Predicting the Markets: Chapter 9 Charts: November, 1 Dr. Edward Yardeni Chief Investment Strategist Mali Quintana Senior Economist info@yardenibook.com Please visit our sites at www. blog. thinking outside the box
Table Of Contents Table Of Contents 1-1 November, 1 / Chapter 9 Charts: www.
3 3 Figure 1. FED CHAIRS & S&P (monthly, ratio scale) Oct 3 3 1 1 97.3. 19.. 9.3 39.3 9 1 73 77 79 1 3 9 97 9 11 1 3 7 3 7 9 71 7 7 9 91 93 99 1 3 7 13 1 17 19 1 3 Data above timeline are percentage changes in the S&P index during each term. Source: Standard & Poor s. 1 Figure. FED CHAIRS & US TREASURY -YEAR YIELD (percent, weekly) 1 11/ 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 Monthly data from April 193 to December 191, then weekly. Source: US Treasury. Page 1 / November, 1 / Chapter 9 Charts: www.
1 1 1 1 Figure 3. FED CHAIRS & CPI (yearly percent change) Sep 1 1 1 1 - - 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 - - Source: Bureau of Labor Statistics. 3 1 Figure. FED CHAIRS & WEST TEXAS INTERMEDIATE CRUDE OIL PRICE (dollars per barrel, monthly, ratio scale) 3 1 Oct 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 Source: Haver Analytics. Page / November, 1 / Chapter 9 Charts: www.
1 Figure. FED CHAIRS & AVERAGE HOURLY EARNINGS* (yearly percent change) 1 Oct 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 * Production & nonsupervisory workers. Source: Bureau of Labor Statistics. 11 97 7 Figure. FED CHAIRS & CRB RAW INDUSTRIAL SPOT PRICE INDEX (ratio scale, weekly) 11 97 7 /3 37 37 7 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 7 Source: Commodity Research Bureau. Page 3 / November, 1 / Chapter 9 Charts: www.
93 3 33 3 13 13 Figure 7. FED CHAIRS & GOLD PRICE* (daily, ratio scale) 11/ 93 3 33 3 13 13 73 73 3 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 3 * Cash price. London gold bullion, PM Fix. Monthly from 19 through 197, then daily. Source: Commodity Research Bureau. 1 1 Figure. FED CHAIRS & MAJOR TRADE-WEIGHTED DOLLAR INDEX* (index=march 1973=, weekly) 1 1 1 1 1 1 11/ 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 * Major index countries whose currencies are included are the Euro Area, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden. The Euro Area includes Germany, France, Italy, Netherlands, Belgium/Luxembourg, Ireland, Spain, Austria, Finland, Portugal, and Greece. Note: Shades denote terms of office of Fed chairs. Source: Federal Reserve Board. Page / November, 1 / Chapter 9 Charts: www.
Figure 9. FED CHAIRS & FEDERAL FUNDS RATE (percent, weekly) 1 1 /31 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 Source: Federal Reserve Board. Figure. FED CHAIRS & DISCOUNT RATE* (percent, weekly) 1 1 /31 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 * Discount window borrowing rate at the Federal Reserve Bank of New York was discontinued after January, 3 and replaced by the rate charged for primary credit. Source: Federal Reserve Board. Page / November, 1 / Chapter 9 Charts: www.
Figure 11. FED CHAIRS & PRIME RATE (percent, weekly) 1 1 1 1 1 1 1 1 /31 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 Source: Federal Reserve Board. 1 1 Figure 1. FED CHAIRS & UNEMPLOYMENT RATE (percent) 1 1 Oct 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 Source: Bureau of Labor Statistics. Page / November, 1 / Chapter 9 Charts: www.
3 Figure 13. FED CHAIRS & S&P P/E BASED ON TRAILING EARNINGS* 3 3 3 Q 1 Average = 1.1 1 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 * Using quarterly average of daily data for S&P price index, and -quarter trailing reported earnings through Q3-19, then operating earnings. Source: Standard & Poor s. 3 3 Figure 1. EXISTING MEDIAN SINGLE-FAMILY HOME PRICES (thousand dollars, 1-month moving average) 3 3 Sep 1 1 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 3 Source: National Association of Realtors. Page 7 / November, 1 / Chapter 9 Charts: www.
1 Figure 1. REAL GDP (yearly percent change) 1 Great Moderation Q3-1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 - Source: Bureau of Economic Analysis. 1 1 Figure 1. REAL GDP IMPLICIT PRICE DEFLATOR (yearly percent change) 1 1 Great Moderation Q3 1 3 7 9 1 3 7 9 71 73 7 77 79 1 3 7 9 91 93 9 97 99 1 3 7 9 11 13 1 17 19 1 Source: Bureau of Economic Analysis. Page / November, 1 / Chapter 9 Charts: www.
