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The Macro Market Mega-Theme

Mar. 03, 2021 6:21 PM ET1 Comment
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Topdown Charts


  • For our big global macro/asset allocation ideas of 2021 and beyond, we decided to make an equal-weighted basket to track the ideas, but it also captures some interesting big-picture insights.
  • The cyclical upturn in the price index reflects a changing market mood on the macro picture as the global economy begins to heal.
  • The composite valuation picture provides fundamental support to holding a longer-term bullish bias across the ideas, and gives confidence that it may well be a secular turning point.
  • At the very least, it provides a novel way of tracking our big ideas.

The first chart I featured in the "10 Charts to Watch in 2021" earlier this year was a somewhat unusual, and perhaps even confusing one...

Basically, I decided to combine all my big ideas into one “mega theme” given some of the echoes across the ideas in terms of price action, setup, and macro drivers.

The result is this peculiar chart - which I will explain in more detail in this post, specifically: 1. Why I decided to do this; 2. Why it's worth paying attention to; 3. What specifically goes into it; and 4. What to watch for going forward...

chart of topdown charts asset allocation ideas portfolio basket

Why did I do this?

To be really precise, I was writing up the intro to the November monthly market cycle guidebook report last year and I sort of just slipped the term "mega theme" in there as a bit of a throwaway line. But then it got me thinking, and a few weeks later I featured it as a topic in the weekly macro themes report (actually was in the final edition of last year).

But aside from the serendipitous development of ideas across the workflows, there is some real method to this: each of the 10 ideas were developed on their own merits in isolation, but each of the ideas share common threads in terms of actual price action, setup (e.g. valuation), and macro sensitivities. There are echoes across the ideas.

So really this is just a useful way of tracking them as a group and capturing that.

Why it's worth paying attention to

The individual ideas (which I outline below) are all fairly critical areas of the market for asset allocators to be paying attention to - particularly as we get later in the cycle and the necessity to get more nuanced with allocations really comes into focus. So it's a

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Topdown Charts profile picture
Topdown Charts is an independent research firm covering global asset allocation and economics - bringing a chart-driven, top-down approach to investors.  -->> Check out our new entry-level service: https://topdowncharts.substack.com/--We take a top-down, global multi-asset perspective to deliver:Actionable investment ideasRisk management inputMeaningful macro insightsCharts to use in your own work--Our clients include Pension companies, RIAs, Hedge Funds, family offices, insurance firms, and wealth managers and Investment Consultants.--Sign up for exclusive insights:  https://topdowncharts.substack.com/===================================================

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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