Charts of the Week: German-Chinese trade, stabilising commodities and the dash for cash
This week’s charts cover the following data:
German consumers are more pessimistic than businesses
German consumer confidence is even lower than it was during the depths of the pandemic. Inflation at 10 percent and the likelihood of recession are probably the factors to blame.
The following chart plots the progression of measures of consumer and business confidence in Europe’s largest economy, with the pre-pandemic business cycle in blue and everything since in green.?
Business confidence is also very low – but it has yet to plunge past the troughs of the global financial crisis and the spring 2020 Covid-19 shock.
Tip: This chart allows for the?change region?function.
Slowing momentum for Japanese industry
Japan is one of the world’s leading exporters, so when its industrial companies lose momentum, that’s a signal that the global economy is slowing.
The following chart displays Japanese industrial production as measured by its yearly and monthly growth rates. Compared to a year earlier, Japan’s industrial production is up more than 9 percent. But the month-on-month growth rate is now slightly negative.?
Tip: This chart allows for the?change region?function.
Cash is king for more stock investors
Investors’ desire to hold cash increases sharply during times of economic stress and falling asset prices. This is one of those times, and it’s probably a bearish signal for the business cycle.
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The following chart tracks equity drawdowns by the S&P 500 over the years as well as the average percentage of individual portfolios held in cash, based on a survey by the American Association of Individual Investors. Periods where the US was officially in recession are highlighted in gray. (In 2022, we’re not there yet.)
Cash balances are at spring 2020 levels, the survey shows.
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