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A Bird's Eye View Blog

Fireside Charts: U.S. Deficit Soars 26% to 7-year High, Fed Expansion Tops $199 Billion, and USD Reverses Negative Trend

By:BCM Investment Team | Date:Oct28, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

Warning: the latest federal deficit figure may leave you with sticker shock. The deficit surged 26% in fiscal 2019 to hit $984 billion, the highest point since we topped $1 trillion in 2012. This figure, in addition to the earnings that continue to roll in (heavyweights reporting this week include Alphabet, Facebook and Apple), will likely be a topic of conversation when the Fed kicks off their October meeting tomorrow. Analysts appear confident that Wednesday will bring news of another rate cut, and the Fed's balance sheet continues to climb by billions per week in an unofficial re-ignition of QE. And while any Fed action is likely to have some bearing on the USD, we're encouraged to see a small uptick from the dollar following its drop from a two-year high on 10/1. Could gold and other commodities soon follow in the dollar's footsteps?


1. The conversation everyone in Washington has forgotten: Over the last 12 months, our Government spent $1 trillion more than it brought in.


U.S. Q3 Deficit

Source: The Chart Store, as of 10/25/19



2. QE RE-reversal!


Fed Reserve Assets October 2019

Source: The Chart Store, as of 10/25/19



3. Duly noted!


Bond yields during QE

Source: Danske Bank, as of 10/28/19



4. Is it becoming "politically" harder for rating agencies to downgrade a fee paying client?


U.S. fallen angels 2019

Source: Moody's Investors Service, as of 4/30/19



5. Have we started a new trend?


U.S. dollar index October 2019

Source: The Chart Store, as of 10/25/19



6. If so, will the tailwind for gold and the rest of the commodities get a renewed bid?


Gold October 2019

Source: The Chart Store, as of 10/25/19



We're entering a big week for the economy and you know what that means: financial jargon and acronym-bearing headlines are approaching. To brush up on your financial buzzwords (and impress your more erudite colleagues), check out our 2019 Glossary of Terms.


Full PDF: Glossary of Terms 2019


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.