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A Bird's Eye View Blog

Fireside Charts 2.20.19

By:BCM Investment Team | Date:Feb20, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

The percentage of S&P 500 above the 50-Day moving average underscores that stocks still are swinging from extreme highs to extreme lows. Are you prepared for another month of volatility? We can continue to put blame on the polar vortex and the government shutdown, but these events do not fully account for the recent poor manufacturing outcomes. Similar to what is going on in the equity markets, junk bond yields are a little more than halfway back from their year-end lows. Lastly, with the exception of the U.S., other global markets are still below the pre-crisis peak. 



1. As the grey ovals point out, 2019 has already been a year of extremes...


2.20 chart 8

Source: Suntrust Advisory Services, as of 2/20/19



2. Commodities will have to break out one way or the other in the next few months. Will the USD drive them higher or lower?


2.20 chart 2

Source: Thechartstore.com, as of 2/18/19



3.  Yes, there was a polar vortex. Yes, there was a partial government shutdown. No, the U.S. is not on an economic "island"!


2.20 chart 5

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



4. Some good news out of the NY FED.


 2.20 chart 6

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



5. ...and the bad news:


2.20 chart 7

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



6. Like equities, junk bonds are a little more than 1/2 way back from their year-end lows.


2.20 chart 1

Source: Thechartstore.com, as of 2/18/19



7. Maybe this is why U.S. yields have been retreating. Our 10-year UST, with a AA rating, has the same yield as Italy's 10-year bond with a BB rating.


2.20 chart 10

Source: Refinity, as of 2/20/19



8. If the U.S. economy is doing so well, then why did our Government's year-over-year tax receipts just turn negative? 


2.20 chart 3

 Source: Thechartstore.com; as of 2/18/19



9. Discussing the budget deficit only in USD terms is an incomplete analysis. Here is our deficit in terms of % of GDP.


2.20 chart 4-1

Source: Thechartstore.com, as of 2/18/19



10. Perhaps the best question is "Why is this happening?". 


2.20 chart 9

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



11. How long will this divergence persist?


2.20 chart 11

Source: Gavekal Data, as of 2/20/19


Be prepared for any bad month. Although the "January effect" is one that investors hope rides out into the short few weeks of February, the real truth is that market events like pullbacks or full market meltdowns don't cluster in any given month. They can happen at any time. Which means investors (you and your clients) need to be prepared… at any time.


 Be Prepared for Any Bad Month



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.