Market Cycle Guidebook - April 2024
Asset class views, macro outlook, long-term expectations, and over 70 charts tracking macro policy, cycle data, and valuations across a global multi-asset universe...
We’ve just published the latest "Market Cycle Guidebook", which is one of the main reports in our institutional investment research service (see details below).
The monthly Market Cycle Guidebook is designed to be a practical & tactical asset allocation guidebook for global multi-asset investors +those who require visibility and insight on the big picture outlook.
It focuses on illuminating the key drivers of risk and return across a global multi-asset universe, with the objective of generating actionable conclusions and meaningful insights for medium-term active asset allocation decisions.
The pack is of particular use to those with a longer-term timeframe, or those who take shorter-term positions but still want a pulse-check on the macro trends and themes that will ultimately filter through to short-term market outcomes.
>> Some of the key takeaways from the latest edition:
-The global growth pulse is turning up [see Global Cycle Map]
--soft data is trending distinctly “less bad”
--likewise the slowdown in hard data growth rates is turning around
--and even the leading indicators are turning up from previous warning signs
---hence the macro edge risk of reacceleration and inflation resurgence is credible
--investors need to think more about the idea of reacceleration
---(yet we continue to monitor for downside/recession risk signs)
-Central banks move into pause mode, and even pivot in places
--the Fed remains on pause, with a high hurdle for cuts or hikes
---others pivot: at least on the frontiers of global monetary policy
---EM has collectively pivoted to rate cuts
----(notably China — making steps towards larger stimulus)
--the bulk of tightening is likely now behind us
---albeit the damage may already have been done (long + variable lags)
----and the global economy now faces a “monetary wall“
---thus the macro edge risk of deflation and recession is also real
--re-pivoting is also a risk, as some banks have moved back to hikes
-Constructive on risk assets, but highly selective and wary of risks
--See Value in government bonds, commodities, defensive stocks, EM
-Tactically bullish on commodities (previous bearish)
--medium-term technical signals say risks skewed to the upside
--underinvestment means a new higher floor price across commodities
-Overall, as with the nuanced asset class performance in Q1, a nuanced approach is warranted… particularly as we navigate between the two major macro edge risks vs the seemingly unlikely “policy perfection” middle path
-the macro edge risks have very important and distinct market implications
--substantial opportunities (and risks) lie ahead…
Key features of the Market Cycle Guidebook:
-Instant overview of: global economic cycle, monetary policy, and valuations
-Market performance snapshot & commentary/highlights
-Summary views across asset classes (short and medium term); "cheat sheet"
-TAA/DAA guide visually mapping those views to recommended positioning
-Monthly updated Capital Market Assumptions
-And of course, over 70 charts illuminating the key medium-term drivers of risk and return across a global multi-asset universe
-Australia/New Zealand appendix (since we're down this part of the world!)
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Track Record — Tactical Asset Allocation Model
The below chart shows performance of the Tactical Asset Allocation weights in the monthly pack (which result from the asset class ratings). Performance has been decent and net-positive over the years (n.b. the value add could be scaled up with larger position sizing, but this exercise only uses 1-5% weights to represent minimum vs maximum conviction). Value-add is the net-total return from over/under-weights and hit rate is the proportion of active positions that added value.
Aside from performance of the tactical allocation model, client feedback on this report and the service in general has been consistently excellent.
Clients include some of the world’s largest and most reputable fund managers and span: hedge funds, family offices, endowment funds, pension companies, wealth managers, asset consultants, and traditional fund companies.
Clients value the insights from the charts, but also the clear, concise, and accurate conclusions — we give you the puzzle pieces so you can make your own mind up, but we also provide our take and present clear views and recommendations (and assistance with specific requests and questions).
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Best regards,
Callum Thomas
Head of Research and Founder, Topdown Charts
About the Service:
The Topdown Charts Professional service caters to multi-asset portfolio managers and investment professionals. The service comprises a set of reports (2 weekly, 1 monthly, 1 quarterly) focused on identifying opportunities, risks, and emerging trends — along with personalized service to help make the portfolio managers' job easier. With the service we deliver a flow of investment ideas, risk management input, and meaningful macro insights to help you make better decisions and achieve your targets.
Our Head of Research and founder spent his career on the buy-side, and our reports reflect that perspective with a clear "so what?" focus rather than research for research sake. The reports are punchy and chart+fact focused, and are easy to read both in terms of speed and understanding: so clients often end up saving time and getting better insights. So if you're looking for a dedicated specialist service to help you deliver excellent returns for your clients, give us a try.