The team at Absolute Strategy Research has just published some interesting research on their analysis of global macro regime change, and the important role that it plays within financial markets. ASR’s framework this looks at the relationship between global activity expectations and activity surprises. They say the current regime, where positive global activity expectations were set against negative data surprises, has been in place since April 2018. Their analysis suggests that recently steadily weakening global activity expectations, set alongside a recent improvement in negative surprises, holds out the prospect of a potential change in macro regime over the next few months. ASR say that the key to a sustained revival in risk assets lies with a turnaround in global activity expectations – however on this front neither ASR’s Leading Indicators nor the Global Nowcast are encouraging. At the same time, while positive activity surprises may re-emerge, they are unlikely to be sustained, which makes them less positive for risk assets currently. ASR have backtested these regimes going back to 2000, highlighting asset class returns under the various regimes.