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5 charts from the past week that tell an interesting story in markets and investing…
1) Asset Class Returns over the Last 10 Years
These are the returns from major asset classes over the last 10 years…
What stands out? What will the next 10 years bring? Read my recent post here.
Over the last 20 years, long-term bonds have outperformed stocks (350% vs. 284%).
How did this happen? Read more here.
3) Pandemic + Recession = Multiple Expansion?
The S&P 500’s P/E ratio has moved from 20.6 at the start of 2020 to 30.8 today, on pace for the highest year-end multiple in history (post).
4) Bitcoin Booming
Bitcoin crossed above $20,000 this week for the first time, and it did not stop there…
The catalyst?
There are many to choose from, including the prospect of another spike higher in US national debt (via another stimulus bill) and the Fed continuing its record balance sheet expansion, with assets hitting a new high of $7.36 trillion.
As confidence in Bitcoin surges higher, the same cannot be said for the US Dollar, which has been moving in the opposite direction.
5) One of These Things Is Not Like the Other
1. Stocks: all-time highs.
— Charlie Bilello (@charliebilello) December 18, 2020
2. Housing prices: all-time highs.
3. Corporate bond yields: all-time lows.
4. Mortgage rates: all-time lows.
5. Jerome Powell @ yesterday’s FOMC Meeting: We need many more years of 0% interest rates and QE to stimulate the markets and spur inflation.
The growing disconnect between the Fed’s continuation of emergency stimulus measures and market conditions…
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And that’s it for this week. Thanks for reading.
Have a great weekend everyone!
-Charlie
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