The LEI (Leading Economic Index) remains in negative territory—still a favorite metric for those who enjoy reveling in manufacturing nostalgia. But its predictive power is weak, hopelessly obsessed with manufacturing and goods, sectors that are becoming less and less relevant for the broader economy.

Central banks are basically targeting nominal GDP in this inflationary quagmire we find ourselves in (not that they’d ever admit it, of course). The game has changed, and services are the real MVP now, thanks to solid wage growth keeping them stickier than anticipated by basically anyone, myself included.

The LEI is showing sequential improvements, and the input parameters are looking (mostly) up in the manufacturing space, but we still have plenty of things to worry about anyway. Last week was full of weak construction activity, there is rising de facto unemployment in the household survey, and an ominous uptick in bankruptcies.

So, can we truly write off the recession? And what does it mean for our investing strategy from here? Let’s have a look at the bankruptcy cycle, which is looking increasingly worrying in several regions.

Chart 1: The LEI is improving on a sequential basis now..