Global Growth Cycle (GGC)
Developed by Grzegorz Link · Macro + Trend · Low-Med Risk
Global Growth Cycle was developed by Grzegorz Link, a quantitative researcher focused on macro-based systematic investing. GGC applies a fundamentally different timing mechanism from the price-based or employment-based indicators used by most tactical strategies: it uses the OECD Composite Leading Indicator (CLI) — a forward-looking economic index specifically designed to predict turning points in the business cycle — as the sole determinant of whether to hold equities or cash.
The CLI is constructed from a basket of leading economic indicators including manufacturing orders, building permits, consumer confidence, stock prices, interest rate spreads, and other variables that historically lead business cycle turning points by six to nine months. This forward-looking construction gives the CLI a theoretical advantage over coincident indicators like industrial production or lagging indicators like unemployment: by the time these measures confirm a recession, equity markets may have already declined substantially. The CLI aims to signal the change before it occurs.
The strategy's decision rule is deliberately minimal: when the CLI is above its trend, the economy is in a growth phase and the portfolio holds US equities (SPY). When the CLI falls below trend, the economy is entering a slowdown or contraction and the portfolio shifts to short-term Treasuries (BIL). This binary positioning based on a single leading indicator produces a strategy with extremely low turnover — the CLI changes direction at the frequency of business cycles, typically every two to four years.
Link's contribution is demonstrating that this simple, data-driven approach to economic regime timing can produce competitive risk-adjusted returns without any price-based momentum calculation. The strategy never looks at market prices, moving averages, or asset returns. Its decisions are entirely derived from the real economy, providing a signal that is genuinely independent of — and potentially complementary to — the momentum-based signals used by the vast majority of tactical strategies.
How It Works
The OECD Composite Leading Indicator
The OECD CLI is a monthly index constructed from a standardized set of leading economic indicators for each member country. For the US, the CLI incorporates data including manufacturing new orders, building permits, consumer expectations, weekly manufacturing hours, the interest rate spread between long and short bonds, and the S&P 500 — each component selected for its historical ability to lead turning points in the business cycle.
The CLI is published monthly by the OECD with approximately a two-month lag. The strategy evaluates whether the CLI reading is above or below its long-term trend — a detrended version of the index designed to oscillate around zero. Readings above trend indicate an economy in the expansion phase of the cycle; readings below trend indicate a contraction or slowdown phase.
Binary Regime Positioning
When the CLI is above trend, the portfolio holds 100% US equities (SPY). When it falls below trend, the portfolio shifts entirely to short-term Treasuries (BIL) — the most conservative defensive position available, essentially parking in cash until the economic outlook improves.
The choice of BIL rather than longer-duration bonds for the defensive position reflects a deliberate decision to avoid interest rate risk during the defensive phase. Business cycle downturns can be accompanied by either falling rates (deflationary recessions) or rising rates (inflationary contractions), and longer-duration bonds perform poorly in the latter scenario. By defaulting to cash-equivalent instruments, the strategy provides unconditional capital preservation during the defensive phase regardless of the rate environment.
Business Cycle Frequency
Because the CLI tracks the business cycle rather than market momentum, the strategy generates signals at business-cycle frequency — typically making one or two round-trip transitions over a three-to-seven-year cycle. This produces near-zero turnover during normal conditions and makes the strategy exceptionally practical for taxable accounts and investors with limited monitoring capacity.
The leading nature of the CLI means the strategy typically exits equities before the recession becomes widely acknowledged and re-enters before the recovery is fully underway. However, the six-to-nine-month lead is a statistical average, not a guarantee — individual cycle transitions can be faster or slower than historical norms, and the CLI can occasionally generate false signals during economic soft patches that do not develop into full recessions.
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