Strategist’s Handbook - Yardeni Research · Strategist’s Handbook Yardeni Research, Inc. May 26, 2018 Dr. Edward Yardeni 516-972-7683 [email protected] Please visit our sites

Strategist’s Handbook

Yardeni Research, Inc.

June 26, 2018

Dr. Edward Yardeni516-972-7683

[email protected]

Please visit our sites atwww.yardeni.comblog.yardeni.com

thinking outside the box

Figure A: Yardeni Research Economic Forecasts (6/26/2018)

2017a/ 2018e/ Item (1) Q1a Q2a Q3a Q4a Q1a Q2e Q3e Q4e 2016a 2017a

Real GDP 1.2 3.1 3.2 2.9 2.2 4.3 2.7 2.6 2.3 3.0Final Sales 2.7 2.9 2.4 3.4 2.0 4.8 2.7 2.4 2.4 3.0Gross Domestic Purchases 1.0 2.8 2.7 4.0 2.0 4.0 2.6 2.7 2.4 3.0Finals Sales to Domestic Purchasers 2.4 2.7 1.9 4.5 1.9 4.0 2.6 2.3 2.5 3.0

Personal Consumption Expenditures 1.9 3.3 2.2 4.0 1.0 3.7 2.8 2.7 2.8 2.7Durable Goods -0.1 7.6 8.6 13.7 -2.6 8.2 5.7 6.1 6.7 5.9Nondurable Goods 1.1 4.2 2.3 4.8 0.4 5.5 3.1 3.3 2.4 3.2Services 2.5 2.3 1.1 2.3 1.8 2.1 2.0 1.6 2.2 1.9

Nonresidential Fixed Investment 7.1 6.7 4.7 6.8 9.2 8.7 4.1 3.6 4.7 6.9Structures 14.8 7.0 -7.0 6.3 14.3 5.0 3.7 4.1 5.6 5.8Producers' Durable Equipment 4.4 8.8 10.8 11.5 5.5 10.8 3.1 2.4 4.8 7.9Intellectual Property Products 5.8 3.7 5.2 0.9 10.9 8.0 5.9 5.1 3.9 6.3

Residential Fixed Investment 11.1 -7.3 -4.7 12.8 -2.0 3.4 6.8 2.9 1.8 2.3

Inventory Investment (billion dollars) 1.2 5.5 38.5 15.6 20.2 26.2 24.2 33.2 15.2 26.0 Net Exports (billion dollars) -622.2 -613.6 -597.5 -653.9 -650.9 -645.9 -646.9 -654.9 -621.8 -649.7

Total Government Purchases -0.6 -0.2 0.7 3.0 1.1 1.0 0.2 0.5 0.1 1.2Federal Government -2.4 1.9 1.3 3.2 1.7 1.9 0.4 1.1 0.2 1.8State & Local Government 0.5 -1.5 0.2 2.9 0.8 0.4 0.1 0.2 0.1 0.8

Real GDP (y/y) 2.0 2.2 2.3 2.6 2.8 3.1 3.0 2.9 2.6 2.9

Light Vehicle Sales (million units) 17.2 16.8 17.2 17.8 17.2 17.1 17.4 17.3 17.3 17.3 Housing Starts (million units) 1.2 1.2 1.2 1.3 1.3 1.3 1.4 1.4 1.2 1.4 Unemployment Rate (%) 4.7 4.3 4.3 4.1 4.1 3.8 3.7 3.6 4.4 3.8

Nonfarm Productivity 0.2 1.7 2.6 0.0 0.4 1.5 0.9 1.1 1.3 1.1 PCE Core Deflator 1.8 0.9 1.3 1.9 2.3 2.2 2.3 2.4 1.5 2.3

Fed Funds Target Rate (%) 0.88 1.13 1.13 1.38 1.63 1.88 2.13 2.38 1.13 2.00 10-Year Government Yield (%) 2.44 2.26 2.24 2.37 2.77 3.00 3.00 3.00 2.33 2.94

a=actual. e=estimate.(1) Quarterly and annual average percent change.Estimates based on limited information and are subject to frequent and large revisions as new information becomes available.Source: Yardeni Research, Inc.

2017 2018

www.yardeni.comPage 1 / June 26, 2018 / Strategist’s Handbook Yardeni Research, Inc.

