FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION. 1Q | 2014. As at 31 December 2013. Paradigm Guide to the Markets. Guide to the Markets. Guide to the Markets is:- A collection of easy to use charts on global markets
1Q | 2014
As at 31 December 2013
ParadigmGuide to the Markets
Guide to the Markets is:-
Guide to the Markets helps you to have more engaged in-depth conversations with clients helping to build stronger relationships with them:
It generates messages that are simple without being simplistic
It does not offer opinions by itself – it is an illustrative tool
It provides clients with information to help them make more informed investment decisions
It enhances advisers understanding of the implications of the wider economic backdrop and the influence this has on their clients portfolios
It helps their clients avoid being too driven by short term market events
Arms advisers with ideas and insights to be shared with their clients
GTM - UKLife Expectancy and Pension Shortfall
If you’re 65 today, the probability of living to a specific age
Perceived retirement shortfall by country
Expected savings shortfall (years)
Savings expected to last (years)
Couple – at least one lives to specified age
Other Assets and
Source: (Left) ‘Analysis of the 2007 Period Life Table for Social Security Area Population’. US Social Security Administration, J.P. Morgan Asset Management. (Right) ‘The Future of Retirement: A new reality’ study by HSBC, J.P. Morgan Asset Management. Figures represent the expected portion of retirement which will not be covered by retirement savings based on survey data. “Guide to the Markets - UK”. Data as at 31 December 2013.
Lowest relative to 50 PMI
Highest relative to 50 PMI
Source: Markit, J.P. Morgan Asset Management. Heatmap colours are based on PMI relative to 50, which indicates expansion or contraction of the sector, for the time period shown. Expansion is percentage of 35 country universe covered by Markit with a PMI greater than 50 or a six month increase in the index greater than or equal to four. “Guide to the Markets - UK”. Data as at 31 December 2013.
Government deficit reduction
% of GDP
Source: IMF World Economic Outlook October 2013, J.P. Morgan Asset Management. Chart shows the change in the government budget deficit (excluding debt interest) as a % of GDP between 2010 and 2013 and between 2013 to 2016. *Ireland uses the period 2009 to 2013 due to distorting impact of banking sector bailouts in 2010. “Guide to the Markets – UK”.Data as at 31 December 2013.
% of GDP
Lending to individuals: secured and unsecured lending
Three month annualised growth rate
Annual income generated by £100,000 investment in a one-year bank deposit
Source: (Top left and right) Bank of England, FactSet, J.P. Morgan Asset Management. (Bottom) Bloomberg, ONS, J.P. Morgan Asset Management. Orange marker points represent year on year inflation for that year and illustrates how the value of income that would have been eroded due to inflation. Inflation is realised inflation from 2000-2006, expected annual inflation thereafter. “Guide to the Markets - UK”. Data as at 31 December 2013.
Housing starts and surveys
Housing starts, RICS Housing Market Survey
Indexed to 100 at December 2002
Housing starts (000s)
Number of loans approved for house purchase, thousands, seasonally adjusted
Dwelling price (ONS)
Source: (Left) Halifax, ONS, Nationwide, J.P. Morgan Asset Management. (Top right) FactSet, Royal Institute of Chartered Surveyors (RICS), J.P. Morgan Asset Management. (Bottom right) Bank of England, FactSet, J.P. Morgan Asset Management .“Guide to the Markets - UK”. Data as at 31 December 2013.
Magnitude of bull run
Total return, cumulative
S&P 500 earnings and performance
Index level, analyst estimates of the next twelve months of earnings
S&P 500 index level
S&P 500 profits
Length of bull run
Number of months
Average: 67 months
Source: (All charts) Standard & Poor’s, FactSet, J.P. Morgan Asset Management. A bear market is defined as a peak-to-trough decline in the S&P 500 Index (price only) of 20% or more. The bull run data reflect the market expansion from the bear market low to the subsequent market peak. All returns are S&P 500 Index returns and do not include dividends. *Current bull run from 9 March 2003 through 31 December 2013. “Guide to the Markets – UK”. Data as at 31 December 2013.
Millions of units, SAAR
Passenger cars per 1,000 people
Source: (Top) BEA, China Automotive Information Network, J.P. Morgan Asset Management. (Bottom) World Bank, J.P. Morgan Asset Management. *Brazil and India as at 2009. SAAR is seasonally adjusted annual rate. “Guide to the Markets - UK”. Data as at 31 December 2013.
Source: (Both charts) Barclays, FactSet J.P. Morgan Asset Management.
*Interest rate volatility is based on the absolute value of the daily change in a balanced fixed income portfolio.
Fixed income sectors shown are provided by Barclays Capital and are represented by – Treasury UK: Barclays Sterling Aggregate Gilts Index; Floating Rate – Barclays US Floating Rate Notes (BBB); IG credit: Barclays Global Aggregate – Corporates Index; High yield: Barclays Global High Yield Index; EMD sovereign ($): Barclays Emerging Markets – Sovereigns index; EMD corporate ($): Barclays Emerging Markets – Corporates Index; EMD sovereign (LC): Barclays Emerging Market Local Currency Government Index.
Change in bond price is calculated using both duration and convexity.
“Guide to the Markets - UK”.
Data as at 31 December 2013.
Interest rate volatility*
Three month moving average of daily absolute change
10y US Treasury
Estimated impact of a 1% rise in local interest rates on selected indices
Investment grade credit
EMD USD sovereign
EMD USD corporate
EMD LC sovereign
FTSE AllShare Index intra-year declines vs calendar year returns
Despite average intra-year drops of 16.0% (median 12.6%), annual returns are positive in 21 of 28 years
Calendar year return
Source: FTSE, FactSet, J.P Morgan Asset Management. Returns are based on price only and do not include dividends. Intra-year decline refers to the largest market fall from peak to trough within a short-term period during the calendar year. Returns shown are calendar years from 1985 to 2013. “Guide to the Markets - UK”. Data as at 31 December 2013.
Other Assets and
Source: FTSE, MSCI, Barclays, Dow Jones/UBS, FactSet, J.P. Morgan Asset Management. Returns are in base currency of the index. Annualised period covers 2004 to 2013. Govt bonds: Barclays Global Aggregate Government Treasuries; HY bonds: Barclays Global High Yield; EMD: Barclays Emerging Markets (USD); IG bonds: Barclays Global Aggregate – Corporates; Cmdty: DJ UBS Commodity; REITS: FTSE NAREIT All REITS; World ex UK: MSCI World ex UK; All share: FTSE All Share; Cash: JP Morgan Cash United Kingdom (3M). Portfolio; 20%: All Share; 10%: government bonds; 15%: IG bonds; 15%: EM equities; 10%: World ex UK equities; 10%: HY bonds; 5%: EMD; 5%: commodities; 5%: cash; and 5%: REITS. “Guide to the Markets - UK”. Data as at 31 December 2013.
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Unless otherwise stated, all data as at 31 December 2013.