Chemical Activity Barometer Turn Higher…Markets Next? – ValueWalk Premium
Institutional Investors

Chemical Activity Barometer Turn Higher…Markets Next?

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Q4 hedge fund letters, conference, scoops etc

Institutional Investors

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The Chemical Activity Barometer(CAB) is a composite economic indicator. It is an indicator derived from data generated from all aspects of industrial, energy, import/export and consumer activity. In simple terms this indicator captures economic activity spanning every sector of the US economy. After the sharp Oct-Dec 2018 decline in chemical company equities, which are a component of the CAB, this indicator is beginning to turn higher. Indicators representing employment, retail sales and personal income forecast continued economic expansion. Economic indicators historically roll-over prior to recessions. There is no evidence of fundamental indicators rolling-over today.

The CAB is a composite index which is comprised of indicators drawn from a range of chemicals and sectors, including chlorine and other alkalies, pigments, plastic resins and other selected basic industrial chemicals. It first originated through a study of the relationship between the business cycles in the production of selected chemicals and cycles in the larger economy. Other specific indicators used include:

  • Hours worked in chemicals;
  • Chemical company stock data; publicly sourced, chemical price information;
  • End-use (or customer) industry sales-to-inventories; and
  • Several broader leading economic measures (building permits and ISM PMI new orders).

Chemical Activity Barometer

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