February 8, 2023
Market Performance (YTD)
Source: YCharts
Disclaimer: Past performance is no guarantee of future performance
Top takeaways from January jobs report:
1) Job market is strong (better than thought!) +517,000 in January and up in 2022
2) Wage growth is slowing –>Fed wants this
3) 3.4% unemployment –>lowest since 1969
4) Tech layoffs aren't triggering others (yet)https://t.co/0qbYi4RSwh pic.twitter.com/Cdzxzq1A0m— Heather Long (@byHeatherLong) February 3, 2023
Really says something about the actual media biases that a few layoffs in Tech get 100s of headlines, while big growth in other less high-status sectors gets 0 headlines. pic.twitter.com/tv1FSBvsq7
— Blake Hegerle (@hegerle) February 3, 2023
Jan ISM Services just bounced back from contraction territory in Dec led by New Orders. Good for activity, bad for services inflation. The cross-currents are still…eh…currently crossing. pic.twitter.com/7u5lGDR4fh
— Liz Young (@LizYoungStrat) February 3, 2023
The jobs report shocker boosted rate hike expectations, with the terminal rate back above 5%. pic.twitter.com/Ciw3W7eXjA
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) February 6, 2023
“Looking ahead, analysts expect earnings declines for the first half of 2023, but earnings growth for the second half of 2023. For Q1 2023 and Q2 2023, analysts are projecting earnings declines of -4.2% and -2.9%, respectively. For Q3 2023 and Q4 2023, analysts are projecting earnings growth of 3.4% and 10.5%, respectively. For all of CY 2023, analysts predict earnings growth of 3.0%.” – John Butters (Factset)
The outlook for US earnings growth in 2023 is growing ever grimmer, thanks to last week's megacap misses. Tech is weighing on the outlook significantly. Europe's outlook continues to brighten, though analysts still anticipate a contraction of just below 1% for earnings in 2023. pic.twitter.com/c9hmsTa4UV
— Gina Martin Adams (@GinaMartinAdams) February 6, 2023
S&P companies are reporting earnings that are 0.6% above estimates, far below the five-year average of 8.6%. If that remains unchanged in the rest of the earnings season, it will mark the lowest level of profit outperformance since 2008. https://t.co/TlZKzUO6zs
— Lisa Abramowicz (@lisaabramowicz1) February 5, 2023
"Forward EPS growth has just gone negative. This has only previously happened 4 times over the past 23 yrs. In each prior instance (2001, '08, '15, '20), equities have faced significant price downside associated w/the shift from positive to negative earnings growth:" MS's Wilson
— Lisa Abramowicz (@lisaabramowicz1) February 6, 2023
Great chart from MS.
Forward EPS growth is now negative. Note the correlation with $SPXH/t @astek81 pic.twitter.com/6DFWPdlzrt
— Ayesha Tariq, CFA (@AyeshaTariq) February 7, 2023
The chart from @TimmerFidelity (collapsing margins) is what happens when orders drop and employment does not (chart @LizAnnSonders below)
It ends one of three ways:
1. Rebound in demand (that doesn’t drive inflation)
2. Companies shed labor
3. Margins keep getting squeezed https://t.co/idL1tVJp4X pic.twitter.com/RcwHw4nf80— The Spread Thread (@SpreadThread1) February 2, 2023
Fed senior loan officer survey: Over the fourth quarter, significant net shares of banks reported having tightened standards on C&I loans to firms of all sizes.
Banks also reported having tightened all queried terms on C&I loans to firms of all sizes https://t.co/CycJMr2RRR pic.twitter.com/xlwBvl0KNY
— Nick Timiraos (@NickTimiraos) February 6, 2023
DEUTSCHE: C&I lending standards tend to lead high-yield defaults by a few quarters — “and last night showed that the tightening continued for a third quarter. We're now at levels broadly consistent with the past recessions.” pic.twitter.com/AkifmiOA0H
— Carl Quintanilla (@carlquintanilla) February 7, 2023
The S&P 500's forward PEG ratio (i.e., P/E to expected growth, or how much you're paying for potential growth) is a lot higher now vs a year ago (1.54 vs 1.04). Only Energy & Utilities have lower PEGs now vs then. Rather take my froth on a cappuccino than in markets. pic.twitter.com/UzJiKy7hPn
— Liz Young (@LizYoungStrat) February 6, 2023
Cyclicals vs. Defensives already pricing a soft landing -Goldman pic.twitter.com/F9nXsNDZbq
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) February 6, 2023
U.S. high-yield bond spreads are the tightest since May 2022. pic.twitter.com/ZEqBO7J7bN
— Lisa Abramowicz (@lisaabramowicz1) February 6, 2023
Fed funds rate is now higher than the spread on high yield for the first time ever, per @SPDJIndices pic.twitter.com/nLALsKJA8r
— Phil Huber (@bpsandpieces) February 7, 2023
Existing home sales have been falling faster today than they did during the Great Financial Crisis–Morgan Stanley pic.twitter.com/3ikAeu55ap
— Gunjan Banerji (@GunjanJS) February 6, 2023
Goldman Sachs now only sees a 25% chance of a US recession over the next 12 months (consensus is at about 65%). pic.twitter.com/WRxysvFAFF
— Robin Wigglesworth (@RobinWigg) February 6, 2023
2/3
Activity components by country show:√ 27% of countries stay in expansion of which 9% are slowing down and 18% are accelerating, China the most
√ Interestingly, almost 58% are recovering, mostly in Europe
√ 15% deteriorating, which includes the US pic.twitter.com/mEu2qr4vcy— Patrick Zweifel (@PkZweifel) February 6, 2023
“.. Thursday’s short covering was the largest since Nov '15 and ranks in the 99.8th percentile vs. the past 10 years.”
– Goldman desk pic.twitter.com/s7Al901HZV
— Carl Quintanilla (@carlquintanilla) February 5, 2023
S&P 500 set to have a Golden Cross today. This rare event takes place when the 50-day MA>200-day MA.
What is special about this one is when it happens more than 10% away from all-time highs (like now) = future returns are impressive.
Higher a yr later 15/16 and up 15.7% on avg. pic.twitter.com/ndLnaejycF
— Ryan Detrick, CMT (@RyanDetrick) February 2, 2023
A great chart to explain the recent market rally from John Authers.
'The biggest fallers in the last downdraft of 2022 are the biggest gainers in this rally, with $TSLA in the vanguard.' #SP500 #NASDAQ pic.twitter.com/zdlKcZwrM6
— Money Morning (@MoneyMorningAU) February 3, 2023
Disclosure
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