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A Bird's Eye View Blog

Fireside Charts 10.8.18

by : BCM Investment Team | POSTED: Oct08, 2018 | CATEGORY: Fireside Charts, Equity, Economics, Market Highlights

Happy Columbus Day, or should we say Indigenous Peoples Day, Discoverers’ Day (Hawaii) or Native American Day (South Dakota)! We begin this week with a look at Small Caps relinquishing nearly all of their outperformance as the fourth quarter kicks off. Now that the GICS sector changes have gone into effect, the new communication services sector should start to act like a growth sector. Additional perspective is provided on Emerging Market currencies’ ongoing struggle, the uptick and steepening in yield curve, and the current state of QE reversal. Plus an anecdotal view on sources of methane emissions (are you surprised?) and health spending by private employers.

 

 

1. Small Caps have surrendered a substantial YTD outperformance. 

 

10.8 chart 2

Source: WSJ Daily Shot, As of 10/8/18

 

 

2. Now that this sector has gone through some major changes, it should start to act like a growth sector.

 

10.8 chart 3

Source: WSJ Daily Shot, As of 10/8/18

 

 

3. After a short respite in September, the USD is on the rise again.

 

 10.8 chart 5

Source: WSJ Daily Shot, As of 10/8/18

 

 

4. While trade war fears, the tax package, rising rates and other factors have been driving the USD higher, here are the effects on some EM currencies.

 

10.8 chart 6

Source: WSJ Daily Shot, As of 10/8/18

 

 

5. Not only have rates increased along the curve, there was actually some steepening from the 2 year to the 30 year.

 

10.8 chart 4

Source: WSJ Daily Shot; As of 10/8/18

 

 

6. So far the FED has reduced its balance sheet by about 9%. QE reversal is not only happening, but it is scheduled to accelerate. Increased supply, with no increase in demand, should lower prices and increase yields.

 

 10.8 chart 7

Source: WSJ Daily Shot, As of 10/8/18

 

 

7. U.S. unemployment is low, but it has gone lower...

 

10.8 chart 8

Source: WSJ Daily Shot, As of 10/8/18

 

 

8. What financial assets that make up the $11.3 trillion do you think are millennials drawn to? 

 

 10.8 chart 9

Source: WSJ Daily Shot, As of 10/5/18

 

 

9. Major oil companies have pledged to cut methane emissions from natural gas extraction. 

 

 10.8 chart 10

Source: WSJ Daily Shot, As of 10/1/18

 

 

10. An less known and underappreciated trend.

 

10.8 chart 1

Source: WSJ Daily Shot, As of 10/5/18

 

 

Rates continue to increase across the curve and the U.S Dollar is back on the up-and-up! If you would like to revisit historical numbers and a have reminder of last week's market data, keep up with our previous chart blog post. 

 

Fireside Charts: Click Here for the Most Recent Post

 

 

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.