Yes, there are still some mustard seeds out there …
Mike Darda of MKM Partners spys some of them:
1) The ratio of leading to coincident indicators is up nearly 5% since bottoming in October, a magnitude not seen outside of economic recoveries going back to 1960.
2) Similarly, the most sensitive credit market indicators (interest-rate swap spreads, LIBOR spreads, etc.) have barely budged in recent weeks despite the sagging equity market. Indeed, the TED spread has now fallen below the historical median. At the same time, corporate bond yields continue to fall, a strong recovery signal.
3) As we’ve pointed out before, the corporate bond market was probably the most powerful leading indicator of recession, depression and recovery during the 1930s.
4) What about the plunging money multiplier and collapsing monetary velocity? The credit markets tend to lead changes in measured velocity, and now suggest the worst of that decline is behind us. In any case, money is a leading indicator while nominal GDP (which is the numerator of the velocity equation) is a coincident indicator.