Tuesday, August 22, 2017

Mid-week graphics link fest

1. The remarkable rise and stability in the US equity markets since the election of Donald Trump and the daily roller-coaster of uncertainty flies against conventional wisdom. The graphic below captures the Trump stability,

2. Talking about equity markets and widening inequality, John Mauldin points to this stunning graphic from BofA about the number of hours the average worker has to work to buy a notional share of the S&P 500.

3. This graphic, again from Mauldin, is even more stunning - the US has more indices today than there are stocks! ETFs are driving the equity markets, not stocks.  

4. The folks at GMO who forecast the 7-year asset class returns have dismal findings - US equities expected to decline by 4.2% annually and bonds by 1%. The only silver-lining being emerging market equities.

5. One of the major beneficiaries (and an amplifier) of this financialization have been the credit rating agencies, or the nationally recognised statistical rating organisations (NRSRO) in the US. 
The credit rating market is virtually consisting of just three firms!

6. It is well accepted that the Fed has played an important role in propping up the equity markets. This graphic of Fed balance sheet expansion and the rise of equity market from John Authers is pretty striking. 

7. This graphic shows that the Bank of England's lending rates are currently its lowest in its 323 year history! Since its founding in 1694, the BoE had never lowered its lending rate below 2 per cent till January 2009!

8. One of the most unfortunate things about the sub-prime mortgages induced crisis in the US has been the virtual absence of fixing accountability. This graphic shows that even as 324 Main Street mortgage lenders, loan officers, real estate brokers, developers and others have been convicted, US prosecutors have not been able to complete charges against even one Wall Street CEO. This despite over $150 bn having been realised in fines. 

9. I recently blogged about the declining interest in PPPs. The graphic below captures the sharp decline since 2007 in UK's pioneering Private Finance Initiative (PFI) to attract private investors to infrastructure deals. 
The decline should be an eye-opener for those mindlessly continue to hold up the PFI as an exemplar of best practice in PPPs.

10. Finally, this is really stunning and sad. In the US, fewer millennials are employed or own homes than previous generations at the same age, the younger Americans have never shouldered a heavier student loan burden, and fewer millennials are out-earning their parents at the same age.

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