Let's assume for the moment that equity investors know what they're doing and can correctly anticipate the future (admittedly, both are very big assumptions).
Based on the following graph, which compares the ISM's manufacturing index (a proxy for the U.S. economy as a whole) to the swings in share prices that occurred six months earlier, it's a good bet that the already tepid recovery is poised to end.
To be sure, this relationship is not infallible (note the false signals that were given off during the late-1990s dot-com bubble), but for those who cling religiously to the notion that the stock market is the best economic indicator we have, I hope they are steeling themselves for rockier times ahead.
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