A new expansion phase

The macro environment

Our global GDP lead is again on the rise following the slowdown period since mid-2018. A new expansion phase – of short or long duration – is being driven by the positive liquidity shock imposed by central banks in 2019, seconding its initial direct market impact.

Global GDP (Y/Y %) vs Global Liquidity


CAP-M has risen 14% since the beginning of the year with a positive contribution from all our sub-portfolios: Low & High Risk, Risk-Off & Risk-On.

DREX Models

Our dynamic return models now point to global equities as the principal asset class to overweight: A.Liquidity is still ample, and we are now getting signals that the global economy is reacting to it. B.Fixed income markets incl. Credits have soared  and most fixed income assets we look at now receive negative short-to-medium term return expectations scores. C.In contrast, global equities now receive the strongest short-to-medium term return expectations score.


Two conditions would reinforce these signals: 1.Liquidity does not revert when the global expansion re-accelerates. Neither central banks nor the banking system or the securitized debt market triggers tighter liquidity. ● 2.The manufacturing sector recovers without a simultaneous weakening of the spending cycle of households. ●

We will use our nowcasting models to track these trends.