10 Charts You Must See
#10 Mortgages
The chart below shows the average single-family U.S. home price multiplied by the 30-year fixed mortgage rate. This chart attempts to show how dramatically higher the financial burden of home ownership has become in the United States. Using a cross chart allows us to better visualize the rate of change. Each cross represents one month.
We can see that the current situation looks even more drastic than the subprime mortgage crisis that preceded the Great Recession. Although wages are rising, the rate of change in the cost of home ownership is rising much faster. In this regard, one may conclude that extreme inflation in home prices coupled with a rapidly rising mortgage rates makes every borrower today subprime.
#9 Tech Bubble
The yearly chart below shows the ratio between tech's performance (QQQ) and the performance of the S&P 500 (SPY). Notice that in 2020 and 2021 tech tried but was unable to close above the peak before the Dotcom Bust. Tech stocks then crashed in the first half of 2022.
Take a look at the yearly (or semi-yearly) Stochastic RSI oscillators in the series of relative charts below.
Could these charts suggest that Microsoft is about to underperform the Nasdaq for years, that the Nasdaq in turn may underperform the S&P 500 for years, that the S&P 500 in turn may underperform Gold for years, and that Gold may underperform U.S. Treasuries on the 6-month timeframe? Using oscillators in this manner is limitedly valid but one may ponder what these charts say about the future. A shift of investment allocation in this manner typically occurs during a financial crisis. For those who may not already be familiar, check out Exter's Pyramid below.
During financial crises market participants typically flee the riskier assets near the top of the inverted pyramid due to these assets' vulnerability to default. Simultaneously, market participants accumulate the more secure and tangible assets lower on the inverted pyramid.
This is not a trade or portfolio reallocation recommendation. The QQQ/SPY chart is adjusted for dividends. The GOLD/TLT chart is on a 6M rather than yearly chart merely because not enough data exists to generate a Stochastic RSI on the yearly level.
#8 Japan's Debt
Although what you see below may look like a single chart of a bell curve, it is actually two charts placed side-by-side.
On the left side is a quarterly chart of the balance sheet of Japan's central bank. As you can see, the amount of Yen on the central bank's balance sheet is trending up toward one quadrillion.
In contrast, on the right side is a chart that shows the amount of gold that each Japanese Yen can purchase. As you can see, the amount of Gold that a single Japanese Yen can purchase is quickly approaching zero.
Smoothened moving averages were used to generate these charts to simplify and enhance the visualization of trends.
#7 Crypto Winter
The below yearly chart shows the equation 1/BTCUSD, which mathematically represents how much Bitcoin a single U.S. dollar can buy, (or simply USD/BTC).
Despite having major “crypto winters” about once every several years, the amount of Bitcoin that one fiat U.S. dollar can buy continues to trend endlessly toward zero (not much unlike the Yen to Gold chart above). The U.S. dollar loses value over time as more and more dollars are created, which must always continue in a debt-based economy.
During periods when the Federal Reserve tightens the money supply, the rise in the U.S. dollar’s value relative to Bitcoin is barely noticeable in the chart, even when log-adjusted. Next time someone tells you that Bitcoin is going to zero [dollars] show them this chart, which technically shows that the exact opposite is more true.
This is not trading or investment advice, Bitcoin and all intangible cryptocurrency assets are highly volatile. You can lose a lot or all of your money trading or investing in these assets.
#6 Dollar Index
As the below chart shows, the dollar index appears be breaking out of a yearly bull flag and breaking above the yearly exponential moving averages (EMA) ribbon for the first time ever.
If this trend continues, what economic consequences might this have?
The Dollar Milkshake Theory attempts to answer that question: youtube.com/watch?v=xxzy3sLs4Bs
#5 Shiller PE Ratio
The Shiller PE Ratio is often used as a measure of stock market valuation. The below chart shows that stocks are so overvalued that even after one of the worst first halves of the year in stock market history, stock valuations have merely come down to the same level as the peak before the Great Depression.
#4 Stock Market Channel
The below stock market channel was created by me using a series of regression lines based on standard deviation from the mean price of the entire history of the S&P 500.
As the charts show, the S&P 500 is near record levels above the mean even after the selloff during the first half of 2022.
#3 Cost of Debt
The below chart attempts to illustrate the cost to the United States of servicing its debt (i.e. interest payments). More specifically, the chart shows the monthly rate of change for the equation of total public debt multiplied by the Fed Funds rate (as a decimal).
As you can see, we've never seen an explosive jump in the monthly rate of change in debt service to this degree ever since data became available about 55 years ago.
This chart was introduced to me by prd001 . It is unscientific and is a mere thought experiment. For official, but lagging, data you can view the Federal Reserve's data on interest payments (Symbol: A091RC1Q027SBEA).
#2 Monetary Easing
The below chart attempts to illustrate just how unprecedented monetary easing is. It provides a visual representation of the total assets on the government's balance sheet as a percentage of nominal GDP. It uses the Bank of England's balance sheet because it provides the most reliable comprehensive records since 1700. The chart then superimposes the Federal Reserves' assets (relative to the U.S. nominal GDP) in the present-day to illustrate the fact that at no point over the past 322 years has such a large amount of assets, as a percentage of nominal GDP, been the norm.
Monetary easing is therefore a modern economic experiment. How might it end?
#1 Climate Change
This chart is so consequential that it has led to the creation of a new epoch in human existence: the Anthropocene Epoch. The chart shows the meteoric rise of carbon dioxide in the earth's atmosphere.
Here are some video you should watch:
Climate Spiral: youtube.com/watch?v=jWoCXLuTIkI
Carbon Dioxide Pump Handle: youtube.com/watch?v=Mr84tEbCQSg
If there is one chart that all future generations will attribute to everyone living today, it is this.
