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A Bird's Eye View Blog

Fireside Charts: Dovish FED Doesn't Stop the Dollar, U.S. Stocks Decoupled from the Rest of the Global Economy, Companies Cautious on Growth

By:BCM Investment Team | Date:Apr29, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

According to a chart on what is mentioned during S&P 500 earnings calls, companies are pulling back on optimism. As we have mentioned throughout the month, small caps are being crushed by their counterparts. Comparing the S&P 500 against the MCSI all world ex. U.S. index, U.S. equities are sharply outperforming the rest of the world. We also saw this occur at the end of 2018. What does it mean? The dollar is still grinding higher despite the dovish FED. In other positive news, the first-quarter GDP growth tipped to the upside. 

  

1. Solid 1Q19 GDP, earnings have generally been good, but is this as good as it gets?

 

4.29 chart 5 

 Source: FactSet, as of 4/29/19

 

 

2. Once again the U.S. equity markets are being led by the mega-caps. Small Cap is still~13% below its previous high...

4.29 chart 1-2

 Source: Thechartstore.com, as of 4/29/19

 

  

3. We wonder how these will reconcile over time...

 

Source: Oxford Economics, as of 4/29/19

 

  

4. A quick update on QE reversal... the FED's balance sheet is down almost $600 billion from the peak...

 

Source: Thechartstore.com, as of 4/29/19

  

 

5. Despite the dovish FED, our rates are still so much higher that our global competitors that the USD is still grinding higher.

 Source: Thechartstore.com, as of 4/29/19

 

 

6. After concerns of a low print, U.S. GDP gave a welcome positive surprise. 

 

4.29 chart 4-1

Source: WSJ Daily Shot, as of 4/29/19

 

  

A survey by MIT Sloan has shown that less than one third (23%) of businesses have adopted any level of machine learning, and of those who have, only 5% are using it extensively. At BCM, machine learning is integral to how we invest and how emotions are removed from our investing process. If you have any questions on BCM and how we incorporate machine learning into our rules-based strategies, reach out to our Investment Team or speak to us in person at this week's Envestnet Summit in Austin. 

 

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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.