Year 2021 begins with strong growth outlook according to leading indicators. Virus fears have changed to optimism, as businesses and markets are anticipating a year of recovery from the pandemic. This is the baseline scenario now priced in stock market.

Leading indicators exhibit robust growth for world economy in the final quarter of the year. This quarter is usually a season of strong growth. We’ll see what effect the second wave of coronavirus infections has on economy. By now it should not come as surprise to anyone, and both companies and investors have had ample time to adjust to new set of circumstances. This means that second wave is already fully priced in stock market.

Leading indicators were still shrinking in May. COVID-19 cases were expanding fast, and economies were still largely at lockdown. Lockdowns have since been lifted, but preliminary indicators for June indicated continuing contraction. Only China seems to have been able to grow in June, so Q3 outlook doesn’t look very good. Stock markets have also voiced their view on the matter though, and indicate growing economies in many developed countries, including US and China.

Onset of global slowdown coincided with coronavirus rendered leading indicators useless, as stock markets took a sharp downturn at the beginning of March. Leading indicators LEI and composite PMI indicated slowing global economy already in February, but those readings came just after market crashed and were of little help for forecasters. Such is the nature of black swans.

World economic leading indicators pointed to expanding global conditions for Q1/2020 in November. Both LEI (Leading Economic Indicator) and composite PMI data signalled growing economic activity.

Invention of cryptocurrencies has inspired many people to explore the nature of currency and money itself (including this author). Even more interesting, and less discussed, aspect of economy is how growth is enabled by the same process of money creation. Cryptocurrencies provide us an interesting case study of how economic growth, and wealth creation in general, works. New development in cryptocurrency world called decentralized finance is set to disrupt the old world order.

Stock investors are bombarded by daily headlines about market ups and downs. Along with market developments, media frequently cites various economic indicators to build a narrative about market developments. It’s a good idea to make yourself as an investor aware of most commonly cited economic indicators. Investors would also benefit to make themselves aware of the choices financial publications make when they choose what indicators to report, how to incorporate those numbers to a wider economic narrative, and ultimately to be able to question themselves, do those indicators matter when it comes to investing?

World economic leading indicators imply still expanding global conditions for Q4/2019 in September. Both LEI (Leading Economic Indicator) and composite PMI data signal growing economic activity.