- 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.“
Macroeconomics
Snippets on the big picture.
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!
US Deficit
- US Deficit is back to $1trn levels.
- This type of fiscal expansion is very unusual at this point in the cycle.
- h/t Deutsche Bank Research
Financial Conditions & GDP
- Financial Conditions also suggest growth will improve.
Global PMIs
- Interesting to see the second derivative of Global PMIs has turned positive – bullish?
Fed and Climate Change
- An interesting and novel conference organised by the Fed on Climate Change Economics. Live stream available.
- “It’s important for us from a monetary policy perspective to know what the potential growth rate of the economy is and if climate events or climate risk is going to shave that off, even if it’s over the long term,” San Fran Fed chief Mary Daly said earlier this week.
- h/t SeekingAlpha
UK Retail
- Sober reading about the UK’s biggest private employment sector.
- Interestingly this hits women harder than men.
- Article suggests 20% of retail space will close in the near future.
- We wonder with AMZN opening retail stores though, could this be an example of pressure point theory.
Global Fertility Crash
- An interesting look from Bloomberg at global fertility rates.
- In 1960 the global fertility rate was five live births per woman.
- This is now 2.43, close to the level required to keep the world population stable.
- Half of all countries are already below this level.
- This has all sorts of implications for investments in the long run.
- Each grey line is a country – try to guess which the worst is?
- h/t FT Alphaville
Sharpe Ratio
- Major asset classes this year are set to produce the highest Sharpe ratio since 1990.
- Sharpe Ratio is the return on an asset divided by the risk (measured as standard deviation) i.e. return per unit of risk taken.
- h/t isabelnet.com.
Dr. Copper vs. Gold
- Gold is outpacing Copper year on year.
- This is generally seen as a negative sign.
- Source: MacroMavens.
National Happiness
- Two academics have used digitised books and newspapers since 1820 to measure happiness based on word usage.
- They control for the change of meaning in some words (e.g. awful – used to mean ‘to inspire awe’).
- You can see clearly in the chart that war is bad for happiness.
- They also find that wealth does lead to an increase in happiness but it is dwarfed by the impact of increases in health.
- In fact, 1 year of longevity has the same effect as 4.3% of GDP Growth.
- Source: The Economist.
Yield
- Chart of Global Government Bond yields.
- 25% have a negative yield … almost none yield more than 3%.
M&A
- Interesting to see M&A in the US is back to peaks.
- Not so much in Europe, Japan or China.
- Source: IMF Global Financial Stability Report.
UK Election Polls
- Updated opinion polls in light of events this evening.
- Source: Wikipedia.
Cross-Correlations
- Chart showing the cross-correlation of asset classes from Fidelity.
- h/t: 361 Capital.
