10k Words - January 2021

 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. 

Citi strategist Matt King summarises the legacy of 2020 across divisions in politics and the economy then Bloomberg shows US treasury yields hitting 1% for the first time since March. Bespoke debunks the view that it is bad for US equities for Democrats to have full control of federal politics. Market frothiness is on display in Factset's chart of SPAC (Special Purpose Acquisition Company or “blank check”) IPOs. UK fund Fasanara Capital shows that monthly variations in markets have been expanding, while US quantitative fund AQR argues with one chart that the prospects for a standard balanced portfolio are low and the opportunity to buy "value" is clear. Forward PEs - even looking two years out - are high relative to historical levels around the world according to Evans & Partners. In Australia, Equitable Investors has mapped out the distribution of CY2020 returns for its "FIT" universe of micro-to-mid caps. Finally, ANZ has mapped out for us the changing shares in global GDP over time.

The legacy of 2020

Source: Citi

Dow Jones performance when Democrats have had full control of US federal politics

Source: Bespoke

10 year US Treasury Yield

Source: Bloomberg

Surge in SPAC IPOs in 2020
Source: Factset

Increasing US equity market variation
Source: Fasanara Capital

AQR's estimate of the expected return on a 60/40 portfolio at lows while the dispersion in valuations moves to highs

Source: AQR

2 yr Forward PE by region
Source: Evans & Partners

Distribution of CY2020 returns for Equitable's "FIT" stocks (ASX micro-to-mid caps)
Source: Equitable Investors, Sentieo

Shifting shares of world GDP

Source: ANZ

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