The Market in Pictures, November 17

Dave: Tuesday’s reaction to the tame CPI report was the ripper of the year

Source: Strategas as of 11.14.2023

John Luke: as markets have more confidence that the Fed will move rates lower in the first half of 2024

Source: CME Fed Watch Tool as of 11.14.2023

John Luke: BUT, we’ve seen this movie before in the past 18 months

Data as of 11.15.2023

Brett: and markets are still reluctant to price in imminent rate cuts

Data as of 11.15.2023

John Luke: Services is the component keeping inflation above the Fed’s comfort level

Data as of October 2023

John Luke: and specifically shelter as the one area comprising the bulk of the services impact

Data as of October 2023

Joseph: and you can really see the significant build-up in housing costs over the past few years

Source: Bianco as of October 2023

Brad: Reminder that stock-bond correlations are not a number you can just plug into planning software, they float in a wide range depending on inflation

Source: Strategas as of October 2023

John Luke: and right now, we’re in the inflation range where correlation is clearly positive

Data as of October 2023

John Luke: Even with recent contractions, central banks around the world are still sitting on large balance sheet debts

Data as of 11.15.2023

John Luke: and the US government fiscal picture is not exactly helping the Treasury’s ability to reduce borrowing needs

Source: Stifel as of October 2023

John Luke: despite that picture on the government side, investors aren’t overly concerned about the repayment ability of US corporations

 Source: Bloomberg as of 11.13.2023

Beckham: On the earnings front, consensus estimates are factoring in a serious boost from profit margins

Data as of 11.13.2023

Dave: but we’re seeing incremental cuts in forward earnings estimates as we go through the Q3 earnings season

John Luke: It seems like megacap tech has been the consensus trade forever, but it’s actually been hot and cold based on recent performance

Data as of 11.13.2023

John Luke: and the sentiment towards the future course of bonds has completely flipped this year as investors think we’ve seen the highs of this cycle

Source: Market Ear as of 11.13.2023

Dave: Looking ahead to an election year, as we’ve historically seen decent performance with the current electoral makeup

Data as of October 2023

Dave: and the weak election years have historically come when there is no incumbent in office to promote a re-election agenda

 Source: Strategas as of 11.13.2023

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