Economic Implosion, Central Banks, Asset Allocation

10 year earnings growth in Europe now negative and the World not far behind

GDP growth per capita has collapsed to close to zero

“Serious indictment” of policymakers actions

This week ISM services collapsed to a 6 year low, in line with everything else

Taxes withheld have already weakened suggesting the jobs data may be lagging

The S&P 500 has become simply dislocated from fundamentals

And the Fed wants to raise rates when? Have they lost their marbles?

Let’s pretend with markets. LBOing the world

Real market disappearing. Fewest stocks traded in 32 years!

Do the central banks now consider the markets as too big to fail?

How well could this work? Does risk remain?

Asset allocation challenge as never before

 

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10 year earnings growth in Europe now negative and the World not far behind

With 10 year earnings growth in Europe now negative and the World not far behind at what point does it become common knowledge that global economic growth has already imploded?

Is there any corroborating evidence? Yes it is everywhere you look.

GDP growth per capita has collapsed to close to zero

“This graph confirms our macroeconomic concerns and helps explain, in part, why so many U.S. citizens feel like they are being left behind. Factor in that many of the economic spoils are not evenly distributed, as assumed in this analysis, but are largely accruing to the wealthy, and the problem only worsens. As such, the growing social anxiety and trend towards populism, be it conservative or liberal leaning, will not likely dissipate if the aforementioned economic trends continue.”

0916GDPpercapita

 

 

 

 

 

 

 

 

 

GDP Growth Trend – Even Less Than Meets The Eye

“Serious indictment” of policymakers actions

“You see that global trade continues to languish, with yoy global export volume growth slipping back below zero (top line), even with yoy export price growth staying deep in deflationary territory (bottom line).

World export prices have fallen by 21% since the summer of 2011, compared with their 22% plunge during the GFC in 2008-09.

Central banks around the world have tried to spur trade through competitive devaluation, but it is of no avail from this global perspective.

Currency depreciation for one set of economies automatically results in currency appreciation for the others.

That policymakers’ collective efforts at stimulating their respective economies have resulted in such massive deflation is a serious indictment of their actions.”

 

https://www.businesscycle.com/ecri-news-events/news-details/economic-cycle-research-ecri-economic-cycle-research-ecri-latest-jobs-data-in-context

This week ISM services collapsed to a 6 year low, in line with everything else

“Following last week’s disappointing Manufacturing ISM/PMI data, Services PMI printed a six-month-low 50.9 over the weekend “pointing to an annualised GDP growth rate of a mere 1%,” according to Markit. Services jobs fell to their weakest since Dec 2014 but the ISM Services data collapsed to 51.4 – lowest since Feb 2010 with new orders imploding to their weakest since Jan 2014.”

 

 

http://www.zerohedge.com/news/2016-09-06/feds-own-jobs-indicator-tumbles-again

 

 

http://www.zerohedge.com/news/2016-09-06/services-economy-crashes-feb-2010-lows-confirming-manufacturing-collapse

Taxes withheld have already weakened suggesting the jobs data may be lagging

“US government real tax receipts have been trending downwards while employment has kept up remarkably well. If we draw a chart of US withholding taxes (smoothed from all the short-term noise) and overlay that with employment growth, we find a worrisome divergence that has historically not been there. If we plot the same chart, but using annual change in real GDP instead of the annual employment growth, everything seem to fall into place though.”

http://www.zerohedge.com/news/2016-09-03/four-simple-charts-explaining-everything

 

The S&P 500 has become simply dislocated from fundamentals

http://www.zerohedge.com/news/2016-09-02/worst-us-macro-slump-6-months-sparks-stock-bond-silver-buying-spree

 

And the Fed wants to raise rates when? Have they lost their marbles?

So the top three Fed officials, Yellen, Fisher, and Dudley have turned up the talk about tightening policy? Have they lost their marbles?

 

http://www.zerohedge.com/news/2016-09-08/and-fed-wants-raise-rates-when

Let’s pretend with markets. LBOing the world

“the 6 big central banks have a balance sheet that is equivalent to nearly 40% of global GDP, a number which if extrapolated will hit 50% just after 2018.”

 

http://www.zerohedge.com/news/2016-09-05/how-central-banks-are-lboing-world-one-stunning-chart

Real market disappearing. Fewest stocks traded in 32 years!

“So whether it’s the total number of stocks or the amount of shares for each company outstanding, the stock market is shrinking.”

 

http://www.zerohedge.com/news/2016-09-02/fewest-stocks-traded-32-years-market-disappearing-one-giant-leveraged-buyout

Do the central banks now consider the markets as too big to fail?

 

 

How well could this work? Does risk remain?

 

 

Asset allocation challenge as never before 

The challenge for asset management has probably never been greater, but there still are a few approaches that have not only a multi decade track record of success, but can also be adapted to outperform even in the current environment through dynamic asset allocation.

Track Record

 

 

 

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