To put things into perspective: Nasdaq 100 now down ~9% from high, largely in the ‘zone’ of recent NDX drawdown episodes over the last 1 year
Source: Bloomberg, HolgerZ
Apollo just said that bonds are now more attractive than equities...
The spread between corporate bond yields and the S&P 500 earnings yield just hit its highest since 2008, at 1.5%. This spread was negative for nearly 13 years before turning positive in mid-2022. Even in 2020 this spread did not turn positive amidst the global lockdowns. Source: The Kobeissi Letter, Apollo
Value Stocks are trading near the cheapest levels of the past 30 years
Source: Barchart
“Soft Landing” is still the consensus. But consensus doesn’t have a good track record...
Source: Game of Tardes
US 10-year Treasury yield is skyrocketing and now at 4.63%, its highest since June 2007
Since last week’s Fed meeting, the 10-year note yield is up 35 basis points. Since the last Fed rate hike in July, the 10-year note yield is up 60 basis points. Meanwhile, Fed rate HIKE expectations have NOT changed. As highlighted by the Kobeissi Letter, odds of another rate hike have actually gone DOWN. But, a long Fed PAUSE is being priced-in now. All as record levels of US Treasuries are being issued while FED balance sheet reduction pace has been accelerating (QT). This bear steepening is pushing the dollar UP and weighing on stocks valuations especially long duration ones, i.e tech darlings. Source. CNBC, The Kobeissi Letter
Uranium is back
The massive deficit + price insensitivity should be a solid tailwind Source: Game of trades
Sentiment among consumers in Germany keeps deteriorating as persistently high inflation encourages people to save & blots out chances of a recovery before year-end
GfK German Consumer Sentiment Index drops to -26.5 in Oct from -25.6 in Sep. An indicator BELOW 0 signals YoY contraction in private consumption. Source: HolgerZ, Bloomberg
This chart by Goldman shows the regime change which has been in place over the last few weeks
Despite the rise in 30-year real yields, short duration stocks (i.e value and the likes) were underperforming long duration ones (i.e IT/growth stocks). Things are now normalizing as short duration stocks are progressively catching up in terms of relative performance. The growth/IT basket probably needs 30-year real yield to reverse trend in order to outperform again...
