Personal Spending Recovers, Comparing 2020 to Past Recessions, and a Looming Threat to DB Plans
October 2, 2020 | FIRESIDE CHARTS
Personal spending climbed 1.0% in August, though spending on services is still lagging. The trade deficit has widened in 2020, bucking the typical pattern from past recessions as the U.S. suffers a 10.1% decline in real GDP. U.S. equities have outperformed the global market since 2012 with large-caps leading the charge, but fixed income yields are continuing to disappoint. Is it time for corporate DB plans to consider GTAA as an alternative?
1. It appears that the U.S. consumer has satiated the pent-up demand from the lockdowns but spending is still on the robust side…
Source: The Daily Shot, from 10/2/20
2. Yet the consumer spending has been focused on goods rather than services…
Source: The Daily Shot, from 10/2/20
3. Will unpaid commercial leases and mortgage foreclosures have some systemic risk to REITs and the regional banks?
The Daily Shot, from 10/2/20
4. This answers one question…
Source: Statista, from 10/1/20
5. A historical comparison of recessions…
Source: JP Morgan, from 10/2/20
6. As the mega-caps grow, large-cap tech is now more than 28% of the S&P 500.
Source: JP Morgan, from 10/2/20
7. Will a post-Covid recovery finally allow small caps to shine? Of course, we have to get there first…
Source: The Daily Shot, from 10/1/20
8. U.S. equities have dominated the rest of the world since 2012…
Source: JP Morgan, from 10/2/20
9. There is ~$3 trillion just in institutional money markets. Hedge funds and PE also have huge cash stores. For short term money, with bonds paying next to nothing, is this the best option?
Source: The Daily Shot, from 10/1/20
10. With yields so low, half of assets in bonds and return expectations still too high, many DB plans are going to have disappointment going forward. Is GTAA an answer?
Source: JP Morgan, from 10/2/20
11. Another example of how the baby-boom has had a profound effect on our society. Will the baby-boom echo (boomer children surge) produce a similar result?
Source: The Daily Shot, from 10/1/20
12. How will high yield bonds fare going forward?
Source: Statista, from 10/1/20
13. Covid in the U.K. “We demand that pubs be allowed to reopen”…
Source: JCH CCE, from 10/1/20
14. Iran, where “people have become completely careless regarding this disease,” according to Iranian Health Minister Saeed Namaki.
Source: JCH CCE, from 10/1/20
15. The U.S., where for enough of us, not wearing a mask trumps public health…
Source: JCH CCE, from 10/1/20
Disclosure: The charts and infographics 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 they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.