Figure B: S&P 500 Operating Earnings*: YRI vs. Consensus Forecasts (6/26/2018)

2009 60.80 -7.3 60.80 -7.3

2010 85.32 40.3 85.32 40.3

2011 97.82 14.7 97.82 14.7

2012 103.80 6.1 103.80 6.1

2013 109.68 5.7 109.68 5.7

2014 117.86 7.5 117.86 7.5

2015 117.46 -0.3 117.46 -0.3Q1 28.60 1.5 28.60 1.5Q2 30.09 0.1 30.09 0.1Q3 29.99 -0.2 29.99 -0.2Q4 29.52 -3.3 29.52 -3.3

2016 118.04 a 0.5 118.04 a 0.5Q1 26.96 a -5.7 26.96 a -5.7Q2 29.61 a -1.6 29.61 a -1.6Q3 31.21 a 4.1 31.21 a 4.1Q4 31.28 a 6.0 31.28 a 6.0

2017 131.98 a 11.8 131.98 a 11.8Q1 30.90 a 14.6 30.90 a 14.6Q2 32.58 a 10.0 32.58 a 10.0Q3 33.45 a 7.2 33.45 a 7.2Q4 36.02 a 15.2 36.02 a 15.2

2018 155.00 e 17.4 161.01 e 22.0Q1 38.05 a 23.1 38.05 a 23.1Q2 38.00 e 16.6 39.16 e 20.2Q3 39.00 e 16.6 40.97 e 22.5Q4 41.00 e 13.8 42.65 e 18.4

2019 166.00 e 7.1 176.72 e 9.8

e=estimate.* Historical earnings growth rates and earnings are not adjusted for accounting and index composition changes.

Source: Yardeni Research, Inc. and Thomson Reuters I/B/E/S.

Analysts' Consensus

Level YOY %

Yardeni Research-post tax cut

Level YOY %

www.yardeni.comPage 2 / June 26, 2018 / Strategist’s Handbook Yardeni Research, Inc.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20193.0

3.5

4.0

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5.5

6.0

6.5

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8.0

8.5

9.0

9.5

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3.5

4.0

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6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

6/26

6/26

RELATIVE GLOBAL PERFORMANCE OF US MSCI:US MSCI (US$) DIVIDED BY ALL COUNTRY WORLD EX US MSCI(in both US$ and in local currencies, daily)

US MSCI / ACW ex-USIn dollarsIn local currencies

Source: MSCI.

yardeni.com

Figure 1.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019500

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S&P 500 BULL & BEAR MARKETS & CORRECTIONS: 2008-2018(ratio scale)

6/26

200-day moving average

-56.8% (517)

-16.0% (70)

-19.4% (157)

-9.8% (28)

-9.9% (60)

-7.7% (62)

-5.8% (34)

-5.8% (19)

-7.4% (28)

-12.4% (96)

-13.3% (100)

-10.2% (13)

Note: Corrections are declines of 10% or more, while minor ones are 5%-10% (all in blue shades). Bear markets are declines of 20% or more(in red shades). Number of calendar days in parentheses.Source: Standard & Poor’s.

yarden

i.com

Figure 2.

Stock Prices

Page 3 / June 26, 2018 / Strategist’s Handbook www.yardeni.com


Figure 3.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019650

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Q1

S&P 500 REVENUES PER SHARE: ACTUAL (S&P quarterly data) & FORWARD (TR weekly data)(dollars)

Revenues Per Share52-week Forward*

Actual (x4)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20190

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Q1

S&P 500 EARNINGS PER SHARE: FORWARD & ACTUAL OPERATING EARNINGS(dollars)

Earnings Per Share52-week Forward*Thomson Reuters Operating (x4)S&P Operating (x4)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20190

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4

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14

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6/14Q1

S&P 500 PROFIT MARGIN MEASURES(percent)

S&P 500 Operating Profit Margins

52-week Forward* (12.2)

Thomson Reuters (11.9)

S&P (11.4)

* Time-weighted average of consensus operating earnings estimates for current and next years. Source: Standard & Poor’s (for actual revenues) and Thomson Reuters I/B/E/S (for forward revenues), and Bureau of the Census.

yardeni.com

S&P 500 Earnings, Revenues, Margins



94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20-25

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AprQ1

S&P 500 AGGREGATE REVENUES & US BUSINESS SALES OF GOODS(yearly percent change)

S&P 500 Aggregate Revenues* (8.6)Business Sales of Goods** (6.7)

** Manufacturing and trade sales.* Revenues are derived by multiplying S&P 500 revenues per share by the S&P 500 divisor for each quarter.

