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Fireside Charts: Small Caps Stock Lag, Brent Crude Settles at $71 Per Barrel, China’s Stimulus Through the Years

by : BCM Investment Team | POSTED: Apr10, 2019 | CATEGORY: Equity, Economics, Market Highlights, Fireside Charts

For the first quarter, Energy, Materials, and Technology stocks are expected to see the largest earnings contractions. Small-cap earnings increasingly lag their large cap peers. Brent (oil) is trading above $71 per barrel, but is the futures curve predicting lower prices? We all know lower prices means lower demand and thus are a possible recessionary indicator. When the Fed is on hold, Treasury yields tend to move lower. Meanwhile, Italian bond yields are at the lowest levels in almost a year. Just how much is China stimulating its economy? Three times its levels in the past!

 

1. Yet Real Estate, Healthcare and Utilities have been struggling of late? Long-term, its still about earnings...

 

Source: FactSet, as of 4/9/19

 

   

2. ...Including small caps...

 

 

Source: SunTrust Private Wealth Management, as of 4/9/19

  

 

3.. Imagine if the 1 billion of cubic square feet of gas was actually used to generate electricity instead of being flared off...

 

 

Source: ShaleProfile, as of 4/10/19

 

 

4. Are oil futures also predicting a recession/ (lower prices in the future indicating lower future demand)

  

Source: WSJ Daily Shot, as of 4/10/19

 

 

5. Interesting historical context...

 

 4.10 chart 10

Source: Piper Jaffray, as of 4/10/19

 

 

6. An update...the trend is not our friend...

 

 4.10 chart 11

Source: SunTrust Advisory Services, as of 4/10/19

 

  

7. There is no hint of trouble here...
 

 

Source: Moody's Investors Service, as of 4/10/19

  

 

8.  Italian 10 year bond yields are slightly lower than the UST 10-year yields. Is there a message here?

 

 

Source: WSJ Daily Shot, as of 4/9/19

 

 

9. While China's economy has been slowing for a few years, will the trade war push them into a trade deficit?

 

 

Source: WSJ Daily Shot, as of 4/9/19

 

 

10. Just how much is China stimulating its economy?

 

4.10 chart 1

Source: Cornerstone, as of 4/9/19

 

 

11. The trade war's collateral damage...

 

4.10 chart 2

Source: Bloomberg, as of 4/9/19

 

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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.