- US Bonds outstanding continues to grow.
- However, inventory of bonds at primary dealers has stayed low since the financial crisis.
- This creates a very risky situation in terms of liquidity.
- Especially problematic now that Bond ETFs have hit $1 trillion.
Macroeconomics
Snippets on the big picture.
Building
US Homebuyers
- The median age of US homebuyers used to be 31 in the 1980s.
- It has now risen to 47.
- 8 years have been added to the median age since the financial crisis.
Americans Moving
- An amazing chart showing the percentage of Americans moving home has fallen from 18.1% in 1987 to just 9.4% now.
- This is having profound effects on economics and society.
Central Bank Cutting
- Global Central Banks are cutting again – at the fastest rate since 2009.
- Interesting set up for 2020 market performance – is the absolute level that matters or the second derivative?
M&G suspends property fund
- M&G have suspended their UK commercial property fund – the largest.
- It is a £2.5bn fund.
- It has suffered £1bn of outflows over the last 12-months.
- They cite Brexit uncertainty. There was a 4-month suspension in 2016 post the referendum.
- Performance since 2016 relative to the sector has been poor.
New Orders vs. Inventories
- The Purchasing Managers Index (PMI) contains several components.
- Two of these are new orders and inventories.
- The ratio of these two tends to lead the overall series – as we see now.
- It makes sense – if orders are rising and inventories are low we could see a snap back in manufacturing.
Income mobility
- US doesn’t rank very high in income mobility.
- It takes 5 generations for someone to move from low to high income.
Leading Indicators
- Lots of leading indicators are perking up.
UK Flows
- Could UK no longer be an investment pariah …
- h/t The Market Ear
Tariffs
- A chart of US duties as % of imports since 1891 …
- Interesting long term trend punctuated with spikes.
Technology (cont.)
- A nice chart showing how Information and Communication Technology (ICT) use has ballooned.
- While the cost of transportation (airline tickets and sea freight) and communication (telephone calls) has collapsed.
- From World Bank Development Report.
Interest rates
- The very (from 3000 BC!) long term history of interest rates.
Geopolitics
- Understanding geopolitical trends is vital to forecast shifting investment landscapes.
- This is the latest trove of leaked Iranian reports showing their level of influence in Iraq.
- Has ramifications around the world.
- “The reports reveal far more than was previously understood about the extent to which Iran and the United States have used Iraq as a staging area for their spy games.“
- “The documents show how Iran, at nearly every turn, has outmanoeuvred the United States in the contest for influence.“
Real vs. Financial Assets
- Real asset (defined as commodities, real estate, collectibles) prices are at an all time low vs. financial assets (defined as large cap stocks and long-term government bonds).
Technology
- Tech change is exponential.
Fertility by Education
- Interesting table of US fertility by education level.
Semiconductors vs. ISM
- Semiconductor index (SOX) strength could be pre-ordering from China ahead of trade war.
- or a genuine pick up in end demand.
- Regardless likely to perk up lead indicators.
Commodities
- Commodities are at a record low valuation vs. stocks.
Central Banks & Gold
- The recent increase in central bank holdings of gold …
- is the first time since the end of the Second World War!