Source: Census Bureau and Standard & Poor’s.

yardeni.com

Figure 4.

47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 212

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S&P 500 OPERATING PROFIT MARGIN (Thomson Reuters data)& AFTER-TAX CORPORATE PROFIT MARGIN

(without IVA & CCAdj)

Corporate Profits After Tax*(as a percent of nominal GDP)

(blue line) Q1

S&P 500 Operating Profit MarginUsing TR Earnings**

(percent, quarterly, nsa)(red line)

Q1

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.

* After-tax profits as reported to IRS excluding Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj), which restate thehistorical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measures used in GDP.

** Operating Proft Margin derived using revenues from S&P and earnings from Thomson Reuters I/B/E/S.

Source: Standard & Poor’s, Thomson Reuters I/B/E/S and Bureau of Economic Analysis.

yardeni.com

Figure 5.

S&P 500 Revenues & Margins



Figure 6.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019900

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S&P 500 REVENUES PER SHARE(consensus analysts estimates in dollars, weekly, ratio scale)

Consensus ForecastsAnnual RevenuesForward Revenues*

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201950

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125

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6/21

17 1819

S&P 500 OPERATING EARNINGS PER SHARE(consensus analysts estimates in dollars, weekly, ratio scale)

Consensus ForecastsAnnual EarningsForward Earnings*

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20196

7

8

9

10

11

12

13

6

7

8

9

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11

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1819

6/14

17

yardeni.com

S&P 500 PROFIT MARGIN(using analysts average earnings and sales forecasts, percent)

Consensus Forecasts

Forward Margins* (12.2)Annual Margins

* Time-weighted average of the consensus estimates for current and next year. Source: Thomson Reuters I/B/E/S and Standard & Poor’s.

Forward Revenues, Earnings, & Margins



1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201910

35

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135

160

185

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35

60

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110

135

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1856/21S&P 500/400/600 FORWARD EARNINGS

(dollars per share, ratio scale)

Forward Earnings*S&P 500 LargeCap (168.56)S&P 400 MidCap (118.95)S&P 600 SmallCap (58.69)

* Time-weighted average of consensus estimates for current year and next year.Source: Thomson Reuters I/B/E/S.

yardeni.com

Figure 7.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20193

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6/14

yardeni.com

S&P FORWARD PROFIT MARGINS*(using analysts average earnings and sales forecasts, percent)

Forward Profit Margins*S&P 500 (12.2)S&P 400 (7.7)S&P 600 (5.4)

* Time-weighted average of the consensus estimates for current and next year using forward earnings divided by forward revenues.Source: Thomson Reuters I/B/E/S and Standard & Poor’s.

Figure 8.

S&P 500/400/600 Forward Earnings & Margins



2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019600

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x19S&P 500, FORWARD EARNINGS, and VALUATION(weekly)

Actual 06/26/18Implied* 06/21/18

* Implied price index calculated using forward earnings times forward P/Es. Weekly data start January 2007.

Blue Angels: S&P 500

Source: Standard & Poor’s and Thomson Reuters I/B/E/S.

yardeni.com

Figure 9.

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019100

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x8

x10

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ALL COUNTRY WORLD EX-US MSCI, FORWARD EARNINGS, & VALUATIONAll Country World Ex-US MSCI Index (In local currencies)06/26/18Blue Angels Implied Price Index*06/15/18

* Implied price index calculated using forward earnings times forward P/Es. Monthly through December 2005, weekly thereafter.Source: MSCI and Thomson Reuters I/B/E/S.

yardeni.com

Figure 10.

