* CMI stabilises, Europe still in ‘Recovery’
Improvement on 12m changes in Pan-European bond yields and the OECD Leading
Indicator offset the lower earnings revision ratio (ERR) and weaker Producer Price
Inflation (page 8). In aggregate, our Composite Macro Indicator (CMI) increases slightly
after last month’s decline, keeping us in the ‘Recovery’ phase. During ‘Recovery’, the
Style Cycle prefers Value, High Risk, and Low Quality stocks. Moving towards an initial
Fed hike, Quality could be an important pain-trade
Macro data improvement is differentiated…
European macro should build on this month’s stabilisation, in our view. Increasing money
supply (M1) and easy comps should feed into a stronger CMI over the coming months
(chart 4). However, regional business cycles continue to diverge (chart 3). For
progression from ‘Recovery’ to the ‘Boom’