This is a chart drawn by Sergey Tarasov: http://www.timingsolution.com/ . He obtained long term data series for the AA investment grade corporate bond yield, US P/E ratios, and PPI. I think these monthly data going back into the 18th century came from the Foundation for the Study of Cycles. Tarasov then detrended the data to make it more amenable to analyzing true oscillations. Subsequently he performed a standard Fourier spectrum analysis of the detrended data and synthesized the highest amplitude cycles found into a master cycle. For the bond yield series he found a 62 year long wave cycle from top to top and bottom to bottom. This is interesting in that the last bottom was 1948/49 which has always been considered a long wave bottom by many people eyeballing many market and economic factors. The next low in Tarasov's long wave cycle would be 2011.
The last previous high was 1982. (I show a triple bottom on T bond futures in September, October 1981 and February 1982, so that fits).
The P/E chart is actually the earnings yield or E/P. It last bottomed in 1948/49 and topped in 1982! It is due to bottom in 2012.
The PPI chart is very similar with a peak in the 1981, but on the way down in each 62-63 year cycle there are three bottoms. For this cycle they were/will be 2003, 2016, and 2023....so theoretically interest rates would bottom in 2011 but commodity prices (PPI) wouldn't finally bottom until 2023'ish....That would make sense historically as rates bottomed in the 1940's ahead of commodities.
I have been interested in the Kondratieff long economic wave for three decades at least. One problem has always been fitting current data and the 18th century into what appeared to be regular 54 year 19th and 20th century cycles. I will deal with some of these theoretical issues in another post, but the practical aspect is that it's quite likely that the Tarasov cycles of corporate interest rates, P/E ratios of stocks, and commodity prices (PPI) could bottom in 2011-2012.
I have seen earlier Fourier analyses of long term data for economic cycles showing a shorter and more conventional 54-55 year cycle, but that hasn't worked out for interest rates or the economy over the past few years. This new analysis needs more "looking" but is very interesting as a possible solution to the long wave issue in real time.
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