Predicting the Markets Chapter 2 Charts: Predicting the World

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Predicting the kets Chapter 2 Charts: April 2, 21 Dr. Edward Yardeni Chief Investment Strategist Mali Quintana Senior Economist info@yardenibook.com Please visit our sites at www. blog. thinking outside the box

Table Of Contents Table Of Contents 1-2 April 2, 21 / Chapter 2 Charts: www.

3. 3.6 3. 3.2 3. 2. 2.6 2. 2.2 2. 1. 1.6 1. 1.2 1.. Figure 1. TOTAL IMPORTS OF 7 COUNTRIES 1/1929-3/1933 (billion dollars, monthly) T 1929 193 1931 1932 1933 Note: T = Smoot-Hawley Tariff enacted June 17, 193. Source: League of Nations, Monthly Bulletin of Statistics, February 193, p. 1. 3. 3.6 3. 3.2 3. 2. 2.6 2. 2.2 2. 1. 1.6 1. 1.2 1.. 1 13 Figure 2. US INDUSTRIAL PRODUCTION: 1929-192 (27=, monthly) 1 13 11 T B M P 11 9 9 7 7 3 1929 193 1931 1932 1933 193 193 1936 1937 193 1939 19 191 192 Note: T = Smoot-Hawley Tariff enacted June 17, 193. B = Emergency Banking Act passed ch 9, 1933. M = k-to-market suspended June 193. P = Pearl Harbor attacked December 7, 191. Source: Federal Reserve Board. 3 Page 1 / April 2, 21 / Chapter 2 Charts: www.

17 16 1 Figure 3. US PRODUCER PRICES: 1929-192 (192=, monthly) Industrial Commodities Grains T B M P 1 3 13 2 12 11 1929 193 1931 1932 1933 193 193 1936 1937 193 1939 19 191 192 Note: T = Smoot-Hawley Tariff enacted June 17, 193. B = Emergency Banking Act passed ch 9, 1933. M = k-to-market suspended June 193. P = Pearl Harbor attacked December 7, 191. Source: Bureau of Labor Statistics. 1 2 22 Figure. US CONSUMER PRICE INDEX: 1921-197 (192-19=, monthly, nsa) 2 22 2 T B P 2 1 1 16 16 1 1 12 21 22 23 2 2 26 27 2 29 3 31 32 33 3 3 36 37 3 39 1 2 3 6 7 12 Note: T = Smoot-Hawley Tariff enacted June 17, 193. B = Emergency Banking Act passed ch 9, 1933. P = Pearl Harbor attacked December 7, 191. Source: Bureau of Labor Statistics. Page 2 / April 2, 21 / Chapter 2 Charts: www.

6 Figure. US COMMERCIAL BANK DEPOSITS: 192-192 (billion dollars, annually) 6 3 3 2 192 1921 1922 1923 192 192 1926 1927 192 1929 193 1931 1932 1933 193 193 1936 1937 193 1939 19 191 192 Source: Census Bureau. 2 Figure 6. DEPOSITS OF SUSPENDED US COMMERCIAL BANKS: 1929-1933 (million dollars, monthly) 3 2 3 2 1929 193 1931 1932 1933 Source: Federal Reserve Bulletin, September 1937, Table 13, p. 99. Page 3 / April 2, 21 / Chapter 2 Charts: www.

3 36 3 32 3 2 26 2 22 2 1 16 1 12 1 6 Figure 7. US UNEMPLOYMENT RATES: 19-197 (percent, annual) Unemployment Rates Nonfarm Employees* Civilian Labor Force** 2 19 1 191 191 192 192 193 193 19 1 3 36 3 32 3 2 26 2 22 2 1 16 1 12 1 6 2 * Persons 1 years old and older. ** Persons 16 years old and older. Source: Historical Statistics of the United States, Colonial times to 197. Figure. DOW JONES INDUSTRIALS AVERAGE 1929-192 (daily) 3 T B M P 3 2 2 1929 193 1931 1932 1933 193 193 1936 1937 193 1939 19 191 192 Note: T = Smoot-Hawley Tariff enacted June 17, 193. B = Emergency Banking Act passed ch 9, 1933. M = k-to-market suspended June 193. P = Pearl Harbor attacked December 7, 191. Source: Haver Analytics. Page / April 2, 21 / Chapter 2 Charts: www.