Blue Angels



1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20196

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6/26

FORWARD P/E RATIOS FOR S&P STOCK PRICE INDEXES*(daily)

S&P 500 LargeCap (16.2)S&P 400 MidCap (16.5)S&P 600 SmallCap (17.6)

* Daily stock price index divided by 52-week forward consensus expected operating earnings per share.Source: Thomson Reuters I/B/E/S and Standard & Poor’s.

yardeni.com

Figure 11.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20195

10

15

20

25

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15

20

25

6/14

MSCI FORWARD P/E(weekly)

Forward P/E*

EMU (13.6)Emerging Markets (11.8)

US (16.9)

Japan (13.4)UK (13.5)

Capped at 20

yardeni.com

* Price divided by 12-month forward consensus expected operating earnings per share.Source: Thomson Reuters I/B/E/S.

Figure 12.

Valuation



89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 208

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28

32

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Q1

May

S&P 500 P/E RATIOSS&P 500 P/Es

Trailing (using operating earnings)* (20.7)Forward** (16.5)

* Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing operating earnings.** S&P 500 stock price index divided by S&P 500 12-month forward consensus expected operating earnings.

Source: Thomson Reuters I/B/E/S and Standard & Poor’s.

yardeni.com

Figure 13.

52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22-3

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12

S&P 500 REPORTED EARNINGS YIELD* MINUS CPI INFLATION RATE**

Q1

Latest (2.6)Average 3.3

* S&P 500 reported earnings as a percent of quarterly average S&P 500 index. Q4-2008 dropped because of negative value.** Year-over-year percent change in three-month average of each quarter.

Note: Shaded red areas denote S&P 500 bear market declines of 20% or more. Yellow areas show bull markets.Source: Standard & Poor’s and Bureau of Labor Statistics.

yardeni.com

Figure 14.

Valuation



Figure 15.

06 07 08 09 10 11 12 13 14 15 16 17 18 198

10

12

14

16

18

20

6/14

S&P 500(forward P/E) P/E (16.7)

06 07 08 09 10 11 12 13 14 15 16 17 18 198

11

14

17

20

23

6/14

INDUSTRIALS(16.5)

06 07 08 09 10 11 12 13 14 15 16 17 18 1910

15

20

25

30

6/14

CONSUMER DISCRETIONARY

(20.4)

06 07 08 09 10 11 12 13 14 15 16 17 18 198

12

16

20

24

6/14

INFORMATION TECHNOLOGY(18.7)

06 07 08 09 10 11 12 13 14 15 16 17 18 1910

12

14

16

18

20

22

6/14

CONSUMER STAPLES(16.9)

06 07 08 09 10 11 12 13 14 15 16 17 18 195

10

15

20

25

6/14

MATERIALS(15.9)

06 07 08 09 10 11 12 13 14 15 16 17 18 195

15

25

35

45

55

65

6/14

ENERGY(17.8)

06 07 08 09 10 11 12 13 14 15 16 17 18 1915

25

35

45

55

65

75

6/14

REAL ESTATE(37.1)

06 07 08 09 10 11 12 13 14 15 16 17 18 196

8

10

12

14

16

18

20

6/14

FINANCIALS

Includes Real Estatethrough September 2016

(12.7)

06 07 08 09 10 11 12 13 14 15 16 17 18 198

10

12

14

16

18

20

22

6/14

TELECOMMUNICATION SERVICES(10.0)

06 07 08 09 10 11 12 13 14 15 16 17 18 198

10

12

14

16

18

20

6/14

HEALTH CARE

Source: Thomson Reuters I/B/E/S and Standard & Poor’s.

(15.3)

06 07 08 09 10 11 12 13 14 15 16 17 18 198

10

12

14

16

18

20

6/14

yardeni.com

UTILITIES(15.4)

S&P 500 Sectors Forward P/Es



Figure 16.

2015 2016 2017 2018500550600650700750800850900950

CONSUMER DISCRETIONARY 6/26

S&P 500 sectorprice indexes

2015 2016 2017 2018400

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INDUSTRIALS

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2015 2016 2017 2018450

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CONSUMER STAPLES

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2015 2016 2017 2018600

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INFORMATION TECHNOLOGY6/26

2015 2016 2017 2018350

425

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725

ENERGY

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2015 2016 2017 2018200

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MATERIALS

6/26

2015 2016 2017 2018250

300

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FINANCIALS

6/26

2015 2016 2017 2018125

150

175

200

225

TELECOMMUNICATION SERVICES

6/26

2015 2016 2017 2018700750800850900950

1000105011001150

HEALTH CARE

6/26

Source: Standard & Poor’s and Haver Analytics.

