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Fireside Charts: Yield Curve Inversion Aftermath, Interest Rate Expectations, and a U.S. Economic Growth Slowdown

March 29, 2019

We tried to look for charts that would "Lyft" our spirits about the economy this week, but fell slightly short. Hopefully the IPO today won't do the same. First, a look at returns for holding periods up to 30 months after a yield curve inversion. Have you seen a chart similar to this before? Next, based on interest rate expectations, the FED could make zero moves this year and still disappoint. Can ...

Fireside Charts: Consumer Confidence Falters, Exports Ramp Up, A Look at Central Banks Balance Sheets

March 27, 2019

U.S. consumer confidence has missed estimates for March after a quick rebound in February. A sharp drop in confidence like this could indicate a similarly sharp drop in spending in the upcoming weeks and months. An unusually high number of S&P companies have issued negative revenue pre-announcements for Q1. How does our yield curve compare against our North American neighbors? If you thought ours was bad…just wait. Gas exports are taking off and the U.S. is producing large amounts of both oil and gas. Finally, we share an aggregate of central ...

Fireside Charts: Sectors’ All-Time Highs, Inverted Yield Curve as LEI, Sharp Downtrend in U.S. Manufacturing PMI

March 25, 2019

Thursday’s release of the FOMC statement drove markets higher, but that was short-lived. With five of eleven sectors ending the week in the red, the stock market sold off Friday after a yield curve inversion and the release of grim global economic data. U.S. Manufacturing data had remained strong versus its European counterparts, but we are now seeing a sharp downtrend in U.S. PMI. Is all of this pointing to a larger downturn or a temporary pause in momentum? The market-based probability of the Fed cutting rates this year shot above 60%. Are investors ...

Fireside Charts: A Dovish Fed, the Trade War Trudges On, the U.S. Yield Curve Extends and Deepens

March 22, 2019

This Friday’s Fireside Charts is one of our favorites in that the charts and data below are forcing us to ask crucial questions about where the market is headed. March Madness indeed! First up, the FED announced on Wednesday that they will not be hiking rates this time around, with zero predicted rate hikes for the rest of the year. This is a highly dovish departure from their December projections.The market saw a rally after this news, which quickly faded when Trump announced tariffs on Chinese goods will stay for a “substantial period of time”. ...

Fireside Charts: Global GDP Growth, Who Funds the US Budget Deficit, Thoughts Ahead of the FED’s Policy Update

March 20, 2019

Happy First Day of Spring and Fed Day! We hope the vernal equinox brings us sunny outcomes for the markets and the impending FOMC announcement. The number of S&P companies in a “no buyback” period will ramp up to as high as 80% leading into April. All but three sectors were hit by negative earnings growth last quarter. Who funds the US budget deficit? Historically, weak foreign demand for Treasuries and the Fed's balance-sheet reduction left the U.S. relying on domestic private-sector investors. The market believes that the Fed is finished ...

Fireside Charts: Communications Sector Breakout, U.S. Manufacturing Reports, and Federal Government Spending vs. Tax Earnings

March 18, 2019

Will the S&P 500 Communications sector break out from a multi-year channel? An improved trend is much needed! The U.S manufacturing output declined again in February. So far, we are not seeing much improvement for the manufacturing sector in March either. Will the FOMC surprise the markets with its interest rate updates this Wednesday? Something is not adding up with the expected path of the Federal Funds rate. Finally, we share a chart on federal taxes paid vs. federal spending received. What is your state spending?

 

Fireside Charts: Number of U.S. Equities Cut in Half, $9 Trillion of Global Negative Yield, and more on China's Slowdown

March 15, 2019

 

The number if U.S. listed stocks has been cut approximately in half since the mid 1990's. Negative-yielding global debt is back above $9 trillion. Recession indicators remain higher than last year, but are still below the key thresholds. As shared in yesterday's blog post, Buying the Dips: When Does this Approach Run the Most Risk?, China is in contraction mode and actual GDP figures may be worse than the released figures. We end this post with a non-investment chart on ...

Buying the Dips: When Does this Approach Run the Most Risk?

March 14, 2019

Fidelity, in their 1Q19 Market Update, has suggested that the U.S. is following many other 

Fireside Charts: Prescription Drug Prices Fall, Fragility of Q1, Global Bond Yields Tumble

March 13, 2019

Prescription medications saw the biggest year over year decline on record, surpassing the second-largest drop in 1972! Looking at GDP growth between 2010-2018, we can see a correlation between slower GDP growth by quarter and the colder winter months. The first quarter tends to be significantly weaker than the rest of the year. Here's to Q2! Next, who has been buying our treasury bonds for the past decade+? Global bond ...

Fireside Charts: Strength of the USD, Secular versus Cyclical Markets, and the Top 1%

March 11, 2019

Against a backdrop of U.S. government reports, weakening economic data out of Europe and China, and continued trade turbulence, the U.S. dollar strengthened. The 10 Year US Treasury yields indicate that a 3-year secular bear market could potentially win out over the 35-year cyclical bull. Positive news for three European nations: France, Italy and Spain's industrial production rebounded in January, exceeding forecasts. Lastly, what level of income would put you in your nation's top 1%?

Fireside Charts: ECB Makes a Surprise Move, Shanghai Stock Slump and World Trade Trouble

March 8, 2019

For the 19 countries that use the euro, the European Central Bank (ECB) pushed back the earliest date for an increase in interest rates from current record lows to year end. Then they downgraded their forecasts for the Eurozone's GDP growth and CPI causing a dramatic decline in the Euro and European bonds. Here at home, model forecasts for the current quarter's GDP growth are increasingly pessimistic as the ...

Changes to the Aggregate Bond Index that Advisors Should Know About: Part Two

March 5, 2019

Last week, we shared some facts about the Bloomberg Barclays Aggregate Bond Index (BBAB). (Missed it? Click here). Outside of the BBAB, there are a few more items that you may want to know about in the corporate bond landscape that may also surprise you and your clients.

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

March 4, 2019

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 ...

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

March 1, 2019

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 ...