.. Figure 17. FED S ASSETS: -1* (trillion dollars)... 3. QE1 QE QE3. 3. 3. 3...... 1. 1... Total Assets US Treasuries + Agency Debt + MBS 9 11 1 13 1 1. 1. 1........ 1. 1. 1. 1. 1. * Average of daily figures for weeks ending Wednesday. Note: QE1 (11//) = Fed starts buying $1.tn in mortgage securities. QE1 expanded (3/1/9) = Fed starts buying $3bn in Treasuries. QE (11/3/) = Fed starts buying $bn in Treasuries. QE3 (9/13/1) = Fed starts buying $bn/month in mortgage securities (open ended). QE3 expanded (1/1/1) = Fed starts buying $bn/month in Treasuries. Source: Federal Reserve Board. Figure 1. FED S ASSETS: -1* (trillion dollars) QE1 QE QE3..... 1. 1. 1. 1. 1...... US Treasury Securities Agency Debt + MBS MBS 9 11 1 13 1 1..... * Average of daily figures for weeks ending Wednesday. Note: QE1 (11//) = Fed starts buying $1.tn in mortgage securities. QE1 expanded (3/1/9) = Fed starts buying $3bn in Treasuries. QE (11/3/) = Fed starts buying $bn in Treasuries. QE3 (9/13/1) = Fed starts buying $bn/month in mortgage securities (open ended). QE3 expanded (1/1/1) = Fed starts buying $bn/month in Treasuries. Source: Federal Reserve Board. Page 9 / November, 1 / Chapter 9 Charts: www.
1 1 1 Figure 19. EUROZONE: GOVERNMENT -YEAR BOND YIELDS (percent) D NIRP QE QEE 1 1 1 1 1 Bond Yields France Germany Italy Spain - Oct 93 9 9 9 97 9 99 1 3 7 9 11 1 13 1 1 1 17 1 19 Note: D (7//1) = ECB President Mario Draghi pledged to do "whatever it takes" to defend the euro. NIRP (//1) = negative interest-rate policy. QE (1//1) = quantitative easing. QEE (3//1) = expansion and extension of QE with corporate bond purchases started /1/1. Source: Financial Times. - Figure. EUROZONE: GOVERNMENT -YEAR BOND YIELDS (percent, daily) D NIRP QE QEE 3 3 3 Bond Yields Greece Italy Ireland Portugal Spain 3 1 1 9 11 1 13 1 1 1 17 1 19 Note: D (7//1) = ECB President Mario Draghi pledged to do "whatever it takes" to defend the euro. NIRP (//1) = negative interest-rate policy. QE (1//1) = quantitative easing. QEE (3//1) = expansion and extension of QE with corporate bond purchases started /1/1. Source: Financial Times. 11/ Page / November, 1 / Chapter 9 Charts: www.
3 Figure 1. ECB ASSETS: LOANS & SECURITIES (trillion euros, weekly) 11/ 3 ECB Holdings Loans to Euro Area Credit Institutions in Euro Securities of Euro Area Residents in Euro D NIRP QE QEE 1 1 11/ 9 11 1 13 1 1 1 17 1 19 D = ECB President Mario Draghi pledged to do "whatever it takes" to defend the euro (7//1). NIRP = negative interest-rate policy (//1). QE (1//1). QEE = expansion and extension of QE (3//1, corporate bond purchases started /1/1). Source: European Central Bank....... 3. 3. 3. 3. 3...... 1. 1. 1. 1. Figure. ECB ASSETS: TOTAL (trillion euros,weekly) D NIRP QE QEE 9 11 1 13 1 1 1 17 1 19 D = ECB President Mario Draghi pledged to do "whatever it takes" to defend the euro (7//1). NIRP = negative interest-rate policy (//1). QE (1//1). QEE = expansion and extension of QE (3//1, corporate bond purchases started /1/1). Source: European Central Bank. 11/...... 3. 3. 3. 3. 3...... 1. 1. 1. 1. Page 11 / November, 1 / Chapter 9 Charts: www.
Figure 3. NIKKEI & YEN (stock index in local currency) Nikkei Yen/US Dollar (inverted scale) 11/ 7 9 1 11/ 1 1 13 1 1 9 97 9 99 1 3 7 9 11 1 13 1 1 1 17 1 19 Source: Haver Analytics. 1 3 Figure. CHINA: M & BANK LOANS (trillion US dollars) Sep 3 Sep 1 M Bank Loans (nsa) 1 1 3 7 9 11 1 13 1 1 1 17 1 19 Source: People s Bank of China. Page 1 / November, 1 / Chapter 9 Charts: www.
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