The Economy, In Charts

[gassy]

[1967 R50/2]

Id' be interested in seeing a similar graph to the "bank graph" for Chinese Banks. Not a real apples to apples comparison because they have always been an arm of the Gov't, but I bet their current capitalization is huge in comparison

[turbo6bar]

Apologize for the poor quality. Ripped from calculatedriskblog.



Think this one is going a lot lower as job losses continue.

[turbo6bar]

Chart goes back a long ways, so the current dive is remarkable.

[turbo6bar]

OK, I'll admit it. I'm addicted to Calculated Risk. I wish I had more time to read the comments.

[jyl]

In another thread I said the most concerning scenario, for investors, would be an extended deflationary period.

Bad earnings - investors have experienced and know how to react. Bank crises - investors have had a year's recent experience in dealing with those. But no living investor has experienced deflation during his career.

Here is a chart which graphically illustrates the uncertainty that deflation would bring.



During mild deflation periods (CPI 0% to -5%) market PE has varied widely, from 6X to 20X. Same wide variation for severe deflation periods (CPI -5% to -15%). The red circles are all over the place. Unlike the more orderly, more predictable relation of PE to inflation which is shown in the scattergram a few posts ago, there is no pattern in a deflationary period, at least not one that most investors understand. A scattergram that includes deflationary periods is just a messy blob of dots.

I don't know much about deflation economics. But it makes sense to me that situation where consumers see their income and wealth falling, their fixed debt burden rising relative to income, and are rewarded for deferring every major purchase, would be destructive to the economy.

The government knows this - not the typical idiot Congressman, but the Fed and Treasury certainly do. They will try to keep some inflation in the economy. I think even flat-out printing money from thin air would likely be preferable to a severe deflationary spiral.

By the way, in deflationary periods, it would seem that being a creditor is good. Interest is fixed in nominal dollars, and each nominal dollar is worth more in real dollars. The concern would be credit risk. But what if you could be a creditor to the one borrower in the world who is guaranteed to have as many US dollars as it takes to pay your interest? That means owning a treasury note. If we do go into a severe deflationary period, being short treasuries may not work out so well.

[rammstein]

My charts go to 11.

[turbo6bar]

[jyl]

The rate of decline in industrial new orders is slowing.



New orders leads the economy, unemployment lags, this index of the difference between them is plotted against past recessions. I didn't prepare any of these charts, so not sure if the apparent relationship is meaningful.



Estimate revisions in technology sector have returned to near-neutral. Think revisions are improving (going from extremely negative to closer to neutral) in financials, consumer cyclicals, and materials.

[tabs]

Does this mean there is HOPE?

[jyl]

Initial unemployment claims, 4 week MVA. Shaded periods are recessions. Note relationship of init UE claim peaks to those periods.



Subsequent to this chart - latest initial claims data point is 610,000. Update: latest 640,000.

[Peterfrans]

an interactive map showing unemployment. Quite shocking http://www.slate.com/id/2216238/

[tabs]

One point of difference in 1982 675K claims was a far bigger percentage of the work force then it is today...so correlate that one will ya...

[kach22i]

Originally Posted by Peterfrans

an interactive map showing unemployment. Quite shocking http://www.slate.com/id/2216238/

All that blue going to red, tragic.

[jyl]

Architectural billings and inquiries improving - inquiries index above 50 now.

[9elf]

John L.
Berkeley CA -> Portland OR
1989 3.2 coupe

Any new charts John?

This is my favourite thread.

[tabs]

Well here is a bit of anecdotal evidence that the econ is getting better...My friends who are in the LV Convewntion Biz say companies are spending more money now on their Trade Show presence.

[jyl]

Originally Posted by 9elf

John L.
Berkeley CA -> Portland OR
1989 3.2 coupe

Any new charts John?

This is my favourite thread.

nerd :-)

[9elf]

Originally Posted by jyl

nerd :-)

The truth cuts deep.

[jyl]