For some perspective on the post-financial crisis rally, today's chart illustrates how much of the downturn that occurred as a result of the financial crisis has been retraced by several major international stock market indices.
For example, the S&P 500 peaked at 1,565 back in October 9, 2007 and troughed at 677 back on March 9, 2009. A recent close for the S&P 500 was in the 1,848 neighborhood -- a retracement of +132% of its financial crisis bear market decline.
As today's chart illustrates, China (Shanghai Composite), Japan (Nikkei 225), India (S&P BSE Sensex), Germany (DAX), France (CAC 40) and the U.K. (FTSE 100) are all above their financial crisis lows (i.e. above 0% on today's chart) and three of the aforementioned countries (Germany, India and the U.K.) are currently trading above their respective pre-financial crisis peak (i.e. are above +100% on today's chart).
It is interesting to note that the U.S. (epicenter of the financial crisis) has outperformed the other major stock market indices (* keep in mind that the German DAX is unique in that it includes for the reinvestment of dividends) while China has lagged to the point where it only trades +9.3% above its financial crisis lows -- not that impressive of a performance considering that the financial crisis occurred well over four years ago.
Chart Courtesy of Chart of The Day
Concerns over the ongoing European debt crisis continue to weigh on the markets.
For some perspective, today's chart compares the 10-year government bond yield of the 2nd (France) and 3rd largest (Italy) euro zone economies to that of the largest (Germany).
As today's chart illustrates, the crisis for these two relatively large economies really began to escalate in Q2 2011 and again in Q4 2011. Note how the French 10-year government bond spread really began to increase over the past couple months as the severity of the Italian situation began to approach extreme levels.
This is due in large part to the fact that French banks hold a great deal of Italian sovereign debt – and Italy has a great deal of debt outstanding (€1.9 trillion which equates to $2.6 trillion).
While there are clearly no good solutions to the crisis, one of the least bad solutions has the European Central Bank printing out significant amounts of euros in order to buy a significant amount of European debt.
Chart & Commentary Courtesy of Chart of The Day
This scary statistic from a BNP Paribas bank executive who declined to be named...
"The total debt of the three big U.S. banks (Bank of America, JP Morgan and Citigroup) is $5.86 trillion, or 39% of U.S. GDP, while the debts of BNP Paribas, Crédit Agricole and Société Générale (France's three biggest banks) come to €4.7 trillion, or 250% of French GDP."
