Global liquidity continues to contract as measured by the BofA Merrill Lynch Global Liquidity Tracker in Bloomberg. Unless the Fed reverses course, we expect this measure to deteriorate further. Keep a close eye on this.
On a positive note, the Conference Board's US Leading Economic Index is still trending higher and has yet to raise the flag of an imminent recession in the world's largest economy. That being said, on a year-over-year basis it has clearly decelerated from its 2014 highs and may continue to trend downward given further data below.
One headwind for the market moving forward (and a measure to watch for increasing recession risks) is the percent of banks tightening to large and middle-market firms. They are now the tightest they've been in 5 years with the current level and trend not hopeful in terms of future outlook.
As we've noted before, there is a very strong correlation between bank tightening, particularly at the small firm level, and employment. The percent of banks tightening on loans to small businesses leads nonfarm payrolls by about 6 months and suggests unemployment levels will be picking up.