Ten Thousand Words - October 2019

Apparently, Confucius didn’t say “One Picture is 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.

Starting with a sobering thought, businesses that have debt graded as speculative or that can't cover their interest bills - Interest Cover Ratios (ICRs) of less than 1 - are "almost 40 percent of total corporate debt in the economies we studied", the IMF noted (as reported by the Financial Times). On a more upbeat note, Bespoke tabulated how a 1% decline in the S&P 500 to start October has typically been followed by healthy returns; and the rise of software M&A was charted by PitchBook. One of our favourite themes - the far greater opportunity set in small and micro cap stocks - has been illustrated by Verdad Advisers. Finally, there's some big swings in the Australian job ads market, with a  particularly sharp decline in New South Wales and in Construction, Design & Architecture.

Debt at non-financial firms with weak fundamentals as a % of GDP
Source: FT

S&P 500: 1%+ Drops to Start October and Returns for Rest of Calendar Year
Source: Bespoke, MarketWatch

Size Distribution of All Stocks by Geography

Source: Verdad Advisers

Software M&A activity in North America (through to June 30, 2019)

Source: PitchBook

Australian Job Ads Growth: State-by-State (year-on-year SEEK Job Ads for September 2019)

Source: SEEK Employment Report

Australian Job Ads Growth by Industry (year-on-year SEEK Job Ads for September 2019)

Source: SEEK Employment Report

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