After spending the past year somewhat ranged bound, margin debt increased by just under $11.5 billion in March to a new all-time high of $476 billion, taking out the previous high set in February 2014. The increase in margin debt over the past two months is the largest two-month increase since February 2013.
From 1974 to 2007, the long-term US growth rate in real GDP generally fell between 3-3.5% on annualized basis (excluding the v-shaped bounce from 1982-1984). We define long-term here by looking at the 10-year annualized percentage change. With the 1Q now in the books, this series just dropped to an all-time low of 1.46%.
Yesterday, we highlighted how equity trends have completely flip-flopped in April. Emerging market stocks have outperformed the developed market stocks, developed market energy is the best performer while developed market health care is the worst performer, etc.
The trend toward knowledge investments and away from traditional investments in fixed assets such as equipment and structures continued in the 1Q in the US. Investment in intangible property products now account 4.1% of GDP.
Long-dated US Treasury bonds have been treading water of late, leaving many rate watchers wondering in what direction the next big move is going to be. One variable in the next move is of course trader positioning. The two charts below show how the ”smart money” is betting.
As the first month of the second quarter winds down, an interesting (momentary?) change in long-standing trends has taken place in the equity markets.
After our recent call, we received an insightful question about how we view research and development (R&D) because surely not all R&D is productive and profitable?
Last week we wrote that 2014 marked another year in which Chinese companies increased the leverage on their balance sheets. In fact 2014 marked the 10th consecutive annual increase in aggregate leverage as measured by total liabilities as a percent of equity. Meanwhile profit margins are down by more than half over the same period.
A couple of weeks ago, we discussed the propensity for markets to go on runs or slumps in a manner not unlike what we can observe in baseball.
The percent of stocks in the MSCI World Index that have had positive EPS revisions compared to six months ago currently stands at 45%. Over the past 7+ years, the average level of this statistic is 56%.