With the swings in sentiment and price over the last couple of weeks it’s important to keep sight of some of the trends in the fundamentals. Particularly so as a lot of markets are looking shaky short-term, with divergences showing up and key levels looking close to being breached.
Indeed, last week I outlined the elevated near termdownside risks for global equitiesgiven the bearish breadth divergences.
But the chart below shows that even if we do get a correction or selloff it may not be time to panic. Here’s a look at the degree of global equities earnings acceleration.

The chart, which appeared in the latest edition of theWeekly Macro Themes, is what I call a global equities earnings accelerometer because it tracks the number of countries seeing a material acceleration in forward earnings growth.  The blue line is the proportion of countries with forward earnings growth greater than 10% YoY.
What’s interesting about the chart is the contrast between the pre-crisis credit-fueled boom times where emerging markets were partying and rising house prices across developed economies saw debt pile up. The post-crisis period saw stagnant growth as a rule with the hangover of the crisis lasting years.
But now there is a very interesting breakout in earnings growth, so while we might get a correction or selloff it will be important to keep indicators like this in mind as we continue to assess the evolving outlook and weigh the odds of risk and return.
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