2 1 Figure 9. REAL GROSS DOMESTIC PRODUCT: ANNUALLY 191-1 (billion 1996 dollars) 2 1 16 16 1 1 12 12 6 6 2 1 3 7 9 11 13 1 17 19 21 23 2 27 29 31 33 3 37 39 1 3 7 9 1 Source: Historical Statistics of the United States. 2 Figure 1. REAL GROSS NATIONAL PRODUCT: QUARTERLY 1921-1939 (billion 1939 dollars, saar) 9 9 7 7 6 6 21 22 23 2 2 26 27 2 29 3 31 32 33 3 3 36 37 3 39 Source: National Bureau of Economic Research. Page / April 2, 21 / Chapter 2 Charts: www.

1 Figure 11. UNEMPLOYMENT RATE: 19-196 (percent, sa) 1 6 6 2 19 199 1 11 12 13 1 1 16 17 1 19 196 Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: Bureau of Labor Statistics. 2 6 Figure 12. TOTAL NONFARM PAYROLLS: 19-196 (millions, sa, ratio scale) 6 2 2 6 6 2 19 199 1 11 12 13 1 1 16 17 1 19 196 Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: Bureau of Labor Statistics. 2 Page 6 / April 2, 21 / Chapter 2 Charts: www.

36 3 2 1 Figure 13. S&P STOCK PRICE INDEX (ratio scale) 36 3 2 1 12 12 6 6 193 193 193 1926 1922 222 21 21 21 26 22 199 199 199 196 192 197 197 197 1966 1962 1 1 1 196 192 Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: Bureau of Labor Statistics. 122 12 Figure 1. INDUSTRIAL PRODUCTION (212=, ratio scale) 122 12 2 2 62 62 2 2 22 22 2 222 21 21 21 26 22 199 199 199 196 192 197 197 197 1966 1962 1 1 1 196 192 193 193 193 1926 1922 2 Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: Federal Reserve Board. Page 7 / April 2, 21 / Chapter 2 Charts: www.

7 6 Figure 1. CRB RAW INDUSTRIALS SPOT PRICE INDEX* (1967=, daily) C 7 6 /23 3 3 2 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 2 * Includes copper scrap, lead scrap, steel scrap, tin, zinc, burlap, cotton, print cloth, wool tops, hides, rosin, rubber, and tallow. Note: C = China joined World Trade Organization on December 11, 21. Source: Commodity Research Bureau. 17 1 12 Figure 16. BRENT CRUDE OIL PRICE (dollars per barrel, daily) C 17 1 12 7 /2 7 2 2 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Note: C = China joined World Trade Organization on December 11, 21. Source: Haver Analytics. Page / April 2, 21 / Chapter 2 Charts: www.

12 Figure 17. MSCI STOCK PRICE INDEXES (local currency) /2 7 6 /2 6 C 3 China 2 2 Emerging kets 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 Note: C = China joined World Trade Organization during December 21. Source: MSCI. 22 2 Figure 1. CHINA: INDUSTRIAL PRODUCTION* (yearly percent change) 22 2 1 1 16 1 C 16 1 12 12 1 1 6 6 2 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 2 * Value added basis. Note: C = China joined World Trade Organization during December 21. Source: China National Bureau of Statistics. Page 9 / April 2, 21 / Chapter 2 Charts: www.

1. 1. Figure 19. CHINA: POPULATION (billions, ratio scale) 217 1. 1. 1.3 1.3 1.2 1.2 1.1 1.1 1. 1..9..9..7.7.6.6. 9 1 3 7 9 61 63 6 67 69 71 73 7 77 79 1 3 7 9 91 93 97 99 1 3 7 9 11 13 1 17 19 21. Source: State Statistical Bureau of the People s Republic of China. 2 Figure 2. CHINA: POPULATION (1-year change, millions) 3. 3. 2 1-year growth rate at annualized rate 2. 1 2. 1. 1. 217 217. 9 61 63 6 67 69 71 73 7 77 79 1 3 7 9 91 93 97 99 1 3 7 9 11 13 1 17 19 21. Source: State Statistical Bureau of the People s Republic of China. Page 1 / April 2, 21 / Chapter 2 Charts: www.

