Global manufacturing PMI peak delayed, relapse still likely

The forecast here at the start of the year was that the global manufacturing PMI new orders index – a key indicator of industrial momentum – would reach a peak in early 2021 and fall into the summer. The index declined slightly between November and February but rose to a new recovery high in March, with flash data last week and today’s Chinese results indicating a further significant increase in April. What has gone wrong? Continue reading

Profits forecasts at risk from waning government support

The consensus has swung from pessimism about prospects for corporate profits in 2020 to likely excessive optimism now. Analysts, in particular, may underappreciate the contribution to recent profits resilience of government subsidies, withdrawal of which may offset much of the benefit of economic normalisation. Continue reading

Global money trends still cautionary

Global six-month real narrow money growth appears to have edged lower in March, continuing a downtrend since last summer. This suggests that an expected relapse in global industrial momentum will extend through late Q3 / early Q4. Continue reading

A “monetarist” perspective on current equity markets – April 2021

The assessment in the previous quarterly commentary was that the monetary backdrop for markets had deteriorated at end-2020. This was arguably reflected in weak bond market performance during Q1 but global equities rose further as earnings expectations were revised higher. The monetary indicators followed here continue to give a cautionary message for markets while suggesting that global industrial momentum will slow into late Q3. Continue reading