Tag: recession

P/E Multiples In Flux

P/E Multiples In Flux

P/E multiples will be in flux for the next few months. Phase I will begin in October. Phase II will begin in January. The sequence will look something like the following: Analysts: Many sell-side analysts will revise their December quarter Revenue and Earnings estimates downward coming off of the September quarter earnings calls beginning in … Continue reading P/E Multiples In Flux

The NASDAQ Could Re-Test COVID Lows & The Rise of High Yield

The NASDAQ Could Re-Test COVID Lows & The Rise of High Yield

Could the NASDAQ re-test the COVID lows of March 2020 when it sat around 6,900? Yes. That would require a prolonged recession (which we expect) AND The Fed not restarting its ultra-dovish monetary policy of Quantitative Easing combined with a near zero Fed Funds Rate. Who knows how the Fed will behave in 2H 2023 … Continue reading The NASDAQ Could Re-Test COVID Lows & The Rise of High Yield

A NASDAQ Bottom. QT Or Not To QT?

A NASDAQ Bottom. QT Or Not To QT?

If the Fed raises by 100 BPS tomorrow we believe there is another 10% downside to the NASDAQ before October earnings. We believe the NASDAQ will continue to work lower as the Fed hikes its Fed Funds Rate and as Treasury yields climb. We expect the Fed's rate hiking will stop by early next year … Continue reading A NASDAQ Bottom. QT Or Not To QT?

The Fed Can’t Tame Inflation. A Deep Recession Will.

The Fed Can’t Tame Inflation. A Deep Recession Will.

With $31 trillion in public debt outstanding the Fed can't quickly take interest rates to where they need to be (north of 8% CPI), to tame inflation. The interest expense on the public debt would be punitive at that level (Debt to GDP is 123%, up from 31% during our last inflationary period of the … Continue reading The Fed Can’t Tame Inflation. A Deep Recession Will.

Housing Supply & The Weakening Consumer

Housing Supply & The Weakening Consumer

The Housing Supply ratio tells a story of a weakening consumer. Housing Supply: The ratio of new houses for sale to new houses sold is at its highest level (9.3) since May 2010, the latter part of the Great Recession. This despite the fact that mortgage rates have ticked down in recent weeks. Housing Supply … Continue reading Housing Supply & The Weakening Consumer

This Bear Market Rally Is Overdone

This Bear Market Rally Is Overdone

This bear market rally feels more driven by FOMO than the fundamentals. What is there to get so excited about as to justify this rally off of the June lows? Inflation: Is the fact that headline CPI slowed to 8.5% from 9.1% really anything to write home about? Core CPI plus Food was up 1.4% … Continue reading This Bear Market Rally Is Overdone

Yield Curve Inversion Implies Near-Term Risk

Yield Curve Inversion Implies Near-Term Risk

The Treasury yield curve continued to invert as short rates climbed higher and long rates fell. The 1-Year climbed to 3.14%, the 2-Year rose to 3.10% while the 7, 10, 20 and 30-Year Treasury yields all fell (see table below). The Treasury market is telling us that it expects a near-term recession by way of … Continue reading Yield Curve Inversion Implies Near-Term Risk