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Author: Jenna Ross

How Disinflation Could Affect Company Financing

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

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The following content is sponsored by Citizens Commercial Banking

How Disinflation Could Affect Company Financing

The macroeconomic environment is shifting. Since the second half of 2022, the pace of U.S. inflation has been dropping.

We explore how this disinflation may affect company financing in Part 2 of our Understanding Market Trends series from Citizens.

Disinflation vs. Deflation

The last time inflation climbed above 9% and then dropped was in the early 1980’s.

Time PeriodMarch 1980-July 1983June 2022-April 2023*
Inflation at Start of Cycle14.8%9.1%
Inflation at End of Cycle2.5%4.9%

* The June 2022-April 2023 cycle is ongoing. Source: Federal Reserve. Inflation is based on the Consumer Price Index.

A decrease in the rate of inflation is known as disinflation. It differs from deflation, which is a negative inflation rate like the U.S. experienced at the end of the Global Financial Crisis in 2009.

How might slowing inflation affect the amount of debt and equity available to companies?

Looking to History

There are many factors that influence capital markets, such as technological advances, monetary policy, and regulatory changes.

With this caveat in mind, history signals that both debt and equity issuance expand after a period of disinflation.

Equity Issuance

Companies issued low levels of stock during the ‘80s disinflation period, but issuance later rose nearly 300% in 1983.

YearDeal Value
1980$2.6B
1981$5.0B
(Read more...)

Reimagining the 60/40 Portfolio for Today’s Market

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

Published • Updated •
The following content is sponsored by New York Life Investments

Reimagining the 60/40 Portfolio for Today’s Market

The 60/40 portfolio failed to protect investors from the volatile market of 2022. As economic conditions change, is it time to rethink the balanced portfolio?

This graphic from New York Life Investments highlights the current circumstances investors face, and a new 60/40 allocation that has historically produced higher risk-adjusted returns.

Nowhere for Investors to Hide

From 1977-2022, stocks and bonds had an average correlation of only 0.3. This weaker relationship between their market movements has helped reduce losses when one asset class performs poorly. 

However, stocks and bonds both dropped in value in 2022, indicating a high degree of correlation between the two asset classes.  The 60/40 portfolio—60% stocks and 40% bonds—lost nearly 17%, driven primarily by the Federal Reserve’s rapid rate hikes. It was the worst performance since the 2008 financial crisis.

Year60/40 Portfolio ReturnCorrelation
2022-16.9%0.7
202115.5%-0.1
202012.8%0.2
201920.8%0.4
2018-3.7%-0.1
201713.1%0.2
20166.8%0.3
2015-0.2%0.4
20149.2%0.6
201317.0%-0.1
20129.7%0.3
20113.1%-0.1
201010.3%0.4
200916.4%0
2008-21.0%-0.4
20074.9%0.7
20069.9%0.4
20052.8%0.5
20047.1%0.6
200317.5%-0.1
2002-9.9%-0.9
2001-4.4%-0.8
2000 (Read more...)

Comparing the Speed of Interest Rate Hikes (1988-2023)

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

Line chart showing the speed and severity of interest rate hikes from 1988-2023. The 2022-2023 cycle is the fastest and the most severe.

Comparing the Speed of U.S. Interest Rate Hikes

After the latest rate hike on May 3rd, U.S. interest rates have reached levels not seen since 2007. The Federal Reserve has been aggressive with its interest rate hikes as it tries to combat sticky inflation. In fact, rates have risen nearly five percentage points (p.p.) in just 14 months.

In this graphic—inspired by a chart from Chartr—we compare both the speed and severity of current interest rate hikes to other periods of monetary tightening over the past 35 years.

Measuring Periods of Interest Rate Hikes

We measured rate hike cycles with the effective federal funds rate (EFFR), which calculates the weighted average of the rates that banks use to lend to each other overnight. It is determined by the market but influenced by the Fed’s target range. We considered the starting point for each cycle to be the EFFR during the month when the first rate hike took place.

Here is the duration and severity of each interest rate hike cycle since 1988.

Time PeriodDuration 
(Months)		Total Change in EFFR
(Percentage Points)
Mar 1988 - May 198914 +3.23
Feb 1994 - Feb 199512+2.67
Jun 1999 - May 200011+1.51
Jun 2004 - Jun 200624+3.96
Dec 2015 - Dec 201836+2.03
Mar 2022 - May 2023*14+4.88

*We considered a rate hike cycle to be any time period when the Federal Reserve raised rates at two or more consecutive meetings. The (Read more...)

Ranked: The Most Expensive Sports Team Sales in History

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

The ten most expensive professional sports team sales shown as sized bubbles. The Washington Commanders sale is number one at $6.1 billion.

Ranking the Biggest Sports Team Sales in History

After a record-setting year in 2022, professional sports team sales are on an uptick yet again.

The tentative $6.05 billion Washington Commanders sale, already approved by other NFL owners, will be the highest amount paid for a sports team once completed.

