🧵
1/
Stocks $SPY off to a strong start so far in 2023, gaining ~2% in first 5 days
- is this important?
- actually, it’s a big deal
1/
Stocks $SPY off to a strong start so far in 2023, gaining ~2% in first 5 days
- is this important?
- actually, it’s a big deal
2/
For 2023, pundits all reading off same menu:
- Fed gonna crush every rally until job market cracks + EPS going to fall in ‘23
- consensus thus, stocks fall in first half to 3,000 (S&P 500) and then maybe stocks recover to “flat” by YE
For 2023, pundits all reading off same menu:
- Fed gonna crush every rally until job market cracks + EPS going to fall in ‘23
- consensus thus, stocks fall in first half to 3,000 (S&P 500) and then maybe stocks recover to “flat” by YE
3/
Several issues with this consensus view:
- stocks rarely “flat” after a year (11% instances) and far more likely to rise >20% (53% of time)
- volatility matters more than EPS = Fed is key
- we see roadmap for volatility to sink sharply in 2023, already happened with bonds
Several issues with this consensus view:
- stocks rarely “flat” after a year (11% instances) and far more likely to rise >20% (53% of time)
- volatility matters more than EPS = Fed is key
- we see roadmap for volatility to sink sharply in 2023, already happened with bonds
4/
While EPS intuitively seems important, post a “negative year” it doesn’t factor in:
- it is all about what $VIX does
- #VIX down means stocks have 83% chance of rising in ‘23 and median gain >20%
- EPS up or down has little impact
While EPS intuitively seems important, post a “negative year” it doesn’t factor in:
- it is all about what $VIX does
- #VIX down means stocks have 83% chance of rising in ‘23 and median gain >20%
- EPS up or down has little impact
5/
Fed is key is volatility.
- and this means it’s all about #inflation
- if #CPI tracks softer than consensus, this is dovish = lower volatility
- inflation shocked markets in 2022 = surging volatility
- but since Oct, opposite happened
Fed is key is volatility.
- and this means it’s all about #inflation
- if #CPI tracks softer than consensus, this is dovish = lower volatility
- inflation shocked markets in 2022 = surging volatility
- but since Oct, opposite happened
6/
Our #FSInsight clients have received extensive analysis by us showing inflation is tracking to be far lower than many expect
- in fact, supports idea inflation largely #transitory
- too much to cover here
- Get the “first word” at fsinsight.com/our-services @fs_insight
Our #FSInsight clients have received extensive analysis by us showing inflation is tracking to be far lower than many expect
- in fact, supports idea inflation largely #transitory
- too much to cover here
- Get the “first word” at fsinsight.com/our-services @fs_insight
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