9 Figure 21. CHINA: RURAL & URBAN POPULATION* (as a percent of total population) 9 7 6 Rural Urban 217 7 6 O C 217 3 3 2 2 1 1 2 6 6 62 6 66 6 7 72 7 76 7 2 6 9 92 9 96 9 2 6 1 12 1 16 1 2 22 * Estimates through 21, projections from 216 through 2. Note: O = China announced Open Door Policy during December 197. C = China joined World Trade Organization during December 21. Source: China National Bureau of Statistics. 3 3 2 2 1 1 - -1-1 -2 3 3 2 2 1 1 - -1-1 -2 Figure 22. CHINA: URBAN POPULATION (yearly change, millions) RURAL POPULATION 2 6 6 62 6 66 6 7 72 7 76 7 2 6 9 92 9 96 9 2 6 1 12 1 16 1 2 22-2 217 217 3 3 2 2 1 1 - -1-1 -2 3 3 2 2 1 1 - -1-1 Source: United Nations. Page 11 / April 2, 21 / Chapter 2 Charts: www.

1 16 1 Figure 23. EUROZONE: GOVERNMENT 1-YEAR BOND YIELDS (percent) D NIRP QE QEE 1 16 1 12 12 1 6 Bond Yields France Germany Italy Spain 1 6 2 2-2 93 9 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Note: D (7/26/12) = ECB President io Draghi pledged to do "whatever it takes" to defend the euro. NIRP (6//21) = negative interest-rate policy. QE (1/22/1) = quantitative easing. QEE (3/1/16) = expansion and extension of QE with corporate bond purchases started 6/1/16. Source: Financial Times. -2 7 Figure 2. BRIC MSCI STOCK PRICE INDEX (in local currency, daily) C /2 7 6 6 3 3 2 2 1 1 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Note: C = China joined World Trade Organization on December 11, 21. Source: MSCI. Page 12 / April 2, 21 / Chapter 2 Charts: www.

13 12 12 Figure 2. WORLD INDUSTRIAL PRODUCTION (EX CONSTRUCTION) (2=, swda*, ratio scale) Jan 13 12 12 11 11 11 11 1 1 9 9 7 7 7 7 6 6 6 6 91 92 93 9 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 * Seasonally and working day adjusted. Source: CPB Netherlands Bureau for Economic Policy Analysis. 16 1 1 13 12 Figure 26. WORLD INDUSTRIAL PRODUCTION (EX CONSTRUCTION) (2=, swda*, ratio scale) Jan 16 1 1 13 12 11 11 9 9 7 7 6 6 Industrial Production Advanced Economies Emerging Economies 3 91 92 93 9 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 3 * Seasonally and working day adjusted. Source: CPB Netherlands Bureau for Economic Policy Analysis. Page 13 / April 2, 21 / Chapter 2 Charts: www.

1 1 Figure 27. OECD INDUSTRIAL PRODUCTION (19=, sa, ratio scale) Dec 1 1 13 13 12 12 11 11 1 1 7 7 6 6 7 76 77 7 79 1 2 3 6 7 9 9 91 92 93 9 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Source: OECD. 1 1 13 12 Figure 2. WORLD EXPORTS: VOLUME (2=, sa, ratio scale) Jan 1 1 13 12 11 11 9 9 7 7 6 6 3 91 92 93 9 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Source: CPB Netherlands Bureau for Economic Policy Analysis. 3 Page 1 / April 2, 21 / Chapter 2 Charts: www.

23 2 Figure 29. WORLD EXPORTS: VALUE (trillion dollars, annualized, nsa, ratio scale) Dec 23 2 17 17 1 1 11 11 2 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 Source: IMF. 7. 6. 6.. Figure 3. G7 EXPORTS (trillion dollars, saar, ratio scale) Feb 7. 6. 6........ 3. 3. 3. 3. 2. 2 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 Source: Haver Analytics. 2. Page 1 / April 2, 21 / Chapter 2 Charts: www.

6 Figure 31. INDUSTRIAL COMMODITY PRICES & WORLD EXPORTS 21 6 Dec 19 CRB Raw Industrials Spot Price Index* (1967=) /23 17 Value of World Exports (IMF) (trillion dollars, annualized, nsa) 1 13 11 3 9 3 7 2 2 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 3 * Includes copper scrap, lead scrap, steel scrap, tin, zinc, burlap, cotton, print cloth, wool tops, hides, rosin, rubber, and tallow. Source: Commodity Research Bureau and IMF. 7 6 Figure 32. WORLD EXPORTS (VALUE): G7 vs REST OF WORLD (percent of total world exports using 12-month averages) Rest of World Dec 7 6 6 6 G7 3 3 3 Dec 3 2 9 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Source: IMF and Haver Analytics. 2 Page 16 / April 2, 21 / Chapter 2 Charts: www.

