Daily BriefsMacro

Macro: Global Liquidity in 2021: A Warning and more

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

By Michael J. Howell

  • 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

By Elan Gore

  • 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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