Tourette type of market
Getting kinda used...
The biggest event of the weekend was obviously the massive performance of Lewis Capaldi at Glastonbury, where the audience helped him overcome and sang him through his issues. What a moment! We sympathize with everyone having Tourette and extra much so right now as we feel that we are having it as well - it is becoming very repetitive with market themes and we say things we really do not want to say. With that as an intro & disclaimer; here we go again.
Somebody to have, somebody to hold
Tech fundamentals outshine the rest of the pack. Revenue growth consensus estimates for the next few quarters. Tech crushing it.
Source: Credit Suisse
I let my guard down...
SPX is breaking below the steep trend channel. A close here or lower and the short term 4320 support should come into play (21 day). 50 day is down at 4240, the break out level.
Source: Refinitiv
And then you pulled the rug
The hottest thing around, NYFANG is breaking below the steep short term trend line. This entire sector is desperate for a pullback, especially now when everybody is all in on the AI theme. 50 day is still 10% lower...
Source: Refinitiv
It's easy to say but it's never the same
The curious case of Q2 estimates...Wall Street is looking for zero/slightly negative revenue growth on a year over year basis, a very unusual outcome outside of a recession, and outright negative earnings comps to last year.
1. Revenues are currently expected to decline by 0.4% versus Q2 2022. On a CPI inflation-adjusted basis, that is a decline of 4.5%
2. Earnings are expected to drop by 6.5%, or 10.6% on an inflation adjusted basis.
Source: Data Trek
I'm going under and this time I fear...
Wilson have 3 additional fears. We all know his "below consensus on EPS growth" bear story. Adding to that:
1. the liquidity picture is starting to deteriorate due to record levels of Treasury issuance and QT. Morgan Stanley estimates bank reserves will contract by $500-800B over the next 6 months, which is likely to have a negative impact on equity valuations.
2. Fiscal support has been much higher over the past 12 months than most investors appreciate, based on our conversations. This is expected to peak and reverse next month and could amount to a 6ppt headwind to nominal GDP over the next 12 months.
3. the technical picture remains poor with recent breadth improvement failing yet again. (Morgan Stanley)
Now the day bleeds into nightfall
MSI has turned risk negative, while sentiment and positioning are near post pandemic highs. The bullish sentiment seems to have gotten to an extreme. Perhaps the market has gotten a bit too optimistic about how the economy/ stocks will do in a higher for longer environment...
Source: Morgan Stanley
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