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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