10k Words - September 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.

We kick off with Equitable Investors' updated study on the distribution of five year returns for ASX-listed industrials. The FT highlights the recent surge in global M&A activity. Leading electronics retailer JB Hi-Fi (JBH) suffered a decline in like-for-like sales amid COVID-19 lockdowns in eastern Australia, ending a long sequence of continual growth, as charted by Evans & Partners. And Wilsons shows how ASX stocks were divided into the winners and losers as the latest round of lockdowns in Sydney and Melbourne were initiated. Westpac highlights how volatile iron ore spot prices have become - at the same time the cost of shipping that ore has surged, as illustrated by a Bloomberg chart of the shipping benchmark the Baltic Exchange Dry Index. Finally, Hussman Funds reckons the ratio of non-financial market capitalization to corporate gross value-added (MarketCap/GVA) is “the single most reliable valuation measure we’ve introduced over time, based on its correlation with actual subsequent market returns across history”.

Distribution of five year total returns for ASX industrials

Source: Equitable Investors, Sentieo

Worldwide M&A

Source: FT.com, Refinitiv

Like-for-like sales growth for JB Hi-Fi (JBH) & subsidiary The Good Guys turns negative
Source: Evans & Partners

ASX COVID-19 winners v. losers
Source: Wilsons

Largest daily fall on record for iron ore spot market - and largest weekly fall too

Source: Westpac

Baltic Exchange Dry Index
Source: Bloomberg

US market cap / gross value add for non-financials v subsequent 12-year S&P 500 returns
Source: Hussman Funds

US market cap / gross value add for non-financials
Source: Hussman Funds

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