TME Weekend: Will Powell prevent a “scarytale” ending?

Approaching the point of peak restraint from last October

The tightening in the GS financial conditions index since August has been equivalent to about 75 bps of Fed rate hikes; also note we’re approaching the point of peak restraint from last October. All eyes are on the fed now. Will Powell prevent a “scarytale” ending?

Source: GS

A small ‘canary in the coal mine’

Small cap has underperformed large cap by more than 10% in ‘23, testing decade lows.

Source: Macrobond

Sad banks

Bank Stocks at 3 year lows. Even surpassing the lows of the Silicon Valley Bank collapse in March.

Source: @barchart

The unreliable defensive

Pharma has significantly rolled over since the start of earnings exacerbating debate on Pharma's defensive characteristics/appeal.

Source: FactSet

The last economic hurrah

The idea that this could be the last economic hurrah for a little bit isn’t being lost on the Street. Despite the fact that ~77% of SPX cos that have reported 3Q results to date have beaten expectations, the Street is slashing CY24 estimates. Shown below, the 4WMA of the SPX’s 2FY EPS revision ratio is sliding back down toward .5. Importantly, moving down to these kinds of levels tends to drag SPX performance down with it.

Source: Jefferies

Tails, range and tactical trading

"...the downside tail is bounded by strong US growth; the upside tail is bounded by rising interest rates. this interplay will again leave us in a broad trading range, where the best money will be made by hitting specific spots within the index and, in spots, trading counter-trend." (Tony P, head of macro trading GS)

$5bn per day.....soon a distant memory?

The global buyback count has been weak lately.

Source: @WallStHorizon

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