This quarter, we explore the hypothesis that the modern era of Ricardian growth has ended. We further explore what this means for asset allocation and which types of stocks in particular should do well in this Ricardian hangover. Download our First Quarter 2016 Strategy &…
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TIPS derived breakeven inflation expectations have started to fall once again in May. For a little context, starting in last June, breakeven inflation started a steady march lower that lasted until January of this year. Since that time, we have seen a rebound in inflation…
Read MoreYesterday saw the monthly slue of Chinese economic stats and the key feature among them was the continued broad-based weakness. The weakness in some of these statistics has been so pronounced (some things like IP and retail sales are at levels near or below those…
Read MoreThe relationship between the Japanese Yen and the spread between the US 30-year treasury yield and US 10-year yield has had a very tight negative correlation (-0.85) over the past 10-years (since 1986 when the bond spread series begins the correlation is -0.61). Since the…
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Sales growth estimates for companies around the world began sliding towards the middle of 2014 as the price of oil began its months-long setback. In the first chart below we show the average and median company’s next 12 month sales growth estimate for the MSCI…
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The quiet, subtle decline in the Federal Reserve’s balance sheet continued in April. As of May 1st, the Fed’s balance was at $4.47 trillion. While undoubtedly still incredibly large, the Fed’s balance sheet is about $45 billion less than its peak level on January 16, 2015.
Read MoreThe US and China are not hitting their economic numbers of late according to the Citi Economic Surprise Index. The economic surprise index in China has recently fallen to 10-month lows. In the US, more economic releases are coming in below expectations than are beating expectations over the past few months.
Read MoreAfter spending the past year somewhat ranged bound, margin debt increased by just under $11.5 billion in March to a new all-time high of $476 billion, taking out the previous high set in February 2014. The increase in margin debt over the past two months is the largest two-month increase since February 2013.
Read MoreFrom 1974 to 2007, the long-term US growth rate in real GDP generally fell between 3-3.5% on annualized basis (excluding the v-shaped bounce from 1982-1984). We define long-term here by looking at the 10-year annualized percentage change. With the 1Q now in the books, this series just dropped to an all-time low of 1.46%.
Read MoreWe won’t know how the first quarter officially ended for another nine days but the Chicago Fed just gave us a hint that it will be below trend growth. According to the Chicago Fed National Activity Index, the three-month period ending in March just posted the slowest growth since October 2012.
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For about six weeks, between the middle of January and the first week of March, inflation expectations embedded in the US Treasury market bounced after declining for the second half of 2014.
Read MoreThree weeks ago we mentioned how Fed assets were finally declining on a quarterly basis. Since then we have had a few more data points released and the trend is still downward.
Read MoreThere is a geographic disparity amongst the Citi Economic Surprise Index. Economies, both developed and emerging, are surprising to the upside in Asia and Europe while economies in the western hemisphere are not doing as well (at least in terms of meeting and exceeding expectations). Below we show some of the more interesting charts.
Read MoreNot even a month ago, we wrote about how it looked like the market was pricing in two rate hikes in 2015 and four in 2016. Well, apparently a lot has changed (at least regarding expectations) since then.
Read MoreThe spread between junk bonds and 10-year treasury on 6/23/14 hit a very narrow 222 basis points. At that time, the S&P 500 was trading at 1962. Since then the junk bond spread widened to over 5% in December and currently stands at 415 basis points.
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