2015 2016 2017 2018200

225

250

275

300

UTILITIES

6/26

yardeni.com

S&P 500 Sectors Price Indexes



Figure 17.

06 07 08 09 10 11 12 13 14 15 16 17 18 1960

90

120

150

180210

18 19 6/14S&P 500(forward earnings*)

Annual consensusestimatesForward earnings

06 07 08 09 10 11 12 13 14 15 16 17 18 1913

19

25

31

3743

1819 6/14INDUSTRIALS

06 07 08 09 10 11 12 13 14 15 16 17 18 195

17

29

4153

18 19 6/14CONSUMER DISCRETIONARY

06 07 08 09 10 11 12 13 14 15 16 17 18 1915

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1819

6/14INFORMATION TECHNOLOGY

06 07 08 09 10 11 12 13 14 15 16 17 18 1913

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18 19 6/14CONSUMER STAPLES

06 07 08 09 10 11 12 13 14 15 16 17 18 196

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16

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26

1819

6/14MATERIALS

06 07 08 09 10 11 12 13 14 15 16 17 18 198

28

48

6888

108

18 196/14

ENERGY

06 07 08 09 10 11 12 13 14 15 16 17 18 191

3

5

79

19 6/1417 18REAL ESTATE

06 07 08 09 10 11 12 13 14 15 16 17 18 198

20

32

4456

1819 6/14

FINANCIALS

Includes Real Estatethrough September 2016

06 07 08 09 10 11 12 13 14 15 16 17 18 197

9

11

13

15

17

1819

6/14TELECOMMUNICATIONS SERVICES

06 07 08 09 10 11 12 13 14 15 16 17 18 1920

35

50

65

80

18 19 6/14HEALTH CARE

* Time-weighted average (in blue) of consensus operating earnings estimates for current and next year (in red). Source: Thomson Reuters I/B/E/S.

06 07 08 09 10 11 12 13 14 15 16 17 18 1911

12

13

14

15

161718

1819 6/14

UTILITIES

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S&P 500 Sectors Forward Earnings



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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20203

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S&P 500 DIVIDENDS & BUYBACKS(billion dollars, annualized)

Buybacks

Dividends

S&P 500 Index

S&P 500 FORWARD EARNINGS YIELD & CORPORATE BOND YIELD(percent)

Investment GradeCorporate Bond Yield** (4.1)

S&P 500 Forward Earnings Yield* (5.4)

* Forward earnings (time-weighted average of consensus operating earnings estimates for current and next year) divided by S&P 500 index.** BoA Merrill Lynch data for AA-AAA yields.

Source: Thomson Reuters I/B/E/S, Federal Reserve Board, and Standard & Poor’s.

yardeni.com

Figure 18.

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20190

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Apr

EQUITY ETFs*(yearly net inflows, billion dollars)

* Net share issuance by equity ETFs.Source: Investment Company Institute.

yard

eni.

com

Figure 19.

Equity Flows



94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 2080

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6/26

S&P GOLDMAN SACHS COMMODITY INDEX & TRADE-WEIGHTED DOLLAR(daily)

Goldman SachsCommodity Index(nearby futures price)

JP Morgan NominalBroad EffectiveExchange Rate*

Source: Standard & Poor’s, JP Morgan, and Haver Analytics.

yardeni.com

Figure 20.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202020

30

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6/25

BRENT CRUDE OIL PRICE & TRADE-WEIGHTED DOLLAR

JP Morgan NominalBroad Effective Exchange Rate**(inverted scale)

Brent Crude Oil Futures Price*(dollars per barrel)

* Nearby futures price.** Argentina, Australia, Brazil, Bulgaria, Canada, Chile, China, Colombia, Croatia, Czech Republic, Denmark, Ecuador, Egypt, France, Germany, Hong Kong,

Hungary, Japan, India, Indonesia, Israel, Italy, Korea, Kuwait, Malaysia, Mexico, Morocco, New Zealand, Nigeria, Norway, Pakistan, Panama, Peru,Philippines, Poland, Romania, Russia Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom,Ukraine, Uruguay, Venezuela, Vietnam, and United States. Source: JP Morgan and Haver Analytics.

yardeni.com

Figure 21.

