part 1: trimtabs liquidity theory and the equities markets part 2: what the u.s. government...
TRANSCRIPT
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Part 1: TrimTabs Liquidity Theory and the Equities Markets
Part 2: What the U.S. Government Doesn’t Know it Doesn’t Know and
Why We Should Care! Madeline Schnapp, Sr. Research Analyst
http://www.trimtabs.com
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The Stock Market
Cash Stock
“The purpose of the equity market is
to separate investors from their cash.”
Charles Biderman
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The Stock Market
Cash
Stock
Market Direction
=
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The Stock Market
Cash
Stock
Market Direction
=
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There are 3 types of Liquidity
Liquidity
L1 L2 L3
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L1
L1 = the Net value of shares available to investors
Insider SellingNew Offerings
Cash BuybacksCash Takeovers
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L1 – “Float”
Insider SellingNew Offerings
Cash BuybacksCash Takeovers
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L1 – “Float”
Insider SellingNew Offerings
Cash BuybacksCash Takeovers
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L1 – Net Liquidity
-150000
-100000
-50000
0
50000
100000
150000
200000
250000
300000
Net
Liq
uid
ity -
Millio
ns o
f $
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Dec-95Dec-96Dec-97Dec-98Dec-99Dec-00Dec-01Dec-02Dec-03Dec-04
L1 - Bullish
L1 - Bearish
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L2 = U.S. Equity Fund Flow
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L2 – U.S. Equity Fund Flow
-50
0
50
100
150
200
250
300
Flo
w i
n B
illi
on
s o
f $
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
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L1 and L2 - 1999 thru 2003
-100
-50
0
50
100
150
200
250
300
Billio
ns o
f $
1999 2000 2001 2002 2003
Year
US Equity Fund Flows, L2
L1
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S&P 500 vs. Model Portfolio Value
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
Month
S&
P 5
00 I
nd
ex C
lose
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
$1,400,000
$1,500,000
Po
rtfo
lio
Valu
e i
n $
S&P 500 Index Close
Portfolio Value ($)
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What the U.S. Government Doesn’t Know it Doesn’t Know and
Why We Should Care!
Part II
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Cash
$$
Wages and SalariesEmployment
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Wages and Salaries
The BEA Way
The TrimTabs Way
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-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04
BEA 1st Release
TrimTabs Personal Income
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-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04
BEA 1st Release
BEA 2nd Release
TrimTabs Personal Income
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-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04
BEA 1st Release
BEA 2nd Release
BEA 3rd Release
TrimTabs Personal Income
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BEA Income Data vs.Tax Witholding Data 1990 through 2004
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%BEA Income
Tax Withholding Data
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Employment
The BLS Way
The TrimTabs Way
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104000
106000
108000
110000
112000
114000
116000
118000
1994
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104000
106000
108000
110000
112000
114000
116000
118000
19941994
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110000
115000
120000
125000
130000
135000
1994
1995
1996
1997
1998
1999
2000
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125000
127000
129000
131000
133000
135000
1999
2000
2001
2002
2003
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128000
128500
129000
129500
130000
130500
131000
131500
132000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2002
2003
2004
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BLS vs. TrimTabs Employment
-400
-300
-200
-100
0
100
200
300
400
500
600
Month
Th
ou
san
ds o
f W
ork
ers
BLS Employment Increase/Decrease
TrimTabs Employment Increase/Decrease
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Weekly Unemployment Claims
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
Date
S&
P 5
00 I
nd
ex C
lose
250000
275000
300000
325000
350000
375000
400000
425000
450000
475000
500000
Nu
mb
er
of
Cla
ims
S&P 500 Close
Weekly Unemployment InsuranceClaims - 4 Week Moving Average
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TrimTabs Online Jobs Postings Index
0
10
20
30
40
50
60
70
80
90
100
110
120
Week
Inde
x Va
lue
Online Job Postings Index
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80
90
100
110
120
130
Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04
Month
Em
plo
ymen
t In
dex
Monster Employment Index
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2004
2002
20001900
2000
2100
2200
2300
2400
2500
2600
2700
2800
2900
Th
ou
san
ds
of
Em
plo
yees 2000
2001
2002
2003
April 2004
Temporary Help Services
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•Money Supply•Sentiment•Debt
Other Indicators
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2004 Turning Out To Be A Good Year
• Low Interest Rates• Tax Cuts
• $61 Billion 2003• $149 Billion 2004• $88 Billion 2005• $21 Billion 2006
• Deficit Spending
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U.S. Budget Deficits/Surpluses1987 through 2004 (p)
-600000
-500000
-400000
-300000
-200000
-100000
0
100000
200000
300000
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TrimTabs Financial Research
http://www.trimtabs.com
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Questions?