The SP500 has now lost $3.5 trillion in value since the Fed removed a recession from their forecast
The Fed marked the exact high in July 2023 with their "no recession" call. Since then, the S&P 500 is down 9% and just hit its lowest level since May 31st. We are also 1% away from entering correction territory just as earnings season begins. Source: The Kobeissi Letter
China’s Nasdaq-Style Index falls to record low:
Star 50 index, which tracks manufacturers, chipmakers & biggest comps on Star Board, falls to lowest since its inception >3yrs ago as investors’ confidence wanes. Set for 6 straight mths of decline. Source: HolgerZ, Bloomberg
As mortgage rates hit 8% for the first time in 23 years, affordability continues to fall off a cliff
The Housing Affordability Index just hit a fresh record low, at ~90. This means that housing affordability is officially down 50% since 2021. Since then peak in 2012, housing affordability is down nearly 70%. Buying a home has become a luxury. Source: The Kobeissi Letter, www.zerohedge.com
Siegfried retesting May 2021 downtrend support
Siegfried (SFZN SW) broke out in May 2023 the 2021 downtrend. It is now retesting the downtrend support. Keep an eye at this key level. Source : Bloomberg
S&P 500 Index back on major support 4195
S&P 500 Index (SPX) is back on major support 4195. Keep an eye to see if it holds. Source : Bloomberg
Fed Chair Jay Powell on why longer-term yields are moving higher: “It’s not apparently about expectations of higher inflation
And it’s also not mainly about shorter term policy moves.” He probably has a point as #realyields are surging toward 2.5%, the highest since 2008. So what else can explain the surge in bond yields? Hints: 1) 1. A resilient economy — Q3 REAL GDP growth is expected to be around 3% annualized, well above trend growth of 1.5% to 2%, driven in large part by a resilient labor market and a strong consumer 2) Supply/demand imbalances — Given the growing U.S. fiscal deficit, the Treasury Department has been increasing its auction sizes for U.S. Treasury bills and notes. This year, the total amount of Treasuries issued in auctions is expected to climb to over $3 trillion, higher than at any year over the past decade (excluding 2020). This figure is expected to increase next year. Meanwhile, some of the natural demand for these bonds has moderated: The Fed is undertaking QT (reducing its holding of Treasuries by about $650 billion over the last year) and some foreign buyers, such as China, have slowly been reducing their holdings of U.S. Treasuries as well. Source: Lisa Ambramowitz, Bloomberg, Edward Jones
This chart from Robin Brooks highlights what is curently happening at ECB level: QE for some and QT for others
This was NOT supposed to happen. Remember: founding principle for the ECB is separation of monetary and fiscal policy. That's why ECB QE was initially subject to the capital key, so it couldn't favor one country over another. Could this last for ever? Source: Robin Brooks
Wall Street biggest bear (BofA's Harnett) turns bullish as investors' sentiment turns extremely bearish (which is bullish from a contrarian perspective)
Indeed, with the S&P down in five of the past seven weeks, BofA's Bull & Bear Indicator just printed at 1.9 (extreme bearish), which according to Hartnett means that a contrarian buy signal for risk assets has been triggered.