Dollar & Commodities



2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019600

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S&P 500 INDEX & YRI WEEKLY LEADING INDEX

S&P 500 Index

YRI Weekly Leading Index*

* Average of Consumer Comfort Index (which is a four-week average) and the four-week average of Boom-Bust Barometer, which is CRB raw industrialsspot price index (weekly average) divided by weekly initial unemployment claims.Source: Bloomberg, Commodity Research Bureau, Bureau of Labor Statistics, and Standard & Poor’s.

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Figure 22.

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EMERGING MARKETS MSCI STOCK PRICE INDEX (in dollars)& INDUSTRIALS COMMODITY PRICE INDEX(daily)

Emerging MarketsMSCI Stock Price Index(in dollars)

CRB Raw IndustrialsSpot Price Index*

* Includes copper scrap, lead scrap, steel scrap, tin, zinc, burlap, cotton, print cloth, wool tops, hides, rosin, rubber, and tallow.Source: MSCI and Commodity Research Bureau.

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Figure 23.

Stocks & Commodities



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* Annual data. Base index from 1800 to 1947 is 1967 = 100.** 1982-84=100.

Source: Census Bureau, Historical Statistics of the United States

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Figure 24.

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Inflation Trend**

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Source: Bureau of Labor Statistics.** Five-year moving average of yearly percent change in CPI.* Percent of labor force 16-34 years old.

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Figure 25.

Big Picture



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AprYRI EARNED INCOME PROXY &PRIVATE WAGES & SALARIES IN PERSONAL INCOME(trillion dollars, saar, ratio scale)

YRI Earned Income Proxy*Private Wages & Salaries

* Aggregate weekly hours times average hourly earnings of total private industries times 52.Source: Bureau of Labor Statistics and Bureau of Economic Analysis.

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Figure 26.

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COINCIDENT ECONOMIC INDICATORS: RECOVERIES & EXPANSIONS*(2016=100, sa, ratio scale)

* Red horizontal lines span cyclical peaks through subsequent cyclical recoveries. Green horizontal lines are expansion periods following recoveries.Source: Conference Board, Haver Analytics, and YRI calculations.

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Figure 27.

US Economic Indicators



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* All series deflated using Personal Consumption Expenditures Deflator.** Mean household income.

Source: Bureau of Economic Analysis, Bureau of the Census and Current Population Reports.

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Figure 28.

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Note: C = China joined WTO on December 11, 2001. Shaded areas denote recessions according to the National Bureau of Economic Research.Source: Federal Reserve Board.

Figure 29.

US Economic Indicators



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CHINA: INDUSTRIAL PRODUCTION & PRODUCER PRICE INDEX(yearly percent change)

Industrial Production* (6.8)PPI: TotalIndustrial Products (4.1)

* Value added basis.Source: IMF International Financial Statistics and China National Bureau of Statistics.

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Figure 30.

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BANK LOANS & MONEY SUPPLY(trillion US dollars)

China: Bank Loans (nsa) (20.0)US: Bank Loans (sa) (9.3)China: M2 (27.3)

Source: Federal Reserve Board and People’s Bank of China.

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Figure 31.

China



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Germany (Apr=116.5)France (Apr=93.3)Italy (Apr=87.1)Spain (Apr=81.0)

Eurozone (Apr=103.9)

Source: Haver Analytics.

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Figure 32.

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Real GDP(yearly percent change) (2.5)

Economic Sentiment Indicator*(long-term average=100, sa) (112.5)

* The overall economic sentiment indicator (ESI) is derived from the industrial (weight 40%), service (30%), consumer (20%), construction (5%), andretail trade (5%) confidence indicators.Source: Statistical Office of the European Communities, European Commission, and Haver Analytics.

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Figure 33.

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JP Morgan NominalBroad EffectiveExchange Rate(inverted scale,yearly percent change)

Implied World Ex-USCapital Flows*(trillion dollars)

* 12-month change in non-gold international reserves minus 12-month sum of the merchandise trade surplus (deficit). US trade deficit multiplied by -1.0.Source: International Monetary Fund and JP Morgan.

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Figure 34.

