Danielle DiMartino Booth CEO & Chief Strategist for Quill Intelligence LLC
Deteriorating US Micro Fundamentals
Will The Real Junk Bonds Please Raise Their Hands?
The True $2.5 Trillion Investment Grade Bond Market Dwarfed by $5 Trillion in High Risk Debt
Earnings Per Share Growth with and Without Share Buybacks Earnings Per Share Earnings per Share w/0 Share-Buy Backs
130
EPS Growth% (left)
9%
EPS Growth% w/o Share-BuyBacks (right)
120 110
7%
100
5%
90
3%
80
1%
70 -1%
60
-3%
50
-5%
Source: Artemis
Sept 17
Mar 17
Sept 16
Mar 16
Sept 15
Mar 15
Sept 14
Mar 14
Sept 13
Mar 13
Sept 12
Mar 12
Sept 11
Mar 11
Sept 10
Mar 10
Sept 09
Mar 09
40
Air Comes out of Global Reflation Trade
Should Investors Listen to Stocks or Bonds?
This is Not a Drill
There But For the Grace of Lag Go Central Bankers
Party Like It’s 1969
Least Creditworthy Most At Risk
Diminishing Returns Latest Evidence of Diminishing Returns: GDP Generating Capacity of Global Debt: All Major Economies (2007-2009 avg.) (2017-Q1 2019 avg.) Percent Ratio of GDP Ratio of GDP Change to Debt to Debt
A
B
C
1
Euro Area
0.44
0.38
-13.5%
2
U.K.
0.42
0.36
-14.3%
3
Japan
0.32
0.27
-14.8%
4
U.S.
0.43
0.40
-5.6%
5
China
0.65
0.34*
-38.2%*
6
All Reporting Countries (aggregate)
0.47
0.42
-11.1%
Source: Hoisington Asset Management, Bank ofSInternational Institute o u r c e : H o Settlements. i s i n g t o n *A China s s e t adjusted M a n a gbased e m eupon n t , B“Aa nforensic k o f I examination n t e r n a t i o of n aChina’s l S e t t lnational e m e n taccounts,” s . * C h i nBrookings a on March 7, 2019, by Wei Chen, Xilu Chen, Chang-Tai Hsieh (University of Chicago), and Zheng (Michael) Song (Chinese University of Hong Kong). “China’s economy is about 12 d j real u s t growth e d b a shas e d been u p overstated o n “ A f obyr e about n s i c 2e percentage x a m i n a tpoints i o n o annually f C h i n in a ’ recent s n a t iyears”. o n a l a c c o u n t s ,” B r o o k in g s percent smaller than official figures indicate anda its
In s titu te o n M a r c h 7 , 2 0 1 9 , b y W e i C h e n , X ilu C h e n , C h a n g -T a i H s ie h (U n iv e r s ity o f
Danielle DiMartino Booth CEO & Chief Strategist for Quill Intelligence LLC CEO & Chief Strategist for Quill Intelligence LLC Wall Street Federal Reserve National Best Seller Global Speaker Seasoned Thought Leader Intelligence Gathering Toolsets Graph Analytics DAILY MARKETS & ECONOMICS INTELLIGENCE The Daily Feather WEEKLY MACRO DEEP ANALYSES The Weekly Quill
THANK YOU Danielle DiMartino Booth danielle@quillintelligence.com