Insights Chart of the Week

Global Leading Indicator Turning Higher

January 27, 2026

Time to Read: 2 minutes

Headline volatility persists and yet the global growth outlook continues to improve. We examined a leading indicator that supports diversifying equity holdings if you haven't already.

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Headline volatility has risen recently as geopolitics in different corners of the globe play out on the world stage. While these headlines have been a source of uncertainty, the global economic outlook for 2026 appears to be improving.

The Organisation for Economic Co-operation and Development operates as an international forum for democratic countries to promote economic growth. Its G20 Composite Leading Indicator Index, a proxy for global activity, has reached its highest level in three years. This means that some of the world’s largest economies are expected to experience growth near or above long-term trends. Historically, an improved outlook has led to positive equity returns across both developed and emerging markets.

What does this mean for investors? Despite these headlines, stocks have proven resilient with positive equity returns year to date across the major global equity indices. Given this improved outlook, we have recently recommended increasing exposure to international and emerging markets to capture potential upside. While we still favor U.S. equities, we believe global diversification will remain critical in the year ahead.

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Muni Yields Are Attractive

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Sizing Up Small Caps

Small caps have outperformed this year despite the threat of higher interest rates, suggesting the rally is being driven by more than just diversification away from large cap tech stocks. Improving earnings expectations and a resilient U.S. economy support our view that small caps have further upside from here.

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Signs from Sales

Year-to-date stock market returns have been driven by robust earnings growth. But when assessing the equity outlook, it’s important to ask what’s supporting the strong earnings trend.

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U.S. Resilience Is a Historical Trend

The S&P 500’s history shows that despite recessions, wars, inflation, and corrections, the market’s long-term trajectory has remained upward. As the U.S. marks 250 years of resilience, the lesson for investors is clear: wealth is built through patience, discipline and staying invested.

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