Economy

Japan Much Less Risky Than Europe From a Currency Perspective June 25, 2015

Posted by Bryce Coward, CFA in Economy, Markets

Asset allocation decisions are best not made in a vacuum and thus a major consideration when investing internationally is the currency risk one is willing to accept (assuming unhedged positions). In today’s world of zero interest rates, the dominant factor in currency movements seems to be…

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Are Staples and Health Care Poised for More Outperformance? June 22, 2015

Posted by Bryce Coward, CFA in Economy, Markets

Today’s cyclical jolt aside, it appears from glancing at relative performance charts of growth counter-cyclicals (our code wording for the Consumer Staples and Health Care Sectors) that they could be poised for a relative performance breakout. Indeed, in all major regions of the world, growth…

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Inflation Expectations Are Turning Back Over In The US May 28, 2015

Posted by Knowledge Leaders Team in Economy

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…

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Can Crude and Copper Keep Rallying with China Slowing? May 14, 2015

Posted by Knowledge Leaders Team in Economy

Yesterday 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…

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Long-End Of US Yield Curve Suggests A Stronger Yen May 13, 2015

Posted by Knowledge Leaders Team in Economy

The 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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Has Sales Growth Peaked for the Cycle? May 11, 2015

Posted by Knowledge Leaders Team in Economy

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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Total Assets At The Fed At Six Month Lows May 04, 2015

Posted by Knowledge Leaders Team in Economy

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.

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NYSE Margin Debt Charged To New All-Time Highs In March April 30, 2015

Posted by Knowledge Leaders Team in Economy

After 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.

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The Step Down In Long-Term US Growth Rates Breaks Lower April 29, 2015

Posted by Knowledge Leaders Team in Economy

From 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%.

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Where Positive Economic Surprises Are (And Aren’t) Happening April 10, 2015

Posted by Knowledge Leaders Team in Economy

There 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.

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