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My Best Charts of 2021

As we wind-down for the year (hopefully) -- I thought it would be good to share some of my charts and calls that worked particularly well this year (and don't worry, I will be sharing my worst charts next week... there are always two sides to the coin!!).


These charts were featured in my just-released 2021 End of Year Special Report - do check it out when you get a chance (free download as a holiday treat!).


The charts listed below were particularly helpful in arriving at some of my key calls and recommendations for clients this past year. I often find that while I do tell the story around the charts and build the puzzle up with multiple pieces, in many cases a good chart can speak for itself and actually do most of the heavy lifting in the investment thesis.


It's also a good exercise to go through - to see what worked well. It's fairly conventional wisdom to try and learn from failures, but it's also important to try and learn from success (albeit while being mindful of hubris and the need to stay humble).


With that all said, here they are! Hope you find it interesting...


n.b. I have updated the charts with the latest data (in a few cases the original idea has actually come entirely full-circle). Also on formatting: the italic text is a quote from the report in which the chart originally appeared.



1. Global Monetary Policy Pivot: I was early to this theme, but that’s what this excellent chart is designed to do! (i.e. provide advance warning on shifts in global policy tides).


“already a number of smaller/developing country central banks have moved to hike rates as inflation begins to pickup (5 so far: Mozambique, Tajikistan, Armenia, Zambia, Zimbabwe). I like to keep an eye on the smaller/developing central banks: many have structural weaknesses and tend to be more sensitive to inflation and hence will be the first to move on rates. In other words, while individually unimportant and idiosyncratic, collectively they have information.” (19 Feb 2021)

chart shows rate hikes vs cuts across smaller developing central banks


2. Inflating Inflation: closely related, a key theme for me this year was the clear upside risks to inflation. It seems obvious at this point given the global monetary policy pivot towards tightening and the constant news flow around inflation, but at the time it was a bit out of consensus and certainly was not without pushback in conversations earlier in the year.


“the prospect of normalization and economic recovery given powerful monetary + fiscal stimulus globally likely skews inflation risk squarely to the upside over the medium-term, and the monetary lead indicator points to upward pricing pressure over the next 12-18 months. The broader bullish commodity outlook also likely lifts price perceptions.” (6 Jan 2021)

chart of inflation outlook


3. Backlogs Biting! the previous chart was more about the sort of fundamental/underlying or medium-term inflation pressures, this next one laid out the short-term pressures stemming from backlogs – another topic that was fairly underappreciated at the time.


“In the short-term there are a few key dynamics which are set to put upward pressure on prices and the headline reported inflation rates. First is the issue of backlogs/global supply chain disruption – by the global PMIs and Google search trends (and anecdotally) it remains an important issue. Historically a rise in backlogs has led to a rise in pricing pressure (we’ve certainly seen it in freight rates, which are up 2-3x).” (15 Jan 2021)

chart of global backlogs and pricing pressures


4. Global Trade Rebound: and of course, picking a resurgence in global trade was a key companion to the previous chart - I’ve said it before and I’ll say it again: there are no backlogs without demand, and there was!


“perhaps the most interesting and stark example of green shoots is the rebound in global trade (funny what happens when you turn the global economy off and then turn it back on again). But a very closely linked theme is that of backlogs/supply chain disruption: this problem has intensified as economic activity picks up vs a still constrained global supply chain (and stuck boats don’t help either)” (2 April 2021)

chart of global trade rebound and leading indicator


5. Asset Class Valuations: throughout this year I advocated staying the course on the core asset allocation view to overweight risk/growth assets and underweight defensive assets – established in March/April 2020. Saying “stay the course” always feels like a boring conclusion, but sometimes asset allocation involves long periods of relative boredom!


“Aside from the big ideas, at the highest level I remain bullish growth vs defensive assets It is true that valuations have rebounded sharply for growth assets, but defensive assets remain extreme expensive Importantly, policy remains easy, earnings/cycle is turning up, and the technicals look good There’s no clear case to get defensive from a big picture medium term standpoint yet, but obviously we’ll keep monitoring the key sign posts for clues as the cycle progresses” (6 Jan 2021)

chart of asset valuations - growth vs defense


>> These charts were featured in our 2021 End of Year Special Report.



6. Asset Allocation -- the Big Picture: to continue on this topic, as you can see in the chart above, things have shifted quite a bit, so it prompted me early in the year to put this visual together to provide a map or conceptual framework to guide an eventual shift defensive (not yet, but steadily moving in that direction).


“But more importantly, checking back in on the sign posts. Valuations aren’t unanimously expensive (ERP looks decent – yields would need to go to 3% to make the ERP expensive), policy is still very easy, the economic recovery is still early in the process, and a fairly well-established uptrend is in play.” (22 Jan 2021)

chart of asset allocation table


7. Commodity Value: in terms of specific asset class views, this was probably the one that worked best for me this year – and was very much closely aligned with the macro views outlined above. Again though, it was more of a “stay the course” (with high conviction) rather than a new earth-shattering idea as such.


“Remain bullish commodities medium term (but like the US dollar are at risk of a short-term correction as sentiment/positioning have moved to excess optimism). Helping the case here is cheap valuations, weak capex, positive medium term technicals (e g market breadth), and commodities are likely to benefit from a prospective global growth rebound (and weaker USD)” (6 Jan 2021)

chart of commodity market valuations


8. Oil vs Gold: on a similar note – within commodities, this was probably one of the most interesting and successful granular ideas: overweight oil vs gold (and energy stocks vs gold miners). Stepping back and looking at the chart below – even though it basically doubled this year it may not even still be done if we assume an element of mean reversion and further (eventual?) normalization.


“Given the fiscal stimulus outlook in the US, crude oil (and energy stocks) likely disproportionately benefits at the expense of gold (and gold miners): energy benefits from greater demand, gold faces headwinds from prospective rising real yields and improving risk sentiment. Quite a non-consensus idea at this point.” (6 Jan 2021)

chart of oil vs gold relative value trade


9. Emerging Markets Sentiment: while I will say I overstayed my welcome on the medium-term bullish view for emerging markets, the bearish tactical signals from sentiment did prompt me to attach a tactical bearish/risk-watch.


“First up is a scan of a couple of risk flags for EM equities: the short-term (50 day moving average) country breadth indicator has rolled over from overbought levels, the equal-weighted EMFX index has also rolled over after hitting resistance (diverging to the downside vs EM equities), meanwhile the EM composite sentiment indicator is approaching levels last seen during the late stages of the 2007 EM bull/bubble. Time to tighten up risk management.” (29 Jan 2021)

chart of broad composite emerging markets investor sentiment


10. Emerging Markets Fixed Income: as noted I had a bearish bias on bonds, which basically worked, but where it worked best was the bearish bias on EM – this chart in particular helped provide tactical clues on a fairly significant upshift in EM sovereign yields.


“EM sovereign yields remain slightly below my simple estimate of fair value (overvalued). Also of note is that 200dma yield breadth (i.e. proportion of EM countries whose 10yr sovereign yield is above its respective 200-day moving average) has been trending upwards (basically bullish divergence for yields: i.e. bearish divergence for EM sovereign bond prices).” (29 Jan 2021)

chart of emerging market sovereign bond yield breadth

Thanks for reading!



This is an excerpt from my 2021 End of Year Special report - click through to download a free copy of the report.


Best regards


Callum Thomas

Head of Research and Founder of Topdown Charts


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