Thread by @ritholtz

JPM's Guide to the Markets is a fave of mine (props to It was @TBPInvictus for this) since 2011/12.

It is chock full of great snapshots of stocks, bonds, commodities, currencies, markets, earnings, valuations, and other good stuff. 1/20

am.jpmorgan.com/us/en/asset-ma…

I heartily endorse going to the link above, register to download the most recent version, & sign up to be notified when new one is out.

I pulled some charts, annotated them, created a narrative about where we are in the economic & market cycle.

Ready? Let’s jump right in: 2/20

This Bull Market began in 2013 when markets broke the prior highs set in 2000 and 2007 3/20

Note we were not in a new Bull Market back in 2012, we were merely recovering from the sell during the financial crisis. The new bull began once we broke out over those prior highs. 4/20

ritholtz.com/2012/10/market…

Stocks are at fair value according to Wall Street Analysts.

The caveat about analysts as a group is that their bias tends to towards the over-optimistic 5/20

It has been rough sledding for the Value stocks as that part of the market has gotten trounced as Growth has been on Fire. (Well, at least until last week when Facebook cratered) 6/20

Drawdowns are a regular part of markets, and following an amazingly calm 2017, volatility has returned – but so far, just back to average. 7/20

Looking at the really long term, we see markets going through regular bull & bear phases.

This chart (and variations to it) gets my nod for the most important chart ever. 8/20

This has been a long expansion, but as far as post credit crisis recoveries in the USA, it is one of two – not a rich data set. 9/20

Debt can be a risk to the economy – but what matters is not the raw amount (denominator blindness) but the ability to service that debt. 10/20

Wage growth has been punk but is starting to signs of perking up. This continues to be an important economic as well as political factor 11/20

Inflation is still modest, but showing signs of becoming interesting.
Tariffs + Inflation + Wage Growth = possible economic trouble 12/20

There simply is not enough high quality sovereign debt around to meet global demand. (No worries, the current U.S. administration is working hard to fix that).
13/20

Dollar is off its highs but still the strongest it has been in a decade. 14/20

The rest of the world has been lagging the US in responding to the crisis and seeing market appreciation.

Mean reversion will eventually correct this (however long that takes). 15/20

Another all-time great chart revealing once again that William Goldman was right, and “no one knows anything.” 16/20

Investors especially succumb to this: 17/20

Fans of Cash, its returns have been paltry. 18/20

I have discussed the home country bias before – its even worse – we have a regional bias at work also ! 19/20

Bottom Line is we continue to recover from the GFC, with a pretty good economy and a stock market fairly priced.

All good things come to an end; we simply do not know when that will be. Nothing in the JPM chart book suggests it is any time soon.

20/20 END