Francisco Martin and Emma Liu are analysts at the same firm. Martin uses the cyclical indicator approach to formulate his equity market outlook, whereas Liu uses microvaluation analysis to develop

her equity market outlook. Martin and Liu have conflicting views on the current outlook for the U.S. equity market. equity ImaIkel.Martin prepares Exhibit 1, a table of recent values of selected U.S. cyclical indicators. He makes the following observation: "Several leading indicators suggest further deterioration in economic conditions. Based on the cyclical indicator approach, these developments are clearly unfavorable for the U.S. equity market." Identify two leading cyclical indicators in Exhibit 1 that support Martin's observation regarding the U.S. equity market. Explain how the change in value of each of these indicators supports Martin's observation. Describe two general limitations of Martin's approach to formulating outlook.an equity market