The global economy is improving. It's a bull market in stocks everywhere.

We’ve already established that:

  1. The U.S. economy has weakened a little bit vs. analysts expectations. The deterioration is not nearly significant enough to cause a bear market. A “small correction” is highly likely.
  2. Overall, the U.S. economy continues to grow. Based on our model’s current projections, this bull market has at least 1-2 years left (and more likely 2-3 years).

Let’s take a look at the global economy. In the final leg of this bull market, global stock indices should go up together. Since the economy leads the stock market, we should see economic improvement in foreign countries.
*We’re looking at major economies (aside from the U.S.).


Germany is Europe’s main economic engine. Germany’s economic data demonstrates that the German economy continues to improve.
Here’s the unemployment rate, which is still falling.

Germany’s inflation rate surged in late-2016. Since then, it has fallen a little and has now stabilized. Here’s the year-over-year inflation rate.

Germany’s economy relies on manufacturing. Hence, the Producer Price Index is important. As you can see, Germany’s year-over-year change in PPI continues to rise. The deflation-scare from a few years ago is gone.

Germany’s Manufacturing PMI also demonstrates the strength of the German economy. Manufacturing PMI continues to rise.

Germany’s Ifo Business Climate Index is the best leading indicator for the German economy. As you can see in the following chart, the Index continues to climb. This Index might fall a little in late-2017 because it is near the top of its range. See the following chart.


Like Germany, China’s economy is heavily reliant on manufacturing exports. Here’s Producer Prices. As you can see, Chinese Producer Prices has fallen a little bit, but on a bigger scale it’s a blip on the screen. Nothing to worry about (yet).

China’s non-manufacturing PMI has been slowly trending higher since early-2016. See the following chart. 
Over the past few months, some investors were concerned that China’s services PMI was falling. We explained that the Services PMI is a very noisy indicator – it’s useless. Last month, China’s Services PMI spiked.

China’s New Orders (a manufacturing indicator) has risen since early-2016. Over the past few months, this indicator has dipped a little bit (but not enough to be a real concern).

China’s Consumer Confidence Index continues to trend sharply upwards. The Consumer Confidence Index will become increasingly important to China as it transitions from a manufacturing-based economy to a consumption-based economy.


Over the past few years, Canada’s economy slumped with falling oil prices. Now that oil prices have stabilized in a wide $40-$60 range, Canada’s economy is improving as well.
After dipping below 0% GDP growth in 2015 and 2016, Canada’s quarterly GDP growth is finally back up to around 1%. That has been the top of Canada’s range over the past decade. Here’s Canada’s quarterly GDP growth rate chart.

After a slump in 2015 and 2016, Canada’s year-over-year Retail Sales growth rate is increasing.

Canada’s unemployment rate went up in 2015. Falling oil prices forced the oil fields in Alberta to layoff thousands of workers. Since then, the unemployment rate has been falling.

Canada’s Manufacturing PMI is trending higher. It fell a little bit last month. Focus on the overall trend and not the month-to-month changes.

Reflecting the strength in Canada’s manufacturing sector, Canada’s year-over-year change in Industrial Production is picking up.

*Canada’s economy is driven by commodity exports. When commodity prices like oil/metals/agriculture tank (as they did in 2015), Canada suffers. When commodity prices stabilize (as they’re doing right now), Canada recovers.


France is the second largest economy in the Eurozone. A lot of French economic indicators are extremely noisy (a lot of whipsaws). It’s hard to find solid leading indicators for the French economy.
France’s unemployment rate continues to fall.

France’s inflation rate spiked in late-2017. Since then, it has fallen a little. Perhaps this is just transitory weakness that’s still related to France’s recent election. Watch out for this.

France’s Business Confidence Index continues to rise. It went up a lot in April and May (after the French election).

France’s Manufacturing PMI continues to trend higher (although it did dip a little bit in May 2017). The overall trend is positive.

France’s Services PMI has been trending higher over the past year. Unlike the Manufacturing PMI, the Services PMI hasn’t fallen over the past 2 months.

France’s Consumer Confidence Index has been rising ever since 2013.


Australia is the weakest link the global economy. But since Australia’s economy is so small (compared to the U.S., Germany, China, etc), Australia doesn’t have a significant negative impact on the global economy.
Australia’s year-over-year Retail Sales growth continues to decline.

Unlike other economies, Australia’s quarterly GDP growth rate has not really picked up.

Australia’s unemployment rate is falling very slowly.

Australia’s Business Confidence Index hasn’t really risen.

Australia’s Consumer Confidence Index has been flat over the past 2 years.

Bottom line

The overall trend in global economic data points to the same conclusion:

International macro is improving.

The real-time economic data leads the stock market. The improving economies demonstrate that this is a global bull market in stocks.

7 comments add yours

  1. You know, I stopped reading when I saw: “Since the economy leads the stock market..”
    What the heck you been smoking, dude???
    Just SMH.

  2. Interesting graphs. I am a optimist. Markets have historically done well. Since when does betting against the market over long periods of time work? Never.

  3. This is awesome to hear. I’d love for the upward trend of the market. I think too many investors are sitting on the sideline waiting for the market to pull back and they’re getting left behind. I think the scars of 2007-2009 are still too fresh unfortunately and people need to relax and let go 🙂

    • In the last stage of the bull market, all the money that’s sitting on the sidelines will come in. Bull markets suck everything in at the end. We just have to be 1 step ahead of everyone else. If you’re too far ahead of the curve, you end up missing out on a lot of gains.

      • That’s an interesting view to compare with the economy of the important countries to get a sense of what’s about to happen. Seems there’s still some steam left, thanks for this interesting insight!

  4. Though you do not have to agree with everything the author has said, but no derogatory comments, please.

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