From T.I.N.A (There is No Alternatives to risk assets) to T.A.R.A (There Are Reasonable Alternatives, i.e bonds)
Three years ago in August 2020, the S&P’s dividend yield (in red below) was 1.8%, almost 50 bps higher than the highest yield on the treasury curve. Every treasury note with a duration shorter than 5 years had a yield below 0.2% and the 1-month was almost ZERO. Fast forward to today and the S&P’s dividend yield of 1.55% is 260 bps lower than the lowest point on the treasury curve right now (the 10-year at 4.15%). And the 1-month T-bill yielding at 5.34% is 380 basis points higher than the S&P’s dividend yield. Source: Bespoke
Many are concerned that higher rates will hurt growth, but it turns out that a lot of S&P 500 companies have locked in debt at much lower rates until 2030
Source: Bloomberg, Goldman Sachs
Out of 20 valuation metrics, the SP500 is currently overvalued on 19 of them relative to historical levels
Source: Barchart
During stagflationary periods, the SP500 index tends to be inversely correlated with inflation
Tavi Costa: "From the late-1960s to the mid-1970s, equity markets declined whenever CPI rates re-accelerated to the upside. The primary driver behind this negative correlation stems from the market's growing concern about the potential for a tighter monetary policy to address the persistent increase in consumer prices". Source: Crescat Capital, Bloomberg
SP500 seasonality and 4-year cycle analysis suggests a consolidation before a year-end rally
Source: Nautilus Research
Should you do the opposite of what Wall Street strategists say? Data over the last 3.5 years suggests that strategists underperform the S&P 500
Source: Barchart, Bloomberg
“.. when the S&P 500 is +10% or better YTD at the July-end mark.”
Source: Carl Quintanilla, Bloomberg
It's now been 40 days since the SP500 had a down 1% day...
Source: Bloomberg, www.zerohedge.com