7 6 Figure 33. PURCHASING MANAGERS INDEXES: GLOBAL (sa) Global PMIs Composite Manufacturing Non-Manufacturing 7 6 3 3 2 2 1 1 9 213 21 21 216 217 21 Source: kit and Haver Analytics. 9 9 7 6 Figure 3. PURCHASING MANAGERS INDEXES: ADVANCED ECONOMIES Advanced Economies PMIs Composite Manufacturing Non-Manufacturing 9 7 6 3 3 2 2 1 1 9 213 21 21 216 217 21 Source: kit and Haver Analytics. 9 Page 17 / April 2, 21 / Chapter 2 Charts: www.

7 6 Figure 3. PURCHASING MANAGERS INDEXES: EMERGING ECONOMIES 7 6 3 Emerging Economies Composite Index Manufacturing Non-Manufacturing 3 2 2 1 1 9 213 21 21 216 217 21 Source: kit and Haver Analytics. 9 13 12 Figure 36. OECD: LEADING INDICATORS* 13 12 11 11 Feb 99 99 9 9 97 97 96 96 9 199 1999 2 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 9 * A reading above that is rising predicts expansion, above and falling a downturn, below and falling a slowdown, and below and rising a recovery. Source: Haver Analytics. Page 1 / April 2, 21 / Chapter 2 Charts: www.

13 Figure 37. OECD: LEADING INDICATORS* 13 11 11 Feb 99 99 97 US Europe Japan 97 93 199 1999 2 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 93 * A reading above that is rising predicts expansion, above and falling a downturn, below and falling a slowdown, and below and rising a recovery. Source: OECD and Haver Analytics. 16 Figure 3. BRICs: LEADING INDICATORS* 16 1 Feb 1 12 12 9 9 96 9 Brazil China India Russia 96 9 92 92 9 199 1999 2 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 9 * A reading above that is rising predicts expansion, above and falling a downturn, below and falling a slowdown, and below and rising a recovery. Source: OECD and Haver Analytics. Page 19 / April 2, 21 / Chapter 2 Charts: www.

13 Figure 39. EUROZONE: ECONOMIC SENTIMENT INDICATOR* & REAL GDP 6 12 11 2 9 7 Real GDP (yearly percent change) Economic Sentiment Indicator* (long-term average=, sa) -2 - -6 6 2 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 - * The overall economic sentiment indicator (ESI) is derived from the industrial (weight %), service (3%), consumer (2%), construction (%), and retail trade (%) confidence indicators. Source: Statistical Office of the European Communities, European Commission, and Haver Analytics. 12 11 Figure. EUROZONE: INDUSTRIAL PRODUCTION (21=, sa) 12 11 11 1 Total Excluding Construction Manufacturing Feb 11 1 9 9 7 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Source: Statistical Office of European Communities. 7 Page 2 / April 2, 21 / Chapter 2 Charts: www.

1 1 13 13 12 12 11 11 1 9 7 7 6 Figure 1. EURO ZONE RETAIL SALES VOLUMES EXCLUDING AUTOS & MOTOR CYCLES (21=) Eurozone Germany France Italy Spain 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 Source: Statistical Office of the European Communities. Feb 1 1 13 13 12 12 11 11 1 9 7 7 6 13 13 12 12 11 11 1 9 7 Figure 2. GERMANY: IFO BUSINESS CLIMATE INDEX (2=, sa) Total Current Situation Index Expectations Index 91 92 93 9 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Source: Ifo. 13 13 12 12 11 11 1 9 7 Page 21 / April 2, 21 / Chapter 2 Charts: www.

12 11 Figure 3. JAPAN: INDUSTRIAL PRODUCTION (21=) 12 11 11 11 1 Feb 1 9 9 7 7 2 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 Source: Ministry of Economy, Trade & Industry. 7 7 7 6 6 3 3 2 2 1 Figure. MERCHANDISE EXPORTS (billions US dollars, saar) South Korea Taiwan 2 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 Source: Haver Analytics. 7 6 6 3 3 2 2 1 Page 22 / April 2, 21 / Chapter 2 Charts: www.

