September’s IeC Boom/Gloom Index© is slightly higher than August. But the ‘Green Shoots’ level (green line) has fallen sharply, indicating that sentiment has become less positive about the staying power of the recent rallies in financial markets. The index now includes a new reading for “frugal” (red line), as this may be worth watching in future months.
Other indicators are also showing signs that “green shoots” may be withering. China’s Shanghai index is now in a bear market, having fallen 23% from its 3471 peak on 4 August, whilst benzene (a good leading indicator for chemical markets) is down 28% since its $1060 peak.
Optimism can carry markets along for a while. But at some point, clear evidence of an upturn has to appear. And so far, as the blog found in Germany last week, there are few signs of this. September’s volumes will be a critical sign of whether recovery is really just around the corner.