Ten Thousand Words - August 2019

Apparently, Confucius didn’t say “One Picture Worth Ten Thousand Words” after all. It was an advertisement in a 1920s trade journal for the use of images in advertisements on the sides of streetcars. Even without the credibility of Confucius behind it, we think this saying has merit. Each month we share a few charts or images we consider noteworthy.

Aussie tech stocks are approaching dot.com pricing according to Schroders, while at the same time Argentina's sharemarket this week experienced the second biggest one-day plunge since 1950 (out of 94 stock exchange indices tracked by Bloomberg). Volatility has ramped up in mainstream Aussie and US equities and Evans & Partners have chimed in to remind us that corrections are normal with an average intra-year drop of 13.9% for the S&P/ASX 200. Meanwhile, Goldman Sachs explores the new world where negative interest rates are normal. JP Morgan then looks at what has happened to equities in markets where bond yields fall below 1%.

 Corrections are normal

 Source: Evans & Partners


Argentina’s stock market plunged 48% in USD on August 12, 2019 - ‘the second-biggest one-day rout on any of the 94 stock exchanges tracked by Bloomberg going back to 1950’


Source: Bloomberg, @jsblokland


Aussie tech valuations near dot.com levels
 Source: Schroders, livewiremarkets.com


Central bank policy rates are at or close to all-time lows

source: Goldman Sachs Asset Management, Macrobond


Timeline of the Introduction of Negative Central Bank Policy Rates
source: Goldman Sachs Asset Management


Equity prices before and after 10yr gov’t bond yields fall through 1% - Japan (JA), EU, Switzerland (SW)
source: JP Morgan, MSCI


Dividend Yields before and after 10yr gov’t bond yields fall through 1% - Japan (JA), EU, Switzerland (SW)
source: JP Morgan, MSCI

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