China’s key economic activity gauges, including the manufacturing Purchasing Managers Indexes (PMI) (both {{nofollow}}official and {{nofollow}}Caixin), expanded ahead of expectations in March. A complementary high-frequency indicator worth considering is road congestion in major cities such as Shanghai, Beijing, Shenzhen, and Guangzhou.
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The Indian economy has experienced high growth, as reflected in its {{nofollow}}manufacturing PMI, which reached a 16-year high in March. Another vital indicator, electricity demand, especially during evening peak hours, correlates strongly with GDP growth. In 2024, electricity demand across India has surged, approaching the upper bounds of historical fluctuations across the country, underscoring the economy's continuing strength. This pattern confirms the resilience and expanding capacity of the Indian economy, aligning with broader economic growth trends.
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US mega-cap tech stocks have demonstrated strong performance, driven by optimistic Artificial Intelligence-related prospects and overall economic resilience. A closer examination of the earnings revisions of these tech giants relative to broader large-cap equities shows that, since 2020, whenever US tech titans' earnings revisions outpace those of larger equities (using z-scores, seen as the green color in the chart), the Nasdaq 100 tends to outperform the S&P 500 and vice versa.
Currently, earnings revisions for these top tech companies are better than broader large large-caps, suggesting that the strength in US big tech stocks is likely to continue.
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The US REITs industry has experienced significant shifts since the pandemic, with the office sector seeing a marked decline due to ongoing challenges in persuading employees to return to physical office spaces. The telecommunications sector also shrank. Conversely, the industrials and self-storage sectors have grown, signaling a rebound in these areas of the economy following the pandemic.
The data center sector has also grown considerably, likely driven by the surge in demand for AI-related technologies. These trends reflect broader economic shifts towards digital and storage solutions post-pandemic.
This analysis of US stock markets since 1935 highlights the cyclical patterns of bull and bear markets within the context of longer-term secular trends. It shows that a cyclical bear market often follows around seven years after the onset of a secular bull market.
As the US economy remains robust, current trends suggest that it could be heading for a new cyclical bear market if economic growth cannot maintain its current pace. Understanding these long-term patterns is helpful to inform investment strategies and economic forecasting.
In recent years, the focus on inflation has shifted from high inflation rates to stabilizing inflation at acceptable levels. This analysis contrasts the extremes of hyperinflation, where rates exceed 10 per cent, with deflation scenarios in which inflation rates are negative. While hyperinflation has become less prevalent, from affecting nearly half of global economies to just 15 per cent, deflation is on the rise, with six per cent of countries seeing reductions in consumer prices compared to a year ago.
These trends are critical for understanding the global economic landscape and the varying fiscal challenges countries face.