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Note: QE1 (11/25/08) = Fed starts buying $1.24tn in mortgage securities. QE1 expanded (3/16/2009) = Fed starts buying $300bn in Treasuries.QE2 (11/3/10) = Fed starts buying $600bn in Treasuries. QE3 (9/13/12) = Fed starts buying $40bn/month in mortgage securities (open ended).QE3 expanded (12/12/12) = Fed starts buying $45bn/month in Treasuries.Source: Federal Reserve Board, Standard & Poor’s and Haver Analytics.

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Figure 35.

Global



“A Quiet Place” (- -) is a very odd film combining aspects of a sci-fi thriller and a horror movie. It is neither thrilling nor horrifying. Aliens invade our planet and devour any human that makes a noise. They have a great sense of hearing, but are blind as bats. It would be great if every movie theater had one of these aliens to terminate anyone talking during the movie.

“Adrift” (+ +) is based on the true story of a young couple hired by the owners of a sailboat to bring it across the Pacific Ocean from Tahiti to San Diego. A terrible storm damages the ship. I won’t spoil the ending. But I do see parallels between the movie and the stock market last year and so far this year. It was certainly smooth sailing last year through late January of this year, when we ran into some significant storms. Will we survive them? I think so, if we keep our wits about us.

“Beirut” (+) takes place in Lebanon during 1982, when the country was in a civil war and just before the Israeli invasion of southern Lebanon. Jon Hamm plays the part of Mason Skiles, who is brought into Beirut to negotiate the release of a kidnapped US operative. The movie is a good reminder of why the Middle East is so messed up. Today, Syria is in the throes of a similar mess, with many more casualties. It doesn’t seem the US can do much about it other than lob some cruise missiles into Syria every now and then when red lines are crossed.

“Black Panther” (+) is an action hero flick that takes inspiration from other types of movies in the action genre, including the “Star Wars” and “Bond” series. Good triumphs over evil, and undoubtedly will continue to do so in sequels and prequels. I’ve tended to stay away from action hero films because they are so cookie-cutter, but I wanted to see what the hype over this one was all about. It is one of the better action hero films, but it was predictable.

“Chappaquiddick” (+ + +) is a very well made docudrama about Ted Kennedy, who committed negligent manslaughter when he drove his car into a tidal channel and left Mary Jo Kopechne to die. He got off scot-free after pleading guilty to leaving the scene of the crash and failing to notify police until the next morning. Mary Jo could have been rescued had the 37-year-old senator gone to get help right away. He became recognized by his fellow Democrats as “The Lion of the Senate” owing to his long tenure and influence.

“Gotti” (- -) is about the life of Mafia boss John Gotti, played by John Travolta. The press called Gotti “Teflon John” because he was indicted several times by the government’s prosecutors and beat them each time. He was finally found guilty and went to jail, dying there of cancer. The film has been widely panned as the worst gangster movie ever made. That’s true for the jerky first half. It got better in the second half, but too late to save the movie. I’ve seen a much better documentary about Gotti featuring his son “Junior,” who has breakfast every morning at the same bakery in my neighborhood in Long Island. He never sits with his back to the window.

“Jurassic World: Fallen Kingdom” (- -) is the fifth of the Jurassic film franchise. It’s entertaining if you like visiting Disney on a regular basis and riding the same rollercoaster ride over and over again. The novelty does wear off. There’s still lots of debate about what caused the extinction of dinosaurs. There’s no debating Spielberg’s great success in bringing them back. The film raises an interesting ethical question: Is killing dinosaurs akin to cruelty to animals and a violation of their rights? Let’s wait for the next installment to see how Spielberg resolves the debate.

“Red Sparrow” (+) stars Jennifer Lawrence as a Russian spy. Hollywood is clearly looking for ways to make more money by diversifying its action hero and spy movie genres to include non-white, non-male lead actors. Last year, in “Atomic Blonde,” Charlize Theron played a spy working for the MI6 British intelligence agency just as the Berlin Wall was coming down. Lawrence’s character works for the Russian intelligence service. Both movies leave plenty of room for sequels. Since the genre is getting stale, predictable, and boring, why not combine them into “Two Atomic Blondes” to generate more box-office receipts?

“The Death of Stalin” (+ +) is an uproarious satire based on the true events surrounding the death of Josef Stalin. The film has a great cast playing the grisly cast of characters who composed the ruling committee of the Soviet Union back then. Steve Buscemi has lots of fun playing Nikita Khrushchev, whose masterful power play

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