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A Bird's Eye View Blog

Fireside Charts: U.S. Treasury Curve Normalizes, the Rise of Emerging Markets, Europe Enters Manufacturing Contraction

by : BCM Investment Team | POSTED: Mar04, 2019 | CATEGORY: Fireside Charts, Equity, Economics, Market Highlights

The U.S. Treasury yield curve is now normalizing in part due to a more moderate FED. Will the U.S. dollar follow this trend? The S&P 500's earnings by sector only continue to be revised downwards. A chart on the cost of energy production by source shows why coal is suffering against its counterparts. Emerging Market economies are dominating, representing two thirds of the world's GDP.The manufacturing slump continues in Europe. 

  

1. The UST yield curve inversion is going away...

 

 3.4 chart 8

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

 

 

2. The S&P 500's earnings keep getting revised downwards... 

 

 3.4 chart 7 final-1

 Source: FactSet; as of 3/4/19

 

 

3. It has been six years since EM manufacturing showed healthier manufacturing readings than DM...

 

3.4 chart 1

Source: Topdown Charts; as of 3/4/19

 

  

4. "Emerging" markets is now a misnomer... EM is now almost 2/3 of the world GDP versus 1/3 for DM. 

 

 3.4 chart 9

Source: Topdown Charts, as of 3/4/19

 

 

5. An update on the 10-year UST.

  3.4 chart 2

Source: Thechartstore.com, as of 3/4/19

 

      

6. Now that a more moderate FED is reducing some pressure on bond yields, will the USD follow?

   3.4 chart 3

Source: Thechartstore.com, as of 3/4/19

    

 

7. Will a weaker USD cause commodities to break out to the upside? 

 

 3.4 chart 4

Source: Thechartstore.com, as of 3/4/19

 

  

8. The FED's favorite inflation measure is the PCE... and the PCE is very close to their 2% long term- target.

  

3.4 chart 5 Source: Thechartstore.com, as of 3/4/19

 

 

9. The real reason coal is suffering... 

 

 3.4 chart 6

Source: J.P. Morgan Asset Management, as of 3/4/19

   

 

10. Europe's manufacturing activity, as a whole, is now contracting. 

 

 3.4 chart 10

Source: IHS Markit, as of 3/4/19

 

  

Today's chart blog confirms Europe has now entered contraction mode and has been struggling in manufacturing hubs in Germany and Poland. Last week, we presented China's February manufacturing PMI and the data confirmed a state of contraction not seen since mid-2016.

 

Japan, China, Europe... what is next? Plus, what does this mean for a global economic slowdown? Read our last week's Fireside Chart blog for the latest.

 

Read Last Week's Fireside Charts

 

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.