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The share of equity trading volume on the exchanges is now smaller than the share of equity trading volume in dark pools, negotiated trades, and internalized trades, see chart below.
Note: Off-exchange trading activity is Trade Reporting Facility (TRF) trading volume. All trades executed otherwise than on an exchange is reported under TRF. Examples include dark pools, negotiated trades, and internalized trades. Source: Bloomberg, FINRA, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The transmission mechanism of monetary policy works through higher costs of capital that lowers demand for capex and hiring but also raises return requirements for equity to pay the debtholders in the company.
Higher interest rates are a redistribution of value from the junior parts of the capital structure to the senior parts, see chart below. Someone has to pay the higher level of interest rates in corporate capital structures, and it is not the Fed, it is the equity holder.
In short, companies with no earnings, no cash flow, and no revenue will continue to struggle simply because they cannot pay the higher debt servicing costs. In other words, when interest rates are higher for longer, companies with earnings tend to outperform because companies with earnings are able to pay higher debt servicing costs. The purpose with higher interest rates is to slow growth, which makes value more attractive than growth.
In fact, this is the entire idea from the Fed with raising interest rates—to discourage too much risk taking, such as investments in companies and capital structures with no earnings, no revenue, and no cash flow. Examples of unattractive sectors are growth, software, and venture capital.
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The share of US imports from China has been declining since 2016 and currently stands at 13%, see chart below.
Source: Census Bureau, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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There are 11,500 people who turn 65 years old every day in the US.
In China, it is 32,000; in Japan, it is 4,000; and in Germany, it is 3,300—see the chart below.
The bottom line is that the number of retirees globally is growing rapidly, and there is a need to provide retirement savings for all of them.
Source: UN Population Statistics, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Corporate capex spending plans are moving higher after the election, see chart below. This points to upside risks to growth and hiring.
Our chart book with high frequency indicators for the US economy is available here.
Source: Business Roundtable, NFIB, Federal Reserve Bank of Philadelphia, Dallas, New York, Kansas and Richmond; Apollo Chief Economist 
Source: Redbook, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The last Fed cut was in December, and the number of months from the final Fed cut to the first Fed hike has historically been as low as seven months, implying that the Fed could hike rates already in June, see chart below.
Source: Federal Reserve, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Companies are waiting longer and longer to go public, and some companies never go public, see chart below.
There are 6 million businesses with employment in the US, and the norm for companies is to not be publicly listed in the S&P 500.
Source: Jay Ritter, IPO Data – Jay R. Ritter, Apollo Chief Economist See important disclaimers at the bottom of the page.
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We have put together a trade war chart book looking at US trade with China, Canada, and Mexico, which is available here.
We will be using these charts for our conference call at 9 a.m. EST today, you can register here.
Source: IMF, Haver Analytics, Apollo Chief Economist 
Source: IMF, Haver Analytics, Apollo Chief Economist 
Source: Factset, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The biggest categories of US imports from China are computer and electronic products, electrical equipment and components, and textile and apparels, see chart below.
Source: Census Bureau, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Goods imports make up 11% of US GDP, and 43% of US imports come from Canada, Mexico, and China. This means that 5% of US GDP is directly impacted by higher tariffs on Canada, Mexico, and China. This is meaningful when annual GDP growth normally is 2%.
See important disclaimers at the bottom of the page.
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