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Brandon’s Charts of the Week

Posted: Brandon Arns

Every week, we read a TON of information. Blogs, articles, research papers…it’s our job to be informed about what’s happening in the market, economy, and society in general. Most people don’t have the time to sort through so much information, so we’ll do it for you. Every week, I will post some of the best charts, graphics, tweets, etc, that I find and put it here in a quick, digestible format. Enjoy.

 

The map below labels every state as a country with a similar GDP. Gives you some perspective of just how large the U.S. economy really is.

 

 

However, as the chart below shows, we shouldn’t get too comfortable. There is some serious competition coming from Asia.

 

 

Nick Maggiulli did a study to determine what the worst market bubble of all time was on his “Of Dollars and Data” blog. The table below shows some of the criteria he used to compare the bubbles, and found that the Japanese bubble of the late 80s was the worst.

 

 

Just for perspective, below compares the Japanese bubble with the Tech bubble in the early 2000’s. The y-axis is a measure (called CAPE) of how expensive each market got during it’s bubble period. To give a more literal example of how crazy things were, by 1990, the total Japanese property market was valued at over 2,000 trillion yen or roughly 4x the real estate value of the entire United States.

 

 

Time for some bad news. The next several charts show how the economy is showing signs of slowing. It doesn’t have to mean a recession is coming, but it’s certainly not a sign of a healthy economy. 

 

Employment is starting to slow down. You might expect this since we’re around full employment.

 

 

“Dallas Fed Future New Orders” reports the likely direction of new orders for the manufacturing sector over the six months ahead for the state of Texas.

 

 

Negative yielding debt wasn’t thought to be possible in the past. Why would anyone buy a bond with a negative interest rate (meaning they are paying to hold it)? It’s starting to become the norm.

 

 

This Fed recession model, which is solely determined by the 10 year – 3 month treasury spread, is starting to indicate a recession.

 

 

TOMS Shoes became very popular due to their “One for All” business model. They would donate a pair of shoes to a child in need for every pair sold. Sad to see they are heading towards bankruptcy.

 

 

Speaking of bankruptcies, here are some of the most notable ones in 2017 and 2018. Check out the entire infographic, “The 20 Biggest Bankruptcies in U.S. History”.

 

People aren’t going to the movie theaters anymore. It’s hard to imagine this trend ever reversing. Disney may be the only thing keeping this business alive with it’s many popular Marvel movies, Star Wars franchise, and animated hits.

 

 

Last week, we had a question from a client who read an article about some high yielding funds. These funds boasted a yield of around 8%, so naturally you would wonder, why not just stick all of your money in there? We’re going to write a more in depth blog about this, but the simple answer is that to get a higher yield, you have to take higher risk. Some charts about this topic below.

 

First chart is from an excellent post from Verdad Capital called Fool’s Gold. As you go further towards the right, you’ll notice the yields (white bars) go up as the credit ratings get worse, as expected. However, notice how the actual returns (blue bars) start going down.

 

 

This chart essentially says the same thing. When bonds or stocks have wildly high yields, it’s not because they are generous. It means something is wrong, and investors need a wildly high yield to even attempt to take that risk. What good is a 20% yielding bond if the company can’t afford the payments?

 

 

Switching topics, President Trump’s tweets are starting to lose their punch, meaning people aren’t responding as often as they used to. Part of this could be because the pace of Trump’s tweeting has picked up over the course of his presidency, from 157 times per month during his first 6 months to 284 times per month over the last 6 months.

 

 

This next chart is confusing. You are seeing VERY negative stock fund outflows, yet at the same time the market has gone up around 18% YTD. So who’s buying?

 

 

I’m sure the actual answer is more complex, but the chart below is definitely a factor. Corporations are buying back their own stock at record high rates.

 

 

And finally, Google continues to dominate the internet. Keep in mind that 2nd place, Youtube, is also owned by Google.

 

 

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