10 Charts To Watch In 2020 (Q1 Update)

The end of Q1 is rapidly approaching, and what a year this quarter has been! Obviously a lot has changed since the start of the year, and the situation is fluid, to say the least. So I thought it would be helpful to take a quick progress check on the "10 Charts to Watch in 2020".

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 (and beyond).

In this article, I have updated those 10 charts and provided some updated comments.

With all that's gone on, some of my initial thoughts and expectations from the original article proved completely wrong - at least at this juncture (still 3 quarters to go!).

So this is quite a good exercise to go through in terms of the "where to from here?" -- is it time to double down on some of the original calls, or to make a course change...

Aside from all that's been going on in markets, I've also been very busy making a series of changes to our institutional reports, including: a new weekly cross-asset sentiment pack, a rejig and expansion of the monthly chartbook (now called the market cycle guidebook), and next week I will be launching the new quarterly slide deck ...and there are still a few other enhancements on the agenda I'm working on as well. These have been well received by clients, and in times like these the value of good research goes up (so from a business standpoint I can honestly say I am actually doing better than ever, despite all the chaos, so definitely grateful for all the support and glad I put the work in to make that possible).

Anyway, on with 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. Global Economy -- there's 2 things to mention on this one. First: the OECD has suspended updates to the composite leading indicators (basically the data for the March release did not reflect the pandemic effects yet, so they didn't want to present misleading info).  Anyway, it's fair to assume that most cycle/economic indicators will collapse short-term (much like what we saw in China). Just about every country has a fiscal and monetary stimulus package implemented to offset this... I would think of this as "economic life support" >> a ventilator for the economy. So the updated view for this one is basically expect nothing much from the economy in the immediate term -- the global synchronized rebound idea has been put in self-isolation for now. I do think however that on the other side of this the growth rebound will be far greater than anyone expects as a potent combination of base effects, pent up demand, and powerful stimulus takes hold. But that is a topic for later.

"Global Economy -- a turning point in the global economic cycle: 2019 basically saw a global manufacturing and export recession. Yes Recession. But looking forward, I have a growing list of leading indicators pointing to a recovery in 2020, and the below is one of them. The diffusion index of OECD leading indicators has made a clear turnaround after reaching a decade low. I will be watching for a turn up in the main global indicator (and for the diffusion index to continue to edge higher/stay higher)."

(Click on image to enlarge)

2. Emerging Markets: what's changed for this one is that EM central banks have been busily introducing a further round of monetary easing, but what's also likely to have changed is that initial cyclical upturn is likely to see an abrupt fizzling out.  However, what stays the same is that we could still well see EM leading the ultimate rebound as China having taken its medicine already on the virus with its sharp and resolute shutdown, gets back to business. Assuming China manages to stay on top of the virus, I would be closely watching China as an analog for the rest of the world.

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