The Market in Pictures, September 20

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 long pause is over, stocks enjoyed it

Source: Strategas as of 09.16.2024

John Luke: the range of future forecasts for the Fed Funds rate is quite wide

Source: Bloomberg as of 09.18.2024

Beckham: and while this meeting had a rare “Powell Fed” dissenter

Data as of 09.17.2024

Brett: the generally assumed path of short-term rates resembles a recession path more than a soft landing

Source: Apollo as of 09.19.2024

John Luke: While the rates market has been uncertain as to the terminal rate for this cycle’s Fed Funds rate

Source: Apollo as of 09.19 2024

Brad: there’s not a ton of evidence suggesting an imminent recession

Source: Sevens Report as of 09.19.2024

John Luke: and the cuts taking place across the globe should help cushion incoming effects from other economies

Data as of 09.13.2024

Brad: In the 1995 soft landing cycle, manufacturing immediately responded to rate cuts

Source: Strategas as of 09.17.2024

Arch: but the most closely-watched area in this cycle will likely be homebuying

Source: Bianco as of 09.18.2024

John Luke: While mortgage rates have come down from the 2023 highs

Data as of 09.16.2024

Joseph: there are still many homeowners in love with their existing mortgages of 2021 vintage

Data as of 09.16.2024

Beckham: and the general level of prices has stayed close to the highs in most parts of the country

Source: Sandbox Daily as of 09.16.2024

Dave: Looking at past instances, stocks have had a solid next 12 months when the Fed has cut rates near all-time equity highs

Brian: but if that pattern repeats itself, it won’t be because of the “cash on the sidelines”; that measure has been remarkably stable over time

Source: Aptus via FRED as of 09.13.2024

Dave: Heading into the end of Q3, sales forecasts have failed to accelerate

Source: Strategas as of 09.17.2024

John Luke: but earnings have been supported by the profit margin recovery and expansion of recent years

Data as of August 2024

Brad: We’re still waiting for the broader market to grab the earnings baton from the megacap leaders

Source: Goldman Sachs as of 09.06.2024

Brett: with energy the leading drag on overall results

Data as of 09.17.2024

Brian: Small caps have historically performed well after rate-cutting cycles start

Data as of August 2024

Brad: and with their valuations as low as they’ve been relative to large caps, there’s no excuse for failing to make up some ground

Source: Strategas as of 09.18.2024

John Luke: Large US corporations used the zero-interest rate era to dramatically improve their financial footing

Data as of August 2024

John Luke: can’t say the same for the US government

Source: @LukeGromen as of August 2024

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Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward-looking statements cannot be guaranteed.

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