In this post I want to share with you an interesting section from our recently published 2019 End of Year Special Edition of the Weekly Macro Themes report (a summary of some of our best, worst, and most notable charts of 2019, and the ones to watch in 2020).
Q4 2019 hedge fund letters, conferences and more
This post provides a brief look at some of the new areas of coverage initiated over the year.
I take pride in my track record and aspiration for constant innovation and development of my craft, and one part of this is expanding coverage of the asset classes I look at for clients. This is partly guided by my own interest, partly by following the trail of noteworthy setups/opportunities, partly from conversations with clients on the road, and partly as a direct request from clients in emails.
I already have a growing research agenda for 2020 both within existing and new areas of coverage, so it will be interesting to see if I can match or go one better on my 2019 job. But for now, I invite you to take a brief look at some of the new areas of coverage I built out last year.
1. Frontier Markets: as part of including frontier market equities in the Capital Market Assumptions, the initial indicator build-out included this interesting breadth chart below which has a rather familiar pattern showing up. I’ve also scraped together valuation data, and some basic macro indicators.
2. EM Sovereign Bonds:I’ve been tinkering away on a few models in this space, but one of particular intrigue is EM sovereign CDS pricing. Indeed, it’s interesting to see how EM sovereign risk pricing has relaxed, a lot.
3. EM Ex-Asia Equities: One question I asked myself before getting to work on analyzing emerging markets ex-Asia as a group was “is it even worth it?”… in other words, is there even a material enough historical variation in relative performance to justify trying to time allocations within EM? The chart below provides a bit of visibility on the swings in relative performance within EM, and at times it can be quite significant.
4. A-REITS: Australian REITs — this one was for my Aussie & Kiwi clients. I already do extensive work on global REITs (and US REITs), and I was little surprised to find AREITs expensive (much like their global peers).
5. Global Shipping Stocks:I’ve been tracking global trade closely for a number of years, and figured I should construct a pure-play shipping stock index – partly as a source of macro insights and partly to identify an possible opportunities. Interestingly, the sector seems to be pricing in a rebound in global trade.
6. Gold Miners: I already have a large and growing indicator set for gold, so it was simply a matter of crunching the valuations, breadth, flows, and intermarkets indicators together for gold miners. As it happened, for a brief moment there, gold miners were a contrarian play (given ETF flows).
I regularly revisit these topics from time to time in the Weekly Macro Themes report to either update the view, highlight emerging risks/opportunities, or to further build out the picture as I add to the data/indicator sets. So get in touch if you’d like a trial or indeed if you’re after some specific insights.
Article by Top Down Charts
