positive this month. In particular, the tech-heavy Nasdaq is up more than 4% in March. This strength has a shelf life, according to Achuthan. Still, he predicts there will be pain ahead. “The market is an imperfect leading indicator,” Achuthan said. “It gets ahead of itself at times.” Disclaimer
Source link: https://www.cnbc.com/2023/03/29/ominous-trend-spells-ahard-landing-for-economy-lakshman-achuthan.html