Top 5 Charts Of The Week: Global Economic Pulse And Investor Sentiment

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. China vs the USA -- Economic Pulse: This chart combines the official and Markit manufacturing PMIs for China and the US. With the latest results, the standout is the slight rebound in China and drop in America. 

But the bigger picture observations are

  • China is below the critical 50-point mark (growth has clearly been softening there); and
  • the US has started to catch down to this softer growth impulse in China; and
  • it may well be that China has to recover first before the US will likewise regain momentum. 

In other words, say what you will, but the economies of China & the USA remain intimately linked.

(Click on image to enlarge)

 2. EM vs DM -- The Crossover: This one follows a similar vein, but bringing in the rest of DM where the slowdown has been much more accentuated, and the rest of EM where the slowdown has not been as distinct as in China. 

If you can't see it, the February results have seen the composite emerging markets PMI break ever so slightly above the composite developed markets PMI. 

This is a rare phenomenon which frankly usually only happens during a weak patch (at least in the post-GFC world). But with EM central banks holding much more rate cut ammunition, and USD strength on the backburner, it could be a sign of things to come for EM. Certainly, one to think about.

(Click on image to enlarge)

3. Futures Positioning -- A Compound Bet Unwinds:  This chart got a lot of interest last year when a sort of "compound bet" emerged. Speculators were heavily long equities and heavily short bonds: if you think about the macro signal i.e. equities tend to benefit from higher growth and inflation and bonds typically suffer in an environment of higher growth and inflation, it effectively amounted to an extreme in reflation optimism. 

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