Visualizing Market Dynamics: A Guide to Market Trends
Originally published: Foundry Partners Thought Leadership, July 2023
Visual representation tools have been essential in the progress of civilizations. During ancient times, early settlers created geographical maps to guide travelers through unchartered territories while others depicted the constellations in almanacs to help with the planting and harvest seasons.
It was not until the late 1700s when a Scottish economist published the first line charts and bar graphs in a piece that examined British trade and debt entitled "The Commercial and Political Atlas." William Playfair was seeking an easier way to relay complex information and wrote that he hoped readers could get information without "the fatigue and trouble of studying the particulars of which it is composed."
This inaugural piece has been created in that same vein — to provide a snapshot for investors through a handful of visualizations on some of the most influential macro drivers impacting markets today.
Labor Markets & Consumer Spending
Employment remains the dominant driver of retail spending, with job openings near all-time highs as of June 2023. The ratio of people unemployed per job opening has compressed dramatically since the COVID disruption, sustaining consumer spending even as stimulus fades.
Housing Affordability
Housing affordability remains near decade lows while the pace of rental cost inflation stays elevated. The combination of rising mortgage rates and persistently high home prices has pushed the NAR Housing Affordability Index to levels not seen since the early 1980s.
Energy: Production, Consumption & Capital Discipline
Worldwide oil and natural gas rig counts have been in a declining trend since 2015 — even as U.S. consumption rises above pre-COVID levels. This structural underinvestment in supply, combined with recovering demand, creates a potentially durable tailwind for energy prices.
The Two Dominant Narratives of H1 2023
According to Google Trends, the two dominant themes of the first half of 2023 — the banking crisis and artificial intelligence — both reached peak search interest in the spring. Despite the bank failures, volatility (VIX) has remained surprisingly subdued, hovering well below its historical average of 21.
*Originally published: Foundry Partners Thought Leadership, July 2023. Download the full report with charts on the Research page.*
Mario Tufano, CFA®, CFP®, is a portfolio manager, author, and independent researcher. Follow his work on LinkedIn or read his book, The Golden Age of Bull$hit.