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Economy - January 21, 2020

Economic Update — Reviewing Q4 2019

Ebbs and flows in the macroeconomy can often lead to tides of change for different sectors, industries, and public companies. Investors, especially those with longer time horizons, look for insights in economic data released by research companies and government agencies to make strategic adjustments to their portfolios.

For that reason, YCharts collects and makes available more than 300,000 economic series from sources such as the US Federal Reserve, Bureau of Labor Statistics, and hundreds of industry-specific authorities.

To make this data even more useful for advisors and investors, YCharts creates visuals highlighting some of the most noteworthy economic events and trends of the last quarter, then compiles them into a downloadable PowerPoint presentation that’s useful in investment committee meetings, when educating clients (including in quarterly newsletters), and for personal use.

All YCharts users can find the full deck in the Support Center, and YCharts Professional subscribers should reach out to their support contact if they’d like to customize the deck with their own firm’s logo or make other adjustments.

Below is a selection of insights from YCharts’ Q4 2019 Economic Summary Deck. To get access to the full deck and more telling economic visuals, schedule a YCharts demonstration with a product specialist.

US Oil Production vs. Imports from OPEC

US Imports of goods from OPEC nations have trended lower since 2011, but particularly so in the last two years. At the same time, US Crude Oil Production has taken off and continues to increase to new all-time highs. With the escalating tensions between the United States and Iran, you can expect a trending news topic that asks just how dependent (or not so) the US is on OPEC and its oil supply.

The Yield Curve Steepens

Remember all the talk about the inverted yield curve and the inevitable doom that would follow?

The last several months have seen the curve move back towards a more traditional, upward-sloping shape, with longer maturity issues yielding more than their shorter-term counterparts. Notably, however, yields are still at very low values compared to long-term historical averages. The recent “steepening” of the curve came from a combination of long-term rates rising and short-term rates dropping.

Yields often move up or down in tandem but at different paces, causing the curve to flatten or steepen. Moving forward, it will be worth keeping an eye on the curve to see in which direction yields trend.

Asset Class Performance by Quarter

The visual table below shows the performance of each asset class over the last 12 calendar quarters, with green cells showing relative outperformance and red showing relative underperformance in a given quarter.

The inability of any single asset class to regularly outperform, or stay consistently “green,” is a strong endorsement for a properly diversified portfolio; however, the long-lasting bull market is apparent here with equity categories like US Growth dominating the green shaded squares. It’s worth mentioning, though, that the lower returns of the fixed income assets are paired with less volatility.

Top Stocks of the Decade

The 2010s decade was particularly kind to the Consumer Cyclical and Technology, the only two sectors to outperform the S&P 500’s total return of 248.2%.

The best stock of the decade was Netflix (NFLX), up 3,650.7% over just less than 10 years, with an annualized return of nearly 44%. Energy far underperformed the rest of the sectors, posting only a 4.88% decade return, 0.6% annualized.

The chart above was originally featured in our blog Charts of the Decade: Looking Back on the 2010s, which discussed ten charts that told stories about the markets and the economy over the last decade.


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