19 Figure. CHINA: MERCHANDISE TRADE* (trillion yuan, saar, ratio scale) 19 1 1 9 9 Total Exports Imports 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 * Excluding Hong Kong. Source: China Customs and Haver Analytics. 3. 3.6 Figure 6. CHINA: RAILWAYS FREIGHT TRAFFIC & IMPORTS PLUS EXPORTS 3. 3.2 3. 2. 3 2.6 2. 2.2 2. 1. Railways Freight Traffic ( million tons, nsa) Imports Plus Exports (billion yuan, saar) 2 1.6 1. 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 Source: China National Bureau of Statistics, China Customs, and Haver Analytics. Page 23 / April 2, 21 / Chapter 2 Charts: www.

2 Figure 7. US EXPORTS & IMPORTS OF GOODS & SERVICES IN NOMINAL GDP (as a percent of nominal GDP) 2 1 Q 1 1 1 Goods & Services Imports Exports 2 6 6 62 6 66 6 7 72 7 76 7 2 6 9 92 9 96 9 2 6 1 12 1 16 1 2 22 Source: Bureau of Economic Analysis. 3 Figure. WORLD EXPORTS VOLUME & US REAL MERCHANDISE EXPORTS + IMPORTS (yearly percent change) 3 2 2 1 1 Feb -1-1 -2 Growth Rates (y/y) World Exports: Volume US Real Exports + Imports -2-3 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Source: CPB Netherlands Bureau for Economic Policy Analysis and Bureau of Economic Analysis. -3 Page 2 / April 2, 21 / Chapter 2 Charts: www.

2.6 2. Figure 9. JAPAN: LIVE BIRTHS & DEATHS (12-month sum, millions) 2.6 2. 2.2 2.2 2. 2. 1. 1. 1.6 1. Live Births Deaths 1.6 1. 1.2 1.2 1. 1...6 Nov..6. 2 6 6 62 6 66 6 7 72 7 76 7 2 6 9 92 9 96 9 2 6 1 12 1 16 1 2 22. Source: Ministry of Health, Labor and Welfare. 1 Figure. US: REAL GDP (yearly percent change) 1 1 1 Q - 2 6 6 62 6 66 6 7 72 7 76 7 2 6 9 92 9 96 9 2 6 1 12 1 16 1 2 22 - Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: Bureau of Economic Analysis. Page 2 / April 2, 21 / Chapter 2 Charts: www.

16 1 12 Figure 1. EUROZONE: PRIVATE SECTOR* LOANS OUTSTANDING AT MFIs** (trillion euros, sa) Total Private Sector Households (including non-profit institutions) Nonfinancial Corporations Others*** Feb 16 1 12 1 1 6 6 2 2 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 * Total Private Sector includes Households (including non-profit institutions), Nonfinancial corporations, Other financial intermediaries, insurance corporations, and pension funds. ** Monetary Financial Institutions (MFIs) exclude Euro System of Central Banks (ESCB) and Money ket Funds (MMFs). *** Others include other financial intermediaries, insurance corporations, and pension funds. Source: Haver Analytics and ECB. 12 Figure 2. EUROZONE: INDUSTRIAL PRODUCTION EXCLUDING CONSTRUCTION 12 11 11 Feb 9 Eurozone Germany France Italy Spain 9 7 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 Source: Haver Analytics. 7 Page 26 / April 2, 21 / Chapter 2 Charts: www.

2 Figure 3. CHINA: REAL GDP 2 2 yearly percent change quarterly percent change, saar 2 1 1 1 1 Q1 92 93 9 96 97 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Source: China National Bureau of Statistics and Haver Analytics. Figure. 2 CHINA: BANK LOANS (trillions, nsa) 1 1 US dollars Yuan 1 2 21 22 23 2 2 26 27 2 29 21 211 212 213 21 21 216 217 21 219 22 Source: People s Bank of China. Page 27 / April 2, 21 / Chapter 2 Charts: www.

12 1 Figure. CHINA: PRODUCER PRICE INDEX (yearly percent change) 12 1 6 6 2 2-2 -2 - - -6-6 - -1 9 99 1 2 3 6 7 9 1 11 12 13 1 1 16 17 1 19 2 Source: China National Bureau of Statistics. - -1 1 16 Figure 6. GLOBAL POPULATION: YOUNGER CHILDREN & OLDER ADULTS (as a percent of total population) 1 16 1 1 12 Age Under 6 & Older 12 1 1 6 6 1 1 196 196 197 197 19 19 199 19 2 2 21 21 22 22 23 23 2 2 2 Source: United Nations, 213. Page 2 / April 2, 21 / Chapter 2 Charts: www.

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