A dozen charts highlight a remarkable decade for the markets.
2019 was a fitting finale to an extraordinary decade that displayed the long-term resilience of economies and markets. Victory went to risk-takers, even though it rarely felt comfortable. Central banks provided the foundation and mechanism for asset-price appreciation. Corporations issued debt, purchased stock, and acquired competitors. Private equity made fortunes “rolling up” industries. Amazon became the flagship reminder for secular disruption, as technology pushed creative destruction. These are a few observed themes. Our humble conclusion: a mix of size (bigger having a significant advantage) and agility were hugely important to success over the past decade. In this note, we highlight some charts that help illustrate the story.
Chart 1: Central bank balance sheets helped drive asset prices
Source: U,S, Federal Reserve, as of 11/28/19.
Chart 2: Asset returns were both strong and broad based
Past performance does not guarantee future results. The referenced indices are shown for informational purposes only and are not meant to represent the Funds. Investors cannot directly invest in an index.
Chart 3: The first decade without a U.S. recession in modern history
Source: St. Louis Federal Reserve, as of 9/30/19.
Chart 4: Despite high global liquidity being high, overnight liquidity has weakened substantially
Source: Bank of America Merrill Lynch, as of 11/27/19.
Chart 5: Global bond yields declined across the developed world
Source: Bloomberg Barclays, as of 12/27/19.
Global benchmark yields
Source: Bloomberg Barclays, as of 12/30/19.
Chart 6: While the number of publicly traded companies shrunk over the decade, the number of corporate issues increased
Sources: Worldbank, Bloomberg Barclays, as of 11/30/19.
Chart 7: Disruption was most prevalent in Energy, Retail, and Tech
Source: Leveraged Commentary and Data, as of 12/27/19.
Chart 8: Tariff fallout has led to global supply-chain diversification
Source: Bloomberg, as of 12/23/19.
Chart 9: Corporate leverage is a focus of the rating agencies
Sources: Moody's, Morgan Stanley research, as of 11/30/19.
Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest) and may change over time.
Chart 10: Moody’s 12-month ratings draft
Source: Moody's, as of 11/30/19.
Rating drift = (notches upgrades - notches downgrades)/rated issuers.
Chart 11: A decade of historically strong returns
Sources: Bloomberg Barclays, Credit Suisse, Leveraged Commentary and Data, as of 12/30/19.
Chart 12: Technology represented the bulk of top-returning S&P 500 stocks.
Source: Bloomberg, as of 12/21/19.
For information purposes only. Does not represent the Funds.
¹Bloomberg Finance L.P., 10/30/19