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Global V scenario moving from forecast to fact
Successive V-shaped recoveries are playing out in global economic aggregates, with labour market recuperation likely to follow, argues Simon Ward, Economic Adviser.
Why the cyclicals rally could extend
Traditional cyclical equity market sectors could sustain their outperformance of defensive sectors and start to overtake tech, argues Simon Ward, Economic Adviser.
A “monetarist” inflation forecast
G7 inflation could rise to 4-5% in 2021-22 barring a rapid reversal of the recent surge in broad money, argues Simon Ward, Economic Adviser.
Don’t call it a recession
The recent output contraction was government-imposed and did not constitute a recession as properly defined, argues Simon Ward, Economic Adviser.
OECD leading indicators recovering, note statistical meddling
The OECD’s leading indicators are giving a recovery signal but users should be aware of a recent methodological change that has increased monthly volatility, argues Simon Ward, Economic Adviser.
Industrial output rebound bullish for equity earnings
Unprecedented GDP falls greatly exaggerate damage to equity market earnings, which are geared to rebounding industrial output, argues Simon Ward, Economic Adviser.
Global monetary update: money growth still strong, lending slowdown to extend
Global monetary acceleration since early 2020 argues for an inflation pick-up in 2021-22 but the increase could prove temporary if money growth now normalises, argues Economic Adviser Simon Ward.
Will industrial commodity prices surge?
Simon Ward, Economic Adviser, argues that attempts to rebuild inventories against a backdrop of “excess” money could result in a sharp rise in commodity prices into 2021, complicating central bankers’ plans to maintain super-easy monetary policies.
Lagging Chinese money growth isn’t concerning
Money measures have surged in most major economies. Narrow money outperforms broad money as a leading indicator of economic activity. Annual growth of the official M1 measure in June was 35.9% in the US, 22.0% in Canada, 15.2% in the UK, 12.6% in the Eurozone and 12.3% in Japan.
Equities / cash switching rule update
The “monetarist” equities / cash switching rule followed here recommends unhedged global equities (MSCI World index) only when the following two conditions are satisfied:
1. Six-month change in global (i.e. G7 plus E7*) real narrow money above six-month change in industrial output;
2. 12-month change in global real narrow money above slow moving average (currently at 5.6%).
Still looks like a “V”
The central view here remains that the global economy is staging a V-shaped recovery – or an italic V, at least – from the covid shock (not recession), with industrial output / GDP likely to regain pre-crisis levels in late 2020 / early 2021.
Global Perspectives Podcast: Strategic Fixed Income Thinking
In the first in the series, Adam Hetts talks to Co-Heads of Strategic Fixed Income Jenna Barnard and John Pattullo. In a candid conversation, the trio cover global credit, inflationary threats, the impact of COVID, fool’s yield and false summits, among other topics.