Late last year I sent out my 2020 End of Year Special report to clients. In that report I reflected on the year that was in terms of what charts worked well, what *didn't* work, my favorite charts, areas of new coverage...
But as interesting and sometimes amusing as it is to look back, as investors we get paid for looking forward, and there’s a few existing trends and themes that will remain front of mind and be key to keep on the radar in 2021.
This post is an excerpt from the 2020 end of year special report. It lays out some of the key charts and indicators I think are worth paying attention to this year (and beyond). Along with some key takeaways and themes listed a the end.
Hope you enjoy it, and indeed wishing you all the very best for 2021!
1. Mega Theme: In the last regular edition of the Weekly Macro Themes report of 2020, I decided to combine all my big ideas into one “mega theme” given some of the echoes across the ideas in terms of price action and macro drivers. The result is this interesting chart which looks to be either at or near the bottom of a long-term secular trend, and the start of at least a short-term cyclical upturn.
2. Monetary Policy (limits): The policy response to the pandemic was historic in terms of its speed, magnitude, and coordination across countries and between fiscal and monetary. But this chart perhaps highlights one limitation of monetary policy, the tag line is “interest rates are low, but good luck getting a loan” (given how much banks tightened up on lending standards). One thing on my mind is a possible passing of the torch from monetary policy to fiscal policy – as that’s going to be the thing that will achieve a more balanced and more transformative impact in the recovery.
3. Global Trade Rebound: The global economic shutdown saw an abrupt collapse in trade growth. But since then we have seen clear green shoots and the leading indicators point to an acceleration and continuation of the global trade growth rebound into 2021.
4. Global Backlogs: A nice follow-on, the surge in backlogs (resulting from global supply chain disruption) has 2 key implications: upside risk to inflation, and a likely spike in activity as firms attempt to clear backlogs and restock inventories.
5. Consumer Normalization: Consumer moods remain depressed *outside of China*. This chart provides a sort of playbook for the rest of the world, as well as a key means of keeping track of normalization, and a nod to a potential consumer boom post-vaccine.