The Market in Pictures, May 19

Our team looks at a lot of research throughout each day. A few charts that caught our eye this week, and the way they fit the unfolding puzzle of evidence:

Dave: The debt ceiling remains a story for markets, here’s Morgan Stanley’s walkthrough of prior showdowns

Source: Morgan Stanley as of 05.15.2023

John Luke: this occurring at a time when the government’s interest expense is exploding

Data as of 05.12.2023

Dave: as a period of relentless liquidity from the Federal Reserve into the economy is ending

Source: Strategas as of 05.12.2023

John Luke: We’re seeing government economic data surprise to the upside after a rough stretch

Data as of 05.17.2023

Dave: yet bankruptcies are climbing

Source: Strategas as of 05.16.2023

John Luke: and the Philly Fed is plunging, seeming to signal a coming recession

Data as of 05.17.2023

John Luke: Tightening lending standards at banks have historically led to widening credit spreads, again summarizing the disconnect between business sentiment and markets

Data as of 05.16.2023

Beckham: Speaking of sentiment, it’s funny to see such a spike in public belief in gold as an investment

Data as of 05.12.2023

Dave: but flows drive performance (and vice versa), and we’re seeing a real flip from what attracted money in 2022

Source: Strategas as of 05.15.2023

Dave: Stocks are not crazy expensive once you look past the glamour names that trade at nosebleed levels

Source: Raymond James as of 05.15.2023

Brad: as evidenced by the extensive discount at which small-cap stocks are trading

Data as of April 2023

Brad: maybe the macro setup finally falls into place for a reversal of fortunes?

Data as of April 2023

Dave: Historically, the level of inflation has also played a role in how the S&P has traded following the end of rate hike cycles

Data as of May 2023

John Luke: and belief in the Fed’s success against inflation will also dictate how the rates market plays out

Data as of May 2023

Dave: Since it’s hard to find fundamental justification for a continuation of the S&P’s bounce, here’s one anecdote in favor of stocks

Source: Strategas as of 05.15.2023

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