Warning: file_exists(): File name is longer than the maximum allowed path length on this platform (260): C:\zpanel\hostdata\zadmin\public_html\forexbr_com_br/wp-content/cache/supercache/www.forexbr.com.br/2019/09/11/the-tell-ignore-this-data-at-your-peril-its-pointing-to-a-recession-societe-generales-albert-edwards/meta-wp-cache-17b0bb6ba5efe88482af222a90805ccb.php in C:\zpanel\hostdata\zadmin\public_html\forexbr_com_br\wp-content\plugins\wp-super-cache\wp-cache-phase2.php on line 71 The Tell: Ignore this data at your peril — it’s pointing to a recession: Société Générale’s Albert Edwards – Forex Brasil

The Tell: Ignore this data at your peril — it’s pointing to a recession: Société Générale’s Albert Edwards

Passing right under the noses of investors recently was data warning that a U.S. recession is around the corner.

That’s according to Société Générale’s known bear Albert Edwards, who was schooling clients Thursday on an often overlooked set of U.S. government numbers that reveal profits of all companies, including unlisted ones, published by the Bureau of Economic Analysis.

The corporate profit series — economic profits from current production in the second quarter — saw nearly 10% cut from the previous more upbeat 2019 first-quarter estimate, said Edwards.

“The latest revisions to U.S. whole economy profits — National Income and Product Account profits — were sufficiently large to suggest that the end of this record economic cycle is much closer than previously thought,” he said.

In sharp contrast to “booming stockmarket measures of profits,” the BEA’s NIPA data has been flatlining for a few years now, he said. That divergence is pretty normal just ahead of a recession, as those profits reveal the underlying trend.

One reason he puts so much faith in this data is because it is collected by the U.S. Internal Revenue Service, which requires companies come clean about their profits. It also encompasses private companies who have no incentive to inflate profits and, given their smaller size and domestic focus, are a better compass to gauge whether the economy is changing direction.

“For it is at this late stage that we often see whole economy profits and margins declining sharply but this weakness does not usually appear in stock market reported profit measures until much later in the cycle (usually in the middle of ensuing recessions when companies sack their CEOs and write down years of inflated profits growth in one fell swoop),” said Edwards.