This graphic from Sam Parker shows how the Commanders’ April 2023 deal measures up against the biggest sports team sales in history, using data from the Wall Street Journal and CBS Sports.

Washington Commanders Sale vs. Other Franchise Fortunes

Valuations have become significantly larger in the last couple of years, with the largest sales all occurring after 2010. Here are the 10 most highly-priced sales for a professional sports team franchise globally.

RankTeamPriceYear of Sale
1🏈 Washington Commanders$6.1B2023
2⚽ Chelsea Football Club$5.3B2022
3🏈 Denver Broncos$4.7B2022
4🏀 Phoenix Suns$4.0B2023
5🏀 Milwaukee Bucks$3.5B2023
6⚾ New York Mets$2.4B2020
7🏀 Brooklyn Nets$2.4B2019
8🏈 Carolina Panthers$2.2B2018
9🏀 Houston Rockets$2.2B2017
10⚾ Los Angeles Dodgers$2.0B2012

The Washington Commanders sale takes the top spot at $6.1 billion, even though it could still be de-throned. It’s been reported that a $7 billion dollar bid for the team is still in play as well.

Dan Snyder, the current owner of the team, is one of the world’s richest people in sports. He purchased the team for $800 million in 1999 and, if the $6.1 billion sale (Read more...)

Ranked: Air Pollution by Economy

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

Published • Updated •
The following content is sponsored by The Hinrich Foundation
Air pollution by economy

Ranked: Air Pollution by Economy

Global air pollution declined by 31% during the initial COVID-19 lockdowns, demonstrating a link between economic activity and air quality.

This graphic from The Hinrich Foundation, the fourth in a five-part series on the sustainability of trade, explores how air pollution varies by economy. It pulls data from the 2022 Sustainable Trade Index, which The Hinrich Foundation produced in collaboration with the IMD World Competitiveness Center.

What is Air Pollution?

In this dataset, air pollution is measured using fine particulate matter known as PM2.5. These particles are less than 2.5 microns in diameter, which is about 28 times smaller than the diameter of human hair. They are made up of things like combustion particles, compounds, and metals.

Not only does their presence cause the air to become hazy, they also pose the greatest health risk compared with any other pollutant. When they are inhaled into the lungs, they can cause respiratory diseases and even death. In fact, air pollution is one of the world’s leading risk factors for death, and is linked to 12% of deaths globally. 

A Geographic Breakdown of Pollution

Air pollution levels have a wide spectrum around the world. Countries with lower GDP per capita tend to have higher pollution because they have less stringent air quality regulations, congested (Read more...)

5 Tax Tips for Investors

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

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The following content is sponsored by New York Life Investments

5 Tax Tips for Investors

Are your investments tax efficient? If you’re not sure, you’re not alone.

  • 82% of Americans are bothered by the complexity of the tax system
  • 66% of Americans are frustrated by the amount they pay in taxes

In this graphic from New York Life Investments, we look at five practical tax tips you can consider for your own investments.

Tip #1: Use a Tax-Advantaged Account

Using a tax-advantaged account can maximize the growth of your investments. This is because you aren’t paying out a portion of your earnings in taxes each year, so your earnings are fully reinvested.

Consider how this affects the value of a hypothetical portfolio over time, assuming $10,000 annual contributions, an 8.4% annual return, and a 20.9% tax rate applied to the taxable account.

Year401(k)Taxable Account
1$10,840$10,660
5$64,103$60,815
10$160,049$144,530
15$303,655$259,765
20$518,595$418,391
25$840,306$636,743
30$1,312,822$937,312

While the difference is minimal in the beginning, the balance of the tax-advantaged 401(k) is 41% larger after 30 years.

Tip #2: Use the Right Tax-Advantaged Account

Among tax-advantaged accounts, there are traditional and Roth options.

TraditionalRoth
ContributionPre-Tax DollarsAfter-Tax Dollars
Withdrawals After Age 59 ½ TaxableTax-Free

If you’re strategic about which account type you choose, you (Read more...)

Classifying Digital Assets With a New Framework: Datonomy

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

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The following content is sponsored by MSCI

Classifying Digital Assets With a New Framework: Datonomy

In 2009, there was one cryptocurrency: bitcoin. Now there are more than 9,000 cryptocurrencies and many digital assets with other uses.

As the ecosystem becomes more complex, investors need more structure and clarity to make sense of how assets relate. In this graphic from MSCI, we introduce a new classification framework known as Datonomy. It is the first in a two-part series on decoding digital assets.

The Main Uses of Digital Assets

MSCI collaborated with Coin Metrics and Goldman Sachs to develop the framework, which classifies digital assets according to what they are primarily used for. It is hierarchical with three levels of classifications: classes, sectors, and subsectors.

We show the first two levels in the table below, along with examples of each sector.

