Some states in the United States have done exceptionally well over the past decade creating massive number of new jobs and reporting record low unemployment. There are reports of major labour shortages in at least some states currently.
Here are maps of the unemployment rate in each state in May 2008 and May 2018,
The business of aging or the youth economic dividend? Or both? Well, we have written up something on both but in the meanwhile here’s the percentage population for each country (Data Source: World Bank) by three age groups – Under 15, 15 to 64 and 65 and over.
This is a consolidated and slightly edited version of the series on economic fundamentals we ran last month.
Do economic fundamentals matter today? We look at the strange market conditions today. We are living in truly interesting times …
Stock Market Valuations
Equities globally have never been more valuable with market capitalization hitting $90 trillion.
Amazon trades at what a Price to Earnings ratio of some 200. Apple is worth some $900 billion. Even Tesla which makes no profit and is unlikely to make any profit any time soon is worth some $55 billion, more than Ford or General Motors.
Netflix is valued at $159 billion (13.6 times revenues of $11.7 billion) with 110 million paid (and 117 million total) subscribers. Netflix trades at a price to earnings ratio of 220. The company expects free cash flow of -$3 to -$4 billion in 2018 (yes, that is negative cash flow). Yet Netflix’s market cap is now greater than Disney’s and Comcast’s.
Both residential and non-residential construction spending continue to grow in the United States. Total construction spending for May 2018 was an annualized $1.31 trillion, up from $1.25 trillion in May 2018.
Everyone seems to be focussing on the equity markets recently, but equity markets haven’t really moved much over the past one month. Over the past month, major equity markets have lost between 1.5% to 4%.
The real action is in bonds and commodities. And trade seems to be flourishing too.
10-year government bond yields of major economies are lower by 5% to 40% (in relative terms not absolute terms) in just the past month. 10-year German bonds are down 12 bps over the past month. That wouldn’t sound much but they are down 28% from 42 bps to 30 bps. U.K. yields are down 8%, U.S. yields down 5%, Japanese yields down 40%. Even Greek yields are down 20% over just the past month. Does the market anticipate a pause in interest rate rises? It would appear so.