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10 Charts to Watch in 2020 [Year-End Update]

The end of 2020 is fast approaching! (what a year it's been...) Following on from the original "10 Charts to Watch in 2020", the Q1 Update, the Half-Time Update, and Q3 Check-In, here's the final update to the 10 charts to watch in 2020. The key purpose of this article is to update the charts and see how things are tracking relative to where I saw things at the start of the year.


It also serves as a bit of a preview to the 2020 End of Year Special Edition of the Weekly Macro Themes report, which I will be publishing next week. Part of that report is what I consider a really important discipline of taking stock of my past work and seeing what worked well and what didn't (and therefore where I can maintain a high standard, as well as improve and enhance what I'm doing).


With research it's a little bit different to trading or portfolio management where you basically get real time insights from your PnL or performance reports about what's working/not working, in research where your job is to support the portfolio manager it can be a bit more subtle (less so on specific ideas, but more so in regards to work that fills out the bigger picture or helps lower the threshold for action).


So keep an eye out for that report...


But back to the task: 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.


Obviously a lot... or perhaps more accurately, *everything*, changed as the pandemic became a reality. But in some sense, a number of the themes and opportunities remained the same, or indeed were reinforced following the wild gyrations in markets, and the simply unprecedented global policy response. Indeed, my process tends to shine in times like these, and while it came under grim circumstances I am thankful for the opportunity to have served as a steady hand and voice of reason for my clients.


With that all said, let's get 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 -- well, this chart and the original view ultimately proved correct... after traversing a slight divot on the way there. We have by now seen a clear turning point following the global economic shutdown, and we should expect to see some follow-through in the global economic recovery headed into 2021 (but of course there are a few complexities and sources of uncertainty around that view).


"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)."




2. Emerging Markets: On a similar note, the EM cycle indicators have indeed started to head up as predicted by the substantial easing of monetary conditions across emerging markets. Again, there was a bit of a detour to say the least... but likewise a big extension of the easing that was already locked-in through 2019.


"Emerging Markets: a big part of the 2020 recovery thesis is the global monetary policy pivot. Not many have noticed, but EM central banks have been particularly aggressive in easing policy (and by the way, they have the most traditional policy ammunition available). Given some of the cycle indicators have already begun to stabilize for EM I have a strong degree of confidence that we will see a cyclical upturn across emerging economies in the coming months and quarters."