S&P 500 EPS vs. U.S. Nonfinancial Corporate Profits

S&P 500 EPS vs. U.S. Nonfinancial Corporate Profits Creative accounting is imaginative ways to present accounts. The divergences between earnings and U.S. nonfinancial corporate profits occur before recessions. Picture source: Gavekal, Macrobond

Gold vs. Japanese Yen

Gold vs. Japanese Yen This chart shows the strong correlation between the Japanese yen and gold, but also the divergence in recent months. You may also like “Gold Bullion and Market Capitalisation of Global Negative Yielding Debt.” Picture source: Jeroen Blokland

Citi Global Economic Surprise Index and Baltic Dry Index

Citi Global Economic Surprise Index and Baltic Dry Index The divergence between the Baltic Dry Index and the Citi Global Economic Surprise Index could suggest that “global economy is likely to bottom soon.” Picture source: Nomura

S&P 500 and U.S. Economic Surprises

S&P 500 and U.S. Economic Surprises This chart shows the current divergence between the S&P 500 and the 12-month moving average of the U.S. economic surprise index. Picture source: Oxford Economics and Macrobond

S&P 500 Index Price Average Before and After Initial Fed Rate Cut

S&P 500 Index Price Average Before and After Initial Fed Rate Cut Historically, the S&P 500 Index has risen in 13 out of 16 cases after an initial Fed rate cut (since 1954). The divergence between the S&P 500 and EPS suggests that the market doesn’t care too much about other things, as long as…

U.S. Hard Data vs. Soft Data

U.S. Hard Data vs. Soft Data U.S. hard data is improving, but the chart shows the current divergence between U.S. hard data and soft data. Picture source: Arbor Research & Trading LLC

S&P 500 vs. U.S. Economic Surprises

S&P 500 vs. U.S. Economic Surprises This chart shows the large divergence between the S&P 500 Total Return and the U.S. economic surprise. You may also like “S&P 500 at Risk of a 10% Correction.” Picture source: Nordea and Macrobond

ISM Manufacturing PMI vs. ISM Non-Manufacturing PMI

ISM Manufacturing PMI vs. ISM Non-Manufacturing PMI ISM Non-Manufacturing rises to 56.9. That’s good news despite US-China trade tensions and weak global growth. When ISM Manufacturing PMI and ISM Non-Manufacturing PMI are below 50, as in 2001 and 2008, there is a recession. But when there is a divergence, as in 2016 and today, it…

Record Valuation Dispersion 1951-2017

Record Valuation Dispersion 1951-2017 Today, there’s an extreme valuation divergence. The crowd invests in the most expensive part of the market. And the Value vs. Growth differential has never been so extreme, even during the Great Depression and the Dotcom bubble. Source: Sound Shore Management