January 16, 2020
Twelve for '19
Twelve charts illustrating the themes and market environment in 2019.
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.
A Decade to Remember
Chart 1: Central bank balance sheets helped drive asset prices
Chart 2: Asset Returns were both strong and broad based
Chart 3: The first decade without a U.S. recession in modern history
Chart 4: Despite high global liquidity, overnight liquidity has weakened substantially
Chart 5: Global bond yields declined across the developed world
Global Benchmark yields
Chart 6: While the number of publicly traded companies shrunk over the decade, the number of corporate issues increased
Chart 7: Disruption was most prevalent in Energy, Retail, and Tech
Chart 8: Tariff fallout has led to global supply-chain diversification
Chart 9: Corporate leverage is a focus of the rating agencies
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
Rating drift = (notches upgrades - notches downgrades)/rated issuers.
Chart 11: A decade of historically strong returns
Chart 12: Technology represented the bulk of top-returning S&P 500 stocks
Important Notes and Disclosures
This publication is provided by Pacific Funds. Pacific Funds refers to Pacific Funds Series Trust. This commentary reflects the views of the portfolio managers at Pacific Asset Management LLC as of January 8, 2020, are based on current market conditions, and are subject to change without notice. These views represent the opinions of the portfolio managers and are presented for informational purposes only. These views should not be construed as investment advice, an endorsement of any security, mutual fund, sector, or index, the offer or sale of any investment, or to predict performance of any investment. Any forward-looking statements are not guaranteed. All materials are compiled from sources believed to be reliable, but accuracy cannot be guaranteed.
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