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Underwear Leads the Stock Market?

Steve LeCompte | | Posted in: Animal Spirits

A subscriber hypothesized that keeping old underwear is an early indicator of personal income at risk. Trends in underwear, as proxied by Hanesbrands Inc. (HBI), may therefore be a leading indicator of trends in the overall stock market. To test this hypothesis, we relate HBI returns to SPDR S&P 500 ETF Trust (SPY) returns at a monthly frequency. Using monthly dividend-adjusted prices for HBI and SPY during September 2006 (limited by HBI) through March 2022, we find that:

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