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A Bird's Eye View Blog

Fireside Charts: Mortgage Risk, Industrial Production, and more Recessionary Red Flags

by : BCM Investment Team | POSTED: Mar01, 2019 | CATEGORY: Fireside Charts, Equity, Economics, Market Highlights

The great news that came out of this week is that the U.S. economy grew by 3.1% in 2018. The S&P 500 earnings per share (EPS) quarterly forecasts continue to turn down further. Yet, the stock market rebound is not necessarily driven by fundamentals. What do you think of what the data is telling us? Is this all a FOMO rally? In China, the February manufacturing PMI has fallen and this data confirms a state of contraction not seen since mid-2016. On a final macroeconomic note, the global equity markets have diverged from fund flows.

 

 

1. Some good news: U.S. GDP grew at 2.6% in 4Q18 bringing full year to 3.1%.

 

3.1 chart 8

Source: WSJ Daily Shot; as of 2/28/19

 

 

2. S&P 500 EPS forecasts continue to be revised downward...

 

3.1 chart 4

Source: WSJ Daily Shot, as of 2/25/19

 

      

3. Given the earnings revisions and stock market action, is this just one big FOMO rally?

  

3.1 chart 5

Source: WSJ Daily Shot, as of 2/27/19

    

 

4. Despite all hope, China's Manufacturing index ticked downward into deeper contraction.

 

3.1 chart 1

Source: Bloomberg, as of 2/25/19

 

  

5. Is the goal of tariffs to destroy trade?  Then success...

  

3.1 chart 2

Source: WSJ Daily Shot, as of 2/27/19

 

 

6. ...And the knife cuts both ways.  Below 50 denotes a contraction.

 

 3.1 chart 3

Source: WSJ Daily Shot, as of 2/27/19

 

 

 

7. Remember the Great Recession?  Are we gunning for a repeat of sorts?

 

 3.1 chart 6

 Source: AEI; as of 2/28/19

 

 

8. There is no way to sugar coat the economic news from overseas..

 

3.1 chart 7

Source: WSJ Daily Shot, as of 2/28/19

 

  

9. The GDP print seems out of sync with the Regional FED surveys. Will 1Q19 GDP spring a big surprise?

 

3.1 chart 9

Source: WSJ Daily Shot, as of 2/28/19

 

 

10. Exports were similarly disappointing at -11.3%.

 

 3.1 chart 10-3

Source: WSJ Daily Shot, as of 2/28/19

 

 

11. Still in contraction but not a meltdown!

  

 3.1 chart 11

Source: WSJ Daily Shot, as of 2/28/19

   

 

12. This is perplexing!

  

 3.1 chart 12

Source: EPFR, as of 3/1/19

   

Want to test your knowledge of the Bloomberg Barclays Aggregate Bond Index (BBAB)? Read our Part 1 Series of Bond Market and the characteristics of U.S. dollar denominated investment-grade debt. Think you know it all? Our answers may surprise you! 

 

 

  

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.