Earnings Matter, Over the Long Run Over the long run, equities move with earnings. Currently, there is a big gap between U.S. and Europe earnings. As Warren Buffett said: “for 240 years, it’s been a terrible mistake to bet against America.” You may also like “Global Earnings since 2006.” Image: Cullen Roche
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…
Fed Funds Rate vs. S&P 500 This chart suggests that the Fed funds rate leads the S&P 500 by 1 to 3 years since the 1990s. Image: Wells Fargo Investment Institute
World PMI Manufacturing Most regions are now in contraction territory, except the United States. Image: Pictet Wealth Management
The Market Consistently Underestimates the Fed Usually, the Fed decides when to raise rates and the market decides when to cut rates. But, this interesting chart shows that the market consistently underestimates the Fed. You may also like “The Market is Almost Wrong about What the Fed Will Do.” Image: Real Investment Advice
Economic Impact of U.S. Recessions This chart shows that the economic impact of most U.S. recessions is relatively small. The average expansion increased GDP by +24% vs. S&P 500 +117%, and the average recession reduced GDP by less than 2% vs. S&P 500 +3%. The average expansion is 67 months and the average recession is…
Unemployment and U.S. Presidential Elections Americans tend to elect Democrats when unemployment is high, and Republicans when unemployment is low. Image: Ken Fisher
S&P 500 Performance Before and After Recessions since 1970 U.S. equities peaked about six months before the recession began. Image: Russell Investments
Correlation Between S&P 500 and U.S. Treasuries This chart shows the correlation between stocks and bonds, which could affect a balanced 60/40 portfolio. Image: Arbor Research & Trading LLC
Global Inflation Interesting chart showing that inflation is largely a global phenomenon. Picture Source: J.P. Morgan Asset Management
S&P 500 Index vs. Global M1 Liquidity Another good correlation between the S&P 500 Index and global M1 liquidity, while the Fed plans to stop quantitative tightening. The money supply M1 is the amount of effective money in the economy. Image: Nordea and Macrobond