ClassSectorExample
💲Digital CurrenciesValue Transfer CoinsBitcoin
Specialized CoinsDogecoin
🚧 Blockchain InfrastructureSmart Contract PlatformsEthereum
Blockchain UtilitiesPolkadot
Application UtilitiesChainlink
📱Digital Asset ApplicationsDecentralized FinanceUniswap
Intermediated FinanceCronos
Business ServicesVeChain
Information TechnologyFilecoin
MetaverseAxie Infinity
Media ServicesAudius
⛓On-Chain DerivativesStablecoinsTether
Tokenized AssetsPAX Gold
Claim TokensLido Staked Ether

Let’s take a closer look at one sector within each class.

Specialized Coins facilitate value transfer on the blockchain for users with a specific interest, such as privacy, (Read more...)

Mapped: Geopolitical Risk by Economy

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

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The following content is sponsored by The Hinrich Foundation

Geopolitical Risk by Economy

The Russia-Ukraine war highlighted how geopolitical risk can up-end supply chains and weaponize trade. More precisely, the war led to trade sanctions, a food crisis, and energy shortages.

This graphic from The Hinrich Foundation, the third in a five-part series on the sustainability of trade, explores how geopolitical risk differs by economy. It pulls data from the 2022 Sustainable Trade Index, which The Hinrich Foundation produced in collaboration with the IMD World Competitiveness Center.

Breaking Down Geopolitical Risk

Geopolitical risk has a strong correlation with GDP per capita, meaning that developing economies typically have less stability.

The following table shows how geopolitical risk breaks down for select economies that are covered in the 2022 Sustainable Trade Index. A lower number indicates less stability, while a higher number indicates more stability.

EconomyGeopolitical Stability
Pakistan5.2
Myanmar9.9
Bangladesh16.0
India17.0
Mexico17.9
Philippines18.9
Papua New Guinea20.3
Russia20.8
Thailand24.5
Indonesia28.3
Ecuador34.4
China37.7
Peru38.7
Cambodia41.0
Vietnam44.8
Sri Lanka45.3
U.S.46.2
Chile49.1
Hong Kong50.0
Malaysia50.9
UK61.3
South Korea62.7
Laos69.3
Taiwan72.2
Australia73.1
Japan87.3
Canada90.1
Brunei90.6
Singapore97.2
New Zealand97.6

Source: World Bank, based on the latest available data from 2020. Values (Read more...)

Super-Sized Bets for Football’s Big Game (2013-2022)

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

The following content is sponsored by Roundhill Investments.

Football betting on Super Bowl infographic

The Briefing

  • Sports betting became legal outside Nevada when the federal ban was lifted in 2018.
  • Legalization contributed to betting growth, with wagers on football’s big game increasing ten-fold over the last decade.

Super-Sized Bets for Football’s Big Game

With 99 million viewers in 2022, “more Americans tune in to the Super Bowl than any other television broadcast.” Its large viewership, combined with expanding legislation, has led to ballooning wagers.

In this graphic sponsored by Roundhill Investments, we show how these bets have grown over the last 10 years.

Annual Legal Bets on the Big Game

From 2013 through 2018, sports betting was only legal in Nevada and year-over-year growth was low. However, when the federal sports betting ban was lifted in May 2018, more states started allowing bets.

By 2022, 33 states plus Washington, DC were legally able to bet on the game. Wagers climbed quickly as a result.

YearTotal BetsAnnual Growth
2013$99M5%
2014$119M21%
2015$116M-3%
2016$133M14%
2017$138M4%
2018$159M15%
2019$191M20%
2020$280M47%
2021$486M73%
2022$1.1B119%

Data only for states that report bets on football’s big game, see graphic for full list of states included in 2022.

Impressively, legal bets surpassed the $1 billion mark in 2022. Growth was primarily driven by New York State legalizing online sports betting, with the state contributing nearly $500 million to the total.

Since (Read more...)

The Top Google Searches Related to Investing in 2022

by Jenna Ross
This post is by Jenna Ross from Visual Capitalist

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The following content is sponsored by New York Life Investments

The Top Google Searches Related to Investing in 2022

It was a turbulent year for the markets in 2022, with geopolitical conflict, rising prices, and the labor market playing key roles. Which stories captured investors’ attention the most? 

This infographic from New York Life Investments outlines the top Google searches related to investing in 2022, and offers a closer look at some of the trends.

Top Google Searches: Year in Review

We picked some of the top economic and investing stories that saw peak search interest in the U.S. each month, according to Google Trends.

Month of Peak InterestSearch Term
JanuaryGreat Resignation
FebruaryRussian Stock Market
MarchOil Price
April Housing Bubble
MayValue Investing
JuneBitcoin
JulyRecession
AugustInflation
SeptemberUS Dollar
OctoberOPEC
NovemberLayoffs
DecemberInterest Rate Forecast

Data based on exact searches in the U.S. from December 26, 2021 to December 18, 2022.

Let’s look at each quarter in more detail, to see how these top Google searches were related to activity in the economy and investors’ portfolios.

Q1 2022

The start of the year was marked by U.S. workers quitting their jobs in record numbers, and the effects of the Russia-Ukraine war. For instance, the price of crude oil skyrocketed after the war caused supply uncertainties. Early March’s peak (Read more...)