10k Words - July 2020

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. 

"Analysts effectively stopped trying to adjust their forecasts about two months ago", concluded Bloomberg upon looking at Deutsche Bank's S&P 500 earnings revision chart. Volatility, meanwhile, remains elevated despite equity market strength. In an Australian context, Bell Potter shows that retail buying has driven the market higher. In a US context, BAML highlights that the strongest fund flows have been into cash and gold in 2020. At the same time, global corporate debt is soaring, Janus Henderson notes, and based on Capital Economics' debt spread data they are paying more for it. Capital Economics' money supply chart shows there's plenty of money out there to lend (or buy equities). And if you are buying equities, Sentimentrader has a strategy for you - market timing using Trump tweets.

S&P 500 consensus earnings estimates

Source: Bloomberg, Deutsche Bank

CBOE VIX Index - measuring implied volatility in US equities

Source: Iress, Equitable Investors

S&P/ASX 200 VIX Index - measuring implied volatility on the ASX

Source: Iress, Equitable Investors

S&P/ASX 200 - retail v institutional broker net buying and selling

Source: Bell Potter

Asset classes with the largest inflows

Source: BAML, WSJ

Global corporate borrowings in $US
Source: Janus Henderson, Bloomberg

Speculative grade corporate debt spreads
Source: Capital Economics

Money supply exploding ("M3" measure)

Source: Capital Economics

The Trump Stock Market Tweet-O-Meter
Source: Sentimentrader, callum_thomas

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