Top 5 Charts Of The Week: Global Deflation Risk, Bear Market Warning, Potential Policy U-Turn

Here are some of the standout economic and markets charts on my radar. I aim to pick a good mix of charts covering key global macro trends, and ones which highlight risks and opportunities across asset classes. Hope you enjoy!

1. Global Deflatometer: Back in the spotlight, this was the number 1 chart from the Ten Charts to Watch in 2019 article. This is going to be one of those charts I keep referring back to as the year progresses - it's also highly relevant to chart number 5 in this week's email. Key point: while the global equity route has begun to abate, the deterioration in activity data remains a concern.

2. Global Shipping Indicators: Similar theme - global freight indexes have been on the soft side, and in particular the Baltic Dry Index has crashed over the past couple weeks (though I would note the China Containerized Freight Index has been just muddling along, likewise shipping sector equity relative performance). The thing to watch for with this chart is a synchronized movement in the indicators (not really yet), but the move in the Baltic dry itself is interesting... particularly in the, as yet, absence of any real material stimulus out of China or visible progress on a comprehensive trade agreement.

3. Bear Market Warning Indicator: One very interesting and useful dataset out this week was the Fed Senior Loan Officer Opinion Survey, which tracks: banks' willingness to lend, loan pricing, and loan demand. From this dataset has come this little bear market warning indicator. It worked well in the 2000 peak and even forewarned of the 2008 turmoil. But in fairness, it also produced basically false signals a handful of times during the period shown. In that respect, it is currently flashing an orange light - whereas a red light would be flashing were it to deteriorate further and at a sharper pace (i.e. if the banks were to aggressively tighten up lending standards). One to watch!

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