More leading indicators are rebounding - April G3 Leading Indicator Watch

• The past 12-18 months have seen a somewhat unique environment of consistently contradictory US macro data. The labor market and consumer have been resilient alongside local recessions in manufacturing, housing, China and Europe. This environment is now resolving with an unambiguous improvement across US growth LEIs.
• We think this unique environment stems from a) fiscal and b) labor hoarding. For now, these factors are persisting while covid distortions are ending, an indication the rebound in US growth leading indicators is credible. 
• US large cap equities have correctly anticipated the strong US growth environment; hence we continue to see better opportunities outside the US (Mar 21) (Feb 15) (Jan 21).

New Ideas: Wealth effects are becoming bigger determinant of consumer spending habits. Inflation path depends more on supply than demand, creating more structural rather than cyclical risks.

• US: Manufacturing, housing, credit LEIs all improving. Consumers still spending, savings rates low, wealth effects a driver. Inflation path depends more on supply than demand.
• China: Cyclical uptick likely “things can’t get any worse” signal. Consumer outlook still poor, structural headwinds persist.
• Eurozone: Growth outlook continues to improve despite Germany lagging. Disinflation story more accepted, inflation risks now more neutral.