- Fedex share price suggesting (with a six month lead) that world trade should start to improve.
Macroeconomics
Snippets on the big picture.
Corporate Debt Service
- Corporate debt service ratios, despite an uptick, are near very low levels.
- Source: Pantheon Macro.
Gundlach Slides Dec 2020
- Latest webcast slides from Jeffery Gundlach always worth a flick.
- This interesting chart perhaps explains why the US economy has been so resilient this time around.
Consumer Debt Service Ratio
- Lowest reading ever of the debt service ratio, positive for consumers.
China Stimulus
- This time around the stimulus out of China has been one of the lowest.
Financial Conditions Index
- The Goldman Sachs Financial Conditions Index hit an all time low.
- NB it does incorporate equity values, as part of a broad measure of financial conditions.
Bond Volatility
- The volatility of government bond returns has risen over time so that it now matches that of stocks.
- Part of a series discussing the future of the 60/40 portfolio.
PMIs and Containment
- Interesting chart plotting global PMI (green line) against an index of containment (orange line, degree to which economies are locked up).
- This index eased from a peak of 64 in April to 32 in September, helping PMIs rise.
- In October it has started to rise to 35, and throughout has remained higher than what was expected a few months ago (dashes) – it should have been 18 by now.
- Suggests PMIs could start to weaken again?
China
- Pew research suggests negative views on China have grown across many advanced economies.
Covid and Retail Footfall
Misleading Chart – Intangible Asset Edition
- First Snippet Blog article points the finger at the pictured chart.
- The chart depicts the rise of intangible assets in firm value described as a “second industrial revolution”, burying with it traditional analysis, accounting, value investing and lending support to ESG.
- By digging into the definition and associated formula, the article argues this chart is in fact just showing the rise in valuation across firms as measured by Price to Tangible Book.
- By framing the problem in the first way one assumes a single explanation for the rise – intangible assets, itself an ambiguous word, when the intellectually honest way should be to frame it in the second way, which leaves the question open.
PMIs
- Chart plotting Philly Fed against US Purchasing Manager Index.
- Latest entry suggests path for PMIs is upwards.
Remote Work and Time
- Survey shows that Americans have devoted 35% of time savings from not commuting to their primary job and 60% to work activities of all sorts (incl chores and child care).
- Source, h/t 361 Capital.
Recessions
- The World Bank is forecasting that more than 90% of the world’s economies were in a recession – the most broad based contraction of the past 150 years.
- Remarkable chart. Sourced from a nice presentation on China.
Gold to Oil Ratio
- Between 1860 and today, one ounce of gold has purchase 20 barrels of crude.
- 80% of all observations are within 10:1 (gold is cheap relative to oil) and 30:1 (oil is cheap relative to gold).
- Source.
Long Term Valuation Cycles
- Interesting chart from Deutsche’s latest Long Term Asset Return Study.
- It plots the combined equity and bond valuations of 15 developed market countries.
- 1980 marked the cheapest point on that series, and the era that followed marked the best combined asset price growth of any era in history.
UK Fiscal Picture
- UK’s fiscal situation isn’t looking good.
Forecasting Inflation is Hard
- Central banks rarely get it right.
China
- In stark contrast to this chart China’s weight in the MSCI All Country World Index is just 5%.
- Source.
Downgrades and Defaults
- Nice chart from Moody’s Analytics.
- It shows net downgrades (downgrades minus upgrades) of US high yield issuers (green line) against default rate (yellow line).
- It appears the bond downgrade cycle has peaked and is heading down, and this leads default rates.
