Inflation Assets vs. Deflation Assets The leadership remains deflationary, and the laggards remain inflationary. Deflation assets: government bonds, U.S. investment grade, S&P 500, U.S. consumer discretionary, growth and US high yield. Inflation assets: TIPS, EAFE, U.S. banks, value and cash. Image: BofA Global Investment Strategy
U.S. Surplus/Deficit As A Percentage of GDP The US federal government’s budget deficit jumps above $1 trillion for the first time over the past 12 months. Image: Bianco Research
6-Month S&P 500 Return Following U.S. Election Since 1932, the median 6-month S&P 500 return for an all Republican sweep has been 4% vs. 1% for an all Democratic sweep, and 3% for a divided government. Image: Goldman Sachs Global Investment Research
Projected U.S. Health Care Costs Over the next 10 years, the federal government is expected to spend $16 trillion on health care and $6 trillion on interest costs. Image: Deutsche Bank Global Research
Percentage Point Contributions to U.S. Real GDP Growth Positive contributions from government spending contributed 1.67% points to real GDP in the first three quarters of 2019. That’s the highest since 2009. Image: Ned Davis Research
U.S. Budget Deficit Government spending increases despite President Trump’s promise to eliminate debt. Image: Financial Times
The Performance of “Deflation Assets” vs. “Inflation Assets” Interesting chart showing the performance of “Deflation Asset” vs. “Inflation Assets” since 1960. “Deflation Assets”: Government Bonds, US Investment Grade, S&P 500, US Consumer Discretionary, Growth and US High Yield “Inflation Assets”: TIPS, EAFE, US Banks, Value and Cash Image: BofA Merrill Lynch
Dividend Yield of MSCI ACWI Stocks Currently, more than 1,100 global stocks are paying dividends above the average yield of global government bonds. Image: BofA Merrill Lynch
Global Real Yields Since 1805 Negative real yields are an “opportunity” for any government to refinance their debt. Image: Deutsche Bank
Total Outlays (Spending) to GDP This chart shows the percentage share of GDP that the U.S. federal government spends. Image: Bianco Research
U.S. Total Receipts (Taxes) to GDP This chart shows the percentage share of GDP that is collected by the U.S. federal government through taxes. Image: Bianco Research