The cumulative Wicksellian process that has been developing since 2009 has led to an increase in demand for more timely credit cycle signals. As a result Credit Capital Advisory has now launched its ex ante signals which update on a quarterly basis, a month before earnings season kicks in. In September 2014, the signal for Q3 turned negative for the United States. The implication is that US firms will be disappointed by their actual results, and the natural rate of interest will fall. This in turn is likely to have a depressing effect on asset prices. The next uptick is likely to come from a jump in productivity growth given that managers of firms have now exhausted all the easy options of growing profits such as refinancing debt and benefiting from a weak currency.
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