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:
John Luke: Tough to see how inflation can get down to the Fed’s stated 2% target
Source: Strategas
Brad: which would make it tough to get valuation support for already-expensive stocks
Source: Strategas as of 05.09.2023
Dave: Net interest costs are rising significantly for the federal government
Source: Strategas as of 05.09.2023
Dave: as low rate Treasuries mature and get replaced by higher borrowing costs
Source: Strategas as of 05.09.2023
Brad: leading to a significant expense for the federal budget
Source: Strategas as of 05.09.2023
John Luke: The end of last 4 hiking cycles have ushered in a healthy period for both stocks and bonds
Data as of 05.08.2023
John Luke: but recent market optimism regarding coming rate cuts seems misguided
Source: Goldman Sachs as of 05.08.2023
Dave: Earnings have been widely reported as “better than expected” but much of that is from reduced expectations coming in
Source: Morgan Stanley as of 05.09.2023
Joseph: with hopes that the earnings trough is behind us seemingly at odds with history
Source: TS Lombard as of 05.09.2023
Brad: and even the most optimistic scenarios not exactly inspiring for stocks
Source: Sevens Report
John Luke: Correlation regimes can last a long time, and the positive correlation b/w stocks and bonds is still young compared to the prior regime
Source: 3 Fourteen Research as of 05.06.2023
John Luke: which could lead to continued ineffectiveness for bonds as a hedge for stocks
Source: 3 Fourteen Research as of 05.08.2023
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