One question from the Level II PM-Quantum particularly confuses me, which says that corporate profits is a leading indicator. But from what I learnt in college corporate profits almost definitely is a lagging one, can anyone help explain this?
Observation 1: The equity premium should be larger than, and positively correlated with, the corporate bond premium. Observation 2: Corporate profitability is a leading economic indicator. Observation 3: Equities provide superior consumption-hedging properties to high quality bonds. Which of Wu’s three observations is least likely correct? Observation 1 Observation 2 Observation 3 It seems both Observation 2 and 3 are wrong.