10 Charts To Watch In 2019 (Half-Time Update)

Well, it's already H2 now, and what a year it's been so far! Following on from the original "10 Charts to Watch in 2019" and the Q1 update here's a half-time update on the 10 charts to watch in 2019. The key purpose of this article is to update the charts and see what's changed, where I've been wrong, and what to watch for in the second half of the year and beyond...

In the original article, I shared what I thought would be the 10 most important charts to watch for multi-asset investors in the year ahead.

My original overarching thoughts/themes on the outlook were:

"Overall, the theme of “transitions” I think captures a lot of the major moving parts: a transition for central banks from suppressors to sources of volatility, rotation across assets and markets, and a transition stage in the business/market cycle.  Risk is clearly elevated, but as the charts show; so too is opportunity."

As for what's changed at a high level on the outlook from here, the big thing is globally central banks are clearly trying to pivot back towards being suppressors of volatility. We're certainly seeing signs of rotation across assets and markets and so far a lot of ranging.  And with the global economic slowdown, we are most certainly in a transition stage, but it is unclear whether this is a transition to a major global recession or that it ends up being a passing growth scare and subsequent re-acceleration. I remain in the latter camp... for now.

With that all said, let's get into the charts! 

[Note: I have included the original comments from back at the start of the year, so you can quickly compare what I'm thinking now vs what I said back then]

1. Deflation Risk: Following a fairly decent run of performance in H1 (MSCI ACWI Ex-US up over 11%, S&P500 up about 20%), the proportion of world equity markets in "deflation" has dropped from over 80% to now less than 50%. Basically, stocks are pricing in more benign economic conditions now. So far there is some hope that the current global slowdown follows the 1995, 1999, or 2011 playbook. But the fact that over a third of countries we track are seeing contracting industrial production and forward earnings growth goes to show that there is or at least has been a genuine slowdown.

"Deflation Risk: as I write, over 80% of world equity markets are in “deflation” (price negative YoY%), the risk here is that we see the black and blue lines turn up (proportion of countries seeing forward earnings and industrial production contracting on an annual basis), and if they do it will probably leave us all feeling a little black and blue, because when it comes to economic deflation, what we’re really talking about is the risk of a global economic recession. Keep this chart front of mind and top of your radar this year."

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