February 22, 2023
Market Performance (YTD)
Source: YCharts
Disclaimer: Past performance is no guarantee of future performance
"Recession odds peaked in Nov'22 at 77% and have since declined to 24% this month (down 27ppt MoM), lowest since Jun'22." – BofA Global Fund Manager Survey pic.twitter.com/uUmcwNhnwE
— Sam Ro 📈 (@SamRo) February 14, 2023
U.S. Citi Economic Surprise Index has jumped to highest since April 2022 pic.twitter.com/hhhySEPq2p
— Liz Ann Sonders (@LizAnnSonders) February 16, 2023
Jan retail sales grew 3% m/m, well above the 2% est. Strong number, with maybe some seasonality tailwinds. Retail is typically weak in Dec (ranks 23/24, see 2nd chart) followed by relative strength Jan-Mar. That pattern held in Dec & Jan, watching Feb & Mar closely 👀 pic.twitter.com/SJa1IY2J5u
— Liz Young (@LizYoungStrat) February 15, 2023
January PPI +0.7% m/m vs. +0.4% est. & -0.2% prior (rev up from -0.5%); core PPI +0.5% vs. +0.3% est. & +0.3% prior (rev up from +0.1%) … fastest gain for headline since June 2022; fastest gain for core since May 2022 pic.twitter.com/iXb4sDFKGs
— Liz Ann Sonders (@LizAnnSonders) February 16, 2023
This is not my thing but in the past 40+ yrs, when the CB LEI diffusion index drops under 20 and then rebounds to over 40, the recession risk has already passed (green circles) pic.twitter.com/vNl3zNdYhf
— Urban Carmel (@ukarlewitz) February 21, 2023
Significant repricing of #Fed tightening expectations over last three weeks…
Looking forward to the FOMC minutes tomorrow! pic.twitter.com/2Fp3GYiiC2
— Gregory Daco (@GregDaco) February 21, 2023
What a difference a few weeks makes…
The bond market has gone from being much more dovish than the Fed in end January, to now expecting a higher terminal rate than the Fed's median dot for 2023. Note there are still cuts priced into the 2H23, but much less (~20 bps vs. ~50 bps… https://t.co/nlrudXaQXC pic.twitter.com/th4P4Y0d5I— Cameron Dawson (@CameronDawson) February 16, 2023
NASDAQ 100 (blue) had rallied as expectations for fed funds rate by June 2023 meeting (orange) moved sideways, but recent spike higher in rate expectations has put some pressure on big tech stocks
[Past performance is no guarantee of future results] pic.twitter.com/1VrpS5LBpn— Liz Ann Sonders (@LizAnnSonders) February 21, 2023
The words "Soft Landing" are prominent in the media right now, a reflection of the Fed's views no doubt. We almost always debate "Soft Landing vs Recession" in a tightening cycle. This chart shows how intense "Soft Landing" idea was pre-GFC and even more during the Tech bubble. pic.twitter.com/m0qc4TbkPi
— Francois Trahan (@FrancoisTrahan) February 12, 2023
The US Leading Economic Index "remained on a downward trajectory, but its rate of decline moderated slightly in January," the Conference Board reports. But the trajectory–6mo annlz'd growth rate–"continues to signal recession over the next 12 months": https://t.co/1vvdzp3BAL pic.twitter.com/e9LQNmbJqF
— James Picerno (@jpicerno) February 17, 2023
January's data has come in strong for US payrolls and retail sales, raising questions about dodgy seasonal adjustment. Less focus though on the January surge in bankruptcies, which has no seasonal adj issues.
Is this what a soft-landing looks like? I don't think so@SoberLook pic.twitter.com/o8TmKjAFs0
— Albert Edwards (@albertedwards99) February 17, 2023
🧵Housing starts fell to 1.31M in Jan, below the 1.36M est. Typically, a big decline in starts would lead to lower residential construction employment (white), but that hasn't happened yet. pic.twitter.com/wxkklH6OQ3
— Liz Young (@LizYoungStrat) February 16, 2023
This month's Philly Fed reading for February came in at -24.3. Notice anything about every prior time the reading has gotten this low? pic.twitter.com/8Qz4AQcboS
— Bespoke (@bespokeinvest) February 16, 2023
*As of Jan/2023 – data from JPM shows estimated "excess savings" from U.S. households built up during 2020-21 now stand at just $900B, down from a peak of $2.1T in early 2021 and roughly $1.9T vs. Jan/2022
That’s a massive drawdown, & once it’s gone, so will the demand it fueled pic.twitter.com/1CGi5ETTiI
— Adem Tumerkan (@RadicalAdem) February 17, 2023
It's nice to see a strong start to 2023 but in my view, the market is ahead of itself @ 4100 and a P/E of 18x. Neither the earnings outlook nor the rate structure supports a P/E north of 16x, which tells me the market likely has some backing and filling to do in the coming months pic.twitter.com/IeA7LVRQOG
— Jurrien Timmer (@TimmerFidelity) February 17, 2023
The S&P 500 equity risk premium is at its lowest level since mid-2007. When you're getting less compensation for taking on risk, it's a good time to be choosy. pic.twitter.com/Yvs1I1l8hW
— Liz Young (@LizYoungStrat) February 21, 2023
Disclosure
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