The chart below shows the average single-family U.S. home price multiplied by the 30-year fixed mortgage rate. This chart attempts to show how dramatically higher the financial burden of home ownership has become in the United States. Using a cross chart allows us to better visualize the rate of change. Each cross represents one month.
We can see that the current situation looks even more drastic than the subprime mortgage crisis that preceded the Great Recession. Although wages are rising, the rate of change in the cost of home ownership is rising much faster. In this regard, one may conclude that extreme inflation in home prices coupled with a rapidly rising mortgage rates makes every borrower today subprime.
#9 Tech Bubble
The yearly chart below shows the ratio between tech's performance (QQQ) and the performance of the S&P 500 (SPY). Notice that in 2020 and 2021 tech tried but was unable to close above the peak before the Dotcom Bust. Tech stocks then crashed in the first half of 2022.
Take a look at the yearly (or semi-yearly) Stochastic RSI oscillators in the series of relative charts below.
Could these charts suggest that Microsoft is about to underperform the Nasdaq for years, that the Nasdaq in turn may underperform the S&P 500 for years, that the S&P 500 in turn may underperform Gold for years, and that Gold may underperform U.S. Treasuries on the 6-month timeframe? Using oscillators in this manner is limitedly valid but one may ponder what these charts say about the future. A shift of investment allocation in this manner typically occurs during a financial crisis. For those who may not already be familiar, check out Exter's Pyramid below.
During financial crises market participants typically flee the riskier assets near the top of the inverted pyramid due to these assets' vulnerability to default. Simultaneously, market participants accumulate the more secure and tangible assets lower on the inverted pyramid.
This is not a trade or portfolio reallocation recommendation. The QQQ/SPY chart is adjusted for dividends. The GOLD/TLT chart is on a 6M rather than yearly chart merely because not enough data exists to generate a Stochastic RSI on the yearly level.
#8 Japan's Debt
Although what you see below may look like a single chart of a bell curve, it is actually two charts placed side-by-side.
On the left side is a quarterly chart of the balance sheet of Japan's central bank. As you can see, the amount of Yen on the central bank's balance sheet is trending up toward one quadrillion.
In contrast, on the right side is a chart that shows the amount of gold that each Japanese Yen can purchase. As you can see, the amount of Gold that a single Japanese Yen can purchase is quickly approaching zero.
Smoothened moving averages were used to generate these charts to simplify and enhance the visualization of trends.
#7 Crypto Winter
The below yearly chart shows the equation 1/BTCUSD, which mathematically represents how much Bitcoin a single U.S. dollar can buy, (or simply USD/BTC).
Despite having major “crypto winters” about once every several years, the amount of Bitcoin that one fiat U.S. dollar can buy continues to trend endlessly toward zero (not much unlike the Yen to Gold chart above). The U.S. dollar loses value over time as more and more dollars are created, which must always continue in a debt-based economy.
During periods when the Federal Reserve tightens the money supply, the rise in the U.S. dollar’s value relative to Bitcoin is barely noticeable in the chart, even when log-adjusted. Next time someone tells you that Bitcoin is going to zero [dollars] show them this chart, which technically shows that the exact opposite is more true.
This is not trading or investment advice, Bitcoin and all intangible cryptocurrency assets are highly volatile. You can lose a lot or all of your money trading or investing in these assets.
#6 Dollar Index
As the below chart shows, the dollar index appears be breaking out of a yearly bull flag and breaking above the yearly exponential moving averages (EMA) ribbon for the first time ever.
If this trend continues, what economic consequences might this have?
The Dollar Milkshake Theory attempts to answer that question: youtube.com/watch?v=xxzy3sLs4Bs
#5 Shiller PE Ratio
The Shiller PE Ratio is often used as a measure of stock market valuation. The below chart shows that stocks are so overvalued that even after one of the worst first halves of the year in stock market history, stock valuations have merely come down to the same level as the peak before the Great Depression.
#4 Stock Market Channel
The below stock market channel was created by me using a series of regression lines based on standard deviation from the mean price of the entire history of the S&P 500.
As the charts show, the S&P 500 is near record levels above the mean even after the selloff during the first half of 2022.
#3 Cost of Debt
The below chart attempts to illustrate the cost to the United States of servicing its debt (i.e. interest payments). More specifically, the chart shows the monthly rate of change for the equation of total public debt multiplied by the Fed Funds rate (as a decimal).
As you can see, we've never seen an explosive jump in the monthly rate of change in debt service to this degree ever since data became available about 55 years ago.
This chart was introduced to me by prd001 . It is unscientific and is a mere thought experiment. For official, but lagging, data you can view the Federal Reserve's data on interest payments (Symbol: A091RC1Q027SBEA).
#2 Monetary Easing
The below chart attempts to illustrate just how unprecedented monetary easing is. It provides a visual representation of the total assets on the government's balance sheet as a percentage of nominal GDP. It uses the Bank of England's balance sheet because it provides the most reliable comprehensive records since 1700. The chart then superimposes the Federal Reserves' assets (relative to the U.S. nominal GDP) in the present-day to illustrate the fact that at no point over the past 322 years has such a large amount of assets, as a percentage of nominal GDP, been the norm.
Monetary easing is therefore a modern economic experiment. How might it end?
#1 Climate Change
This chart is so consequential that it has led to the creation of a new epoch in human existence: the Anthropocene Epoch. The chart shows the meteoric rise of carbon dioxide in the earth's atmosphere.
Here are some video you should watch:
Climate Spiral: youtube.com/watch?v=jWoCXLuTIkI
Carbon Dioxide Pump Handle: youtube.com/watch?v=Mr84tEbCQSg
If there is one chart that all future generations will attribute to everyone living today, it is this.
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