Global Growth: A Shocking Number of Investors Are Missing the Story

Takeaway: Many active managers are simply not long enough in the context of how good the fundamentals have been.

Global Growth: A Shocking Number of Investors Are Missing the Story - globe image

The OECD expects a "modest pick-up" in global growth, but warns of risks like "rising protectionism, financial vulnerabilities [and] potential volatility" that could "derail recovery." Meanwhile, the BIS' monetary and economics head, Claudio Borio writes, "Politics tightened its grip over financial markets in the past quarter, reasserting its supremacy over economics." The BIS too cautioned of a global growth slowdown.

The warnings have been heeded by investors. "Hedge funds are bracing for a market selloff," Bloomberg writes today. 

The sheer number of investors and pundits missing out on such an obvious recovery in global growth data is shocking to say the least. Our analysis suggests that global growth is unequivocally accelerating on a trending basis. This is the underlying factor perpetuating the broad-based recovery in both domestic and global corporate profit growth.

Global Growth: A Shocking Number of Investors Are Missing the Story - World Nominal Retail Sales

We’ve calculated the weighted average growth rate of Nominal Retail Sales and Industrial Production for the world’s 10 largest economies, which in total represent just shy of 80% of global Nominal GDP. The punchline is that each of the aforementioned indicators is accelerating on a trending basis.

Global Growth: A Shocking Number of Investors Are Missing the Story - World Industrial Production

All told, when analyzing the data from either a top-down or bottom-up perspective, it’s easy to see that global growth momentum is currently as strong as it’s been at any point in the last ~2.5 years.

Global Growth: A Shocking Number of Investors Are Missing the Story - World Exports