Global Equity vs. Bonds and U.S. Unemployment Rate and Recessions The chart shows that the U.S. business cycle drives global asset allocation and suggests a possible U.S. recession in 2020. Picture source: Pictet Asset Management
Global Equity Fund Flows This great chart from Deutsche Bank shows that equity outflows over the last 6 months are now the largest on record. In 2011 and 2016, it was similar and equities rose significantly. Picture source: Deutsche Bank
Global Equity – Bond Flows According to Bernstein, the S&P 500 not far from its all-time high, could set a new record. Picture source: Berstein Research
S&P 500 Equity Risk Premium and Global DM Composite PMI Nice chart showing that the equity risk premium of the S&P 500 is currently elevated. Picture source: JDI research
U.S. Equity Volatility and Global Economic Policy Uncertainty The chart shows that U.S. equity volatility does not mirror global economic policy uncertainty since 2009, perhaps due to strong central bank support. Picture source: Pictet Wealth Management
Hedge Fund Equity Exposure Great chart showing that hedge funds’ equity exposure is near their lowest since the global financial crisis. Picture source: J.P. Morgan
Over The Last 6 Months, The S&P 500 Lags Bonds, Gold And Global Stocks Last year, the sell-off of stocks was a correction from a bad equity risk premium and an overvalued stock market, as suggested by our forecasting models. Picture source: Bloomberg
Risk Parity Funds Currently, risk parity equity allocations are near the top of the historical range. Picture source: Deutsche Bank Global Research
Probability of US Recession is Rising Mike Wilson, chief U.S. equity strategist for Morgan Stanley, said that “Fed could cut as soon as July but it may not halt slowdown/recession.” Picture source: U.S. Global Investors
Why Are U.S. Banks Healthier Than Ever? U.S. banks are much stronger than ever. They have more capital and should withstand the next recession. See Fed’s annual stress test (Dodd-Frank Act Stress Tests): “The capital levels of the firms after the hypothetical severe global recession are higher than the actual capital levels of large banks…
