Expected Fed Funds Rate as of June 20, 2019 Fed funds futures for January 2021 imply an expected rate of only 1.26% (traders are pricing in more than four full cuts). You may also like “Markets Have Accurately Priced in Cuts before Easing Cycles Begin.”
The S&P 500’s Drawdown and The Target Fed Funds Rate Fed rate cuts have generally been associated with recessions and drawdowns. Image: Bianco Research
Change in the Summary of Economic Projections This chart shows the change in the summary of economic projections from March to June 2019. Image: Evercore ISI
Years Without a 20% Gain for the S&P 500 Index This great chart shows the number of years without a 20% gain since 1950. Could the S&P 500 gain 20% this year? Image: LPL Research
Most Important Variables Explaining the S&P 500’s YoY Return Today, the two most important variables explaining the S&P 500’s YoY return: FOMC rate change and U.S. hard economic data. Image: Arbor Research & Trading LLC
Dow Jones Industrial Average Around First Fed Rate Cut After first Fed rate cut, the Dow Jones Industrial Average’s gains are +24% on average when no recession, and +11% with a recession within 12 months. Image: Ned Davis, Ed Clissold
Global Economy Is Late Cycle This chart shows that a record number of fund managers think the global economy is late cycle. Image: Bank of America Merrill Lynch
ISM Manufacturing Index vs. Cass Freight Index The Cass Freight Index (white bar chart) is a measure of monthly North American freight activity. It suggests that the ISM Manufacturing Index (green line) could go lower if the U.S. economic slowdown persists. Image: Greg S.
U.S. Recessions since 1957 This chart shows that almost every Fed rate cut has been associated with a recession. Image: John P. Hussman
Debt and Demographics Our world is aging with high levels of debt and low interest rates (maybe for a long time). Image: Fidelity Investments
GDP Growth Differential: U.S. vs. European Union U.S. GDP growth has been stronger than in the European Union in 28 of the last 40 quarters. It can explain why the U.S. dollar has been so strong relative to the euro. Image: Brandywine Global