- Nice chart from GS showing contribution of total S&P 500 net income by sector.
- Interesting to see Financials pretty much hold up over a long period of time, with a blip for the financial crisis.
- Tech has been steadily increasing and Energy declining.
Macroeconomics
Snippets on the big picture.
Dynamism
- Despite the prevailing narrative, dynamisms in the US has been consistently falling since the last 1970s.
UK’s Labour Takes the Lead
- Latest opinion polls show Labour taking the lead.
- Source: Wikipedia poll tracker.
Household Net Worth
- US Household Net Worth is up a staggering 128% of GDP.
- The wealth effect alone can, using historic models, add a few points to GDP growth.
- Source: BCA Research.
E-Commerce Sales Share
- Counter to the prevailing narrative – e-commerce hasn’t seen a step change and is almost exactly where a 10-year trend line would have predict it would be as a share of total retail in the US.
- The reason for this is that total retail sales has grown strongly (+13% vs. normally being +2-3%). In absolute terms, shoppers spent $204bn on e-commerce in Q3 2021 but the pre-pandemic trend would have predicted $183bn.
- h/t NZS Capital and Marketplace Pulse.
Chinese Tax Rate
- China has a very low personal tax rate.
ECB Bond Ownership
- The European Central Bank (ECB) owns a large share of government bonds across Europe.
Chinese Working Age Population
- Latest 2020 census in China has painted a worrying picture.
- The working age population is declining faster than expected by models.
- Source: Gavekal.
Real Incomes
- Inflation is eroding real incomes, at almost the same rate it did in the 1970s.
US Homeowner Vacancy Rate
- This rate has fallen to historic lows – a supportive and key variable for housing construction.
Debt Binge
- Fiat money era has led to a spectacular debt binge.
- A great long-term chart from Deutsche.
Debt Productivity
- Debt is becoming less and less productive, in terms of units of GDP added.
- Great analysis from Hoisington on the topic.
Total Factor Productivity
- Europe’s Total Factor Productivity (TFP), a key determinant of long term growth, has substantially lagged the US.
Southern Europe
- Southern Europe has been on a mission to loosen employment protection since the European crisis.
- h/t Capital Economics.
Central Government takes over
- Since the financial crisis the number of people employed in local government in the UK has been declining and currently stands at the lowest level since 1963.
- In contrast, central government employment is at a record high.
Average Long-Term Inflation
- Great chart showing average inflation since 1971 for 152 economies.
- There is no country that averaged below 2% in the period, and only 45 averaged below 5%.
Government Funding
- Perhaps paradoxically, the US stands out as having a relatively high level of government funding for corporate R&D.
- Spain on the other hand is one of the worst in Europe.
- h/t BCA Research.
Inflation Tracker
- Vanguard produces a useful inflation tracker – highlighting key drivers.
- It is currently flashing mixed – growth and stimulative policy are pulling against deflationary technology and high unemployment.
- Interestingly, fiscal policy could continue to run strong driving 2022 inflation above 3%, an outcome not currently predicted by markets.
Fiat Money and Recessions
- Long-term chart from Deutsche Bank’s Annual Asset Return Study.
- It suggests that since the introduction of fiat money, cycles have become a lot longer.
- Of the top 11 longest cycles since 1850, all but two are post the abandonment of gold standards.
Net Migration EU to UK
- Since 2016 net migration from the EU to the UK has fallen.
- The pandemic has likely pushed it into negative territory.
- Certain sectors – like hospitality, transport, manufacturing, administration and construction – will be hit the hardest as they rely on EU labour for 10-15% of their work force.
