part 1: trimtabs liquidity theory and the equities markets part 2: what the u.s. government...
TRANSCRIPT
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
The Stock Market
Cash Stock
“The purpose of the equity market is
to separate investors from their cash.”
Charles Biderman
The Stock Market
Cash
Stock
Market Direction
=
The Stock Market
Cash
Stock
Market Direction
=
There are 3 types of Liquidity
Liquidity
L1 L2 L3
L1
L1 = the Net value of shares available to investors
Insider SellingNew Offerings
Cash BuybacksCash Takeovers
L1 – “Float”
Insider SellingNew Offerings
Cash BuybacksCash Takeovers
L1 – “Float”
Insider SellingNew Offerings
Cash BuybacksCash Takeovers
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
L2 = U.S. Equity Fund Flow
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
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
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 ($)
What the U.S. Government Doesn’t Know it Doesn’t Know and
Why We Should Care!
Part II
Cash
$$
Wages and SalariesEmployment
Wages and Salaries
The BEA Way
The TrimTabs Way
-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
-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
-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
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
Employment
The BLS Way
The TrimTabs Way
104000
106000
108000
110000
112000
114000
116000
118000
1994
104000
106000
108000
110000
112000
114000
116000
118000
19941994
110000
115000
120000
125000
130000
135000
1994
1995
1996
1997
1998
1999
2000
125000
127000
129000
131000
133000
135000
1999
2000
2001
2002
2003
128000
128500
129000
129500
130000
130500
131000
131500
132000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2002
2003
2004
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
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
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
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
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
•Money Supply•Sentiment•Debt
Other Indicators
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
U.S. Budget Deficits/Surpluses1987 through 2004 (p)
-600000
-500000
-400000
-300000
-200000
-100000
0
100000
200000
300000
TrimTabs Financial Research
http://www.trimtabs.com
Questions?