Our success is based upon a unique approach to economic analysis.

Our results speak for themselves.

Read about our track record

Individualism and independence of thought are crucial to our success, with our economists bringing a combination of insight and experience to bear on our unique approach to economic analysis. The result is a perceptive yet practical approach to the challenges faced by our clients, based upon our global leadership in the application of monetary economics.
 

Methodology

The key foundation of our research is monetary economics.

Fundamental analysis of trends in money and credit, banking systems and flows-of-funds provide unique insights into economic developments and into likely movements of financial asset prices. We also employ proprietary leading indicators to help generate forecasts for economic growth in all of the major economies of the world.

The Lombard Street Research leading indicator indices forecast real GDP relative to trend about a year in advance. These indices are based on the principle that some aspects of economic activity can be used to predict broad trends in the economy. Each leading indicator index consists of seven components. The components are typically the following:

• a broad money measure, deflated by a price index
• a measure of future activity in the construction industry, either order book trends or building permits or similar
• retail sales of new passenger cars
• a measure of manufacturing activity, such as domestic orders for consumer goods, new orders to manufacturing, the stocks/delveries ratio or similar
• interest rates
• a measure of business sentiment, usually a business survey measuring expected output over the next 3-4 months
• some other measure of business or consumer sentiment

The actual components for each country vary, depending on how well indicators have shown themselves capable of predicting turning points in the economy.The raw data from each component is then standardised and related to its long-term trend or average, after which the seven components are weighted together to form the indicator.

If necessary, the components are lagged by up to five months to obtain best results.