Tag: finance charts

Chart of the day: Emerging markets and the Taylor Rule

Chart of the day: Emerging markets and the Taylor Rule

According to Wikipedia, the Taylor rule is a “monetary-policy rule that stipulates how much the central bank should change the nominal interest rate in response to changes in inflation, output, or other economic conditions.” It is named after Stanford economist John B. Taylor. Emerging markets’ monetary policy has been loose if one uses this rule.

US stock market capitalization higher than any time except NASDAQ bubble

US stock market capitalization higher than any time except NASDAQ bubble

It is worth noting that currently both markets are pushing deviation extremes only seen four times previously. The difference has much to do with the “secular market” within which these deviations occurred. The current deviation from the long term average, fuelled by Federal Reserve interventions, is approaching extremes in both deviation and duration. As I stated above – as investors we should always remain mindful of the risk.

Chart of the day: U.S. Treasury losses in perspective

Chart of the day: U.S. Treasury losses in perspective

The histogram below shows the total return of long-dated treasuries over a rolling 4-month period since 2007. The leftmost bucket contains five periods that constitute the worst treasury losses since 2007. All five of these periods ended within the past 10 days, indicating that the recent losses are the worst in at least 6 years.

Chart of the day: Chronic American excess capacity

Chart of the day: Chronic American excess capacity

The long-term trend in capacity utilization in the US shows a secular decline. After each major recession over the past 50 years, capacity utilization peaked at a lower level than after the previous recession. So far in the post-Great Recession recovery, this trend has not been violated, as the nation struggles from chronic excess capacity.