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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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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