In today’s briefing:
- Global Liquidity in 2021: A Warning
- TMI Snapshot: Revisiting Cyclical Sector Sentiment – Industrials Showing Signs of Life
Global Liquidity in 2021: A Warning
- Global Liquidity hits record US$175 trillion in 2021, or near 2x World GDP
- Central Bank QE will test US$30 trillion, up by around 15% and led by US Fed
- Monetary velocity fell in 2020 (bullish), but will likely rise (bearish) in 2021
- Major concern in 2021 is that strong economies will crowd-out asset markets
TMI Snapshot: Revisiting Cyclical Sector Sentiment – Industrials Showing Signs of Life
- Back in November, we text-mined for GICS sector-level sentiment shifts as the post-election cyclical rotation arrived (see TMI Snapshots: Quantifying Relative Sector Sentiment in the Recent Rotation Via Text Mining)
- At the time, we saw Financials sector sentiment surge along with Materials, while Industrials sentiment remained subdued; these sentiment readings have been somewhat reflected in performance, as since October 31 the S&P Financials (XLF) is up +28%, S&P Materials (XLB) +21%, and S&P Industrials (XLI) +18%
- All cyclical sectors are now in positive territory sentiment-wise, with Consumer Discretionary and Financials sentiment now looking quite extended at multi-STDEV readings
- Industrials sector sentiment stood out as relatively depressed for months, but is breaking out of its range in the last 10 days
- As we noted in our post on cyclicals sentiment last week (TMI Snapshot: Cyclicals Sentiment Melts Up into Year-End, Impact Concentrated in Materials Sector), the rotation theme has been particularly strongly correlated to the Materials sector (metals in particular) and there is potentially room for laggard cyclicals – namely industrials – to catch up as recent sentiment readings imply
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.
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