U.S. Bull and Bear Markets Since 1926: Chart

Posted by on

The bull market in U.S. equities since the Global Financial Crisis(GFC) seemingly remains strong despite many crises affecting the US and global economy in recent years. The most recent Turkey crisis has become another “dead on arrival” case. The question now on most investors’ mind is what is holding up US stocks so well and when will the bull get tired. Though nobody including the so-called experts knows exactly when this bull market will end, it helps to pay attention to historical performances of bull and bear markets.

I came across the following historical US bull and bear markets chart created by First Trust and posted by Barry Ritholtz at The Big Picture:

Click to enlarge

Source: First Trust

The Top 10 Global Banks by Assets 2018

Posted by on

The Top 10 Global Banks by Assets for 2018 is shown in the chart below. According to the Bloomberg article 9 out of the top 10 banks were Japanese in 1988 before the Nikkei collapsed Before the Global Financial Crisis of 2008, the list was dominated by US and European banks. After the crisis most of these developed banks crashed and would not exist today if they were not bailed out by the states. European banks especially were the hardest hit and never recovered due to incompetent managements, political paralysis, dithering regulators and politicians. The banking crisis shows that when a crisis hits, Americans are better in handling and fixing it than the Europeans. Sometimes one has to wonder if all those European bankers know even how to run a mom-and-pop grocery store in a third-world country let alone a complex operation like a bank.

Click to enlarge

Source: China’s Giant Banks Top This Ranking. And That’s a Cause for Concern, Bloomberg

Of the top 10, five are Chinese banks including all top 4. The only European bank is the French BNP Paribas(BNPQY). UK-based HSBS(HSBC) is really an Asian bank with roots in Hong Kong.

Disclosure: No Positions

BlackRock: Asian Equity Markets Are Cheap Now

Posted by on

The US equity market is in positive territory with the S&P 500 up by 5.41% YTD. Most of the developed European markets are down so far this year. The Turkey crisis has added more pressure on some of the banks in Europe and the markets in general. Emerging markets have been hit especially hard with some of the currencies plunging to new record lows. Some of the emerging equity markets are also down year-to-date. For example, Shanghai Composite is off over 17%, Russia’s RTS is down by over 8%, Turkey’s BIST 100 is in the red by about 225, etc.

Some investors may be wondering which markets are cheap given the current market situation. According to Russ Koesterich, CFA of Blackrock says that Asian stocks are cheap in an article. He notes that Korea and Taiwan are especially cheap. From the piece:

While not enjoying 2017-like returns, stocks are having a decent year. Developed market equities are up more than 4% in dollar terms. Things look even better in the United States, with the S&P 500 Index up around 7%. As many markets started the year at already full valuations, investors could be forgiven for thinking that there are few bargains left. Interestingly, much of Asia appears really cheap.

As of the end of July, Japanese equities remain the cheapest equity market in the developed world.  The Topix Index (TPX) is trading at 1.8 times price-to-book (P/B), roughly half the level of the S&P 500. The current discount is close to the lowest since 2012, a period that preceded a three-year, 150% rally.

The Asian discount applies to a number of emerging markets as well. For example, Korean equities remains not only the cheapest equity market but by some measures the cheapest asset class (see Chart 1). Korean equities even look inexpensive relative to the already discounted emerging market space. The current valuation represents a 40% discount to the rest of EM, the largest discount since the 1997 Asian financial crisis.

Source: Asia on sale,  Russ Koesterich,  Blackrock

Related ETFs:

  • iShares MSCI South Korea ETF (EWY)
  • iShares MSCI Turkey ETF (TUR)
  • iShares MSCI Taiwan ETF (EWT)

Disclosure: No Positions

Comparing Current Account Balances Of Select Emerging Countries

Posted by on

Current Account Balances is an important factor to evaluate the health of an economy. A surplus indicates that the country is in a better financial shape and lends money to other countries. A deficit implies that the country is a debtor to other countries and institutions.

The chart below shows the current account balances for select developing countries:

Click to enlarge

Source: What happened to all the worries about rising inflation and bond yields? Goldilocks, tariffs, Turkey & other things by Dr.Shane Oliver, AMP Capital

Turkey is the worst based on this factor and Thailand is the best since it has the highest surplus. Other major emerging economies with surpluses are Russia, South Korea and Malaysia.

Employment Protection Legislation: Which Countries Are Flexible and Which Are Rigid?

Posted by on

Employment protection laws for labor varies countries countries. Countries with flexible labor laws tend to have vibrant economies and strong economic growth. The US is the classic example of this scenario. Among the major developing countries India has the one of the most rigid labor laws as the following chart shows:

Click to enlarge

 

Source: India’s Strong Economy Continues to Lead Global Growth, IMF