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A Bird's Eye View Blog

Fireside Charts 1.2.19

by : BCM Investment Team | POSTED: Jan02, 2019 | CATEGORY: Fireside Charts, Equity, Economics, Market Highlights

Continue to ring in the New Year with the first Fireside Charts post of 2019. In today's blog, world economic data continues to look grim as the FED regional manufacturing indices fell further. US capital goods orders, which are a measure of business investment, finished 2018 in the negative. Metals including copper had a very discouraging year. Since companies will be forced to refinance maturing debt between 2020 and 2022, interest expenses for many U.S. corporations will climb sharply this year. Finally, China's manufacturing is also facing instability as the sector entered contraction territory in December. 

 

 

1. Well, Happy New Year!...please fasten your seat belts. World economic data continues to worsen. This includes the FED regional surveys:

 

Kansas City Fed Manufacturing

Source: WSJ Daily Shot, as of 12/21/18

 

 

2. These are big misses...

 

Richmond Fed Manufacturing Index

Source: Bloomberg, as of 12/26/18

 

 

3. And another...

 

 Dallas Fed Manufacturing

Source: WSJ Daily Shot, as of 12/31/18

 

 

4. The regional Fed data is out of alignment with the national data.

 

Regional Activity vs National Activity

Source: Lohman Econometrics, as of 1/2/19

 

 

5. As the markets struggle to find a price equilibrium, volatility has surged.

 

SP 500 daily % range

Source: WSJ Daily Shot, as of 12/31/18

 

 

6. The yield curve inversion is now out to 7 years.

 

 1.2 chart 11

Source: WSJ Daily Shot, as of 1/2/19

 

 

 

7. Similar to the U.S. Government's refinance "wall", U.S. corporations will also need to refinance much of their debt into higher interest rate bonds in the next few years.

 

wall of maturity

Source: WSJ Daily Shot, as of 1/2/19

 

 

8. Another miss...is the current economic activity going to show up in GDP?

 

Capital Goods New Orders

Source: RENMAC, as of 12/21/18

 

 

9. The 2018 trend was discouraging for "Dr. Copper".

 

COMEX copper

Source: WSJ Daily Shot, as of 12/31/18

 

 

10. And now the coup de gras?....

 

China Manufacturing PMI

Source: WSJ Daily Shot, as of 12/20/18

 

 

11. A "beat", but it is still negative...

 

 Japan Industrial Production MoM

Source: WSJ Daily Shot, as of 12/18/18

 

  

 

 

 

As of December 28th, 2018, the S&P 500 had logged in six moves of more than 1 percent over a two week period, and three of these moves were of more than 2 percent. Just like in chart #5 and more, volatility has surged, especially in December. If you are wary of these swings and are looking to reevaluate your portfolio, read the latest CNBC report featuring BCM Portfolio Manager Dave Haviland. 

 

Wild swings, a government shutdown and Fed fears: CNBC Article Featuring BCM PM  Dave Haviland

 

  

 

Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.