10k Words - October 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. 

A focus on the US to begin with and Yale's monthly surveying showing investor confidence that stocks won't crash has taken a beating this year; while on the other hand Bloomberg shows that US dollar weakness has correlated with strength in US equities. Taking a look at the disconnect between markets and the economy, ASI-Transmatch's rail traffic movements in the US have recovered significant ground but remain below pre-COVID-19 levels; while FactorInvestor shows the step-change in e-commerce penetration. Deutsche Bank's look at US market PEs in different inflation regimes is interesting. Moodys, meanwhile, shows corporate bond issuance surging in 2020. Turning to Australia, Evans & Partners sets out loan provisioning by Australian banks relative to gross loans and compares them to higher ratios reported by major international banks. Morningstar sets out just how strong momentum has been as a factor in the Australian market, which may explain Evans & Partners' chart of the historically high PE ratio on high growth ASX industrials. Fitch reminds us that Australia's immigration and population growth have dipped significantly in 2020. 

US Crash Confidence Index 

Source: Yale School of Management, Jerome Blokland

Correlation between S&P 500 and US Dollar

Source: Bloomberg

US Rail Traffic

Source: ASI-Transmatch

e-commerce sales continuing to take share of US retail
Source: Bloomberg, FactorInvestor

US average annual PE ratio since 1920 in different inflation environments
Source: Deutsche Bank

Year-long sum of US corporate bond issuance
Source: Moodys Analytics, NBER, Dealogic

Banks' provisions relative to gross loans
Source: Evans & Partners

ASX Factors
Source: Morningstar

P/E ratio of the 90th percentile of ASX 200 Industrials 

Source: Evans & Partners

Australian net immigration
Source: FitchRatings

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