Down goes the Dow

Regarding likelihood of a Recession, I keep hearing mention of it being more likely than not, but that doesn't feel right to me at all.

Here's a good article in Forbes that dives into what goes into arriving at that outlook and how it has shifted to a bit more hawkish as of late, and I quote their conclusion.

Note that the article was published just 3 days ago:

forbes.com

Are We In A Recession Yet?

Benjamin Curry

For almost a year now, politicians, economists and financial professionals have been engaged in a great semantic debate over whether the U.S. economy is headed for recession or not. One common definition of recession—two cons...

Open link

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Earnings Scorecard: For Q1 2023 (with 18% of S&P 500 companies reporting actual results), 76% of S&P 500 companies has reported a positive EPS surprise and 63% of S&P 500 companies have reported a positive revenue surprise.

Year to Date

BTC +67

TSLA +34

Comms Sector +21

ARKK +20

Peloton +19

Tech +19

Cons Disc +15

GME +11

Non-US developed +11

Gold +9

SP500 +8

Global 60/40 +6

Corp Bonds +4

Materials +4

ST Junk +4

Cons staples +3

Industrials sector +3

Junk +3

Retail +3

TIPS +3

Treasuries +3

Emerging +3

China +3

Small Caps +3

COWZ +2

ST Corps +2

Value +1

REITs +1

Healthcare -1

Utilities -1

Energy -2

Commodities -2

Financials -3

Hussman -6

Weed -24

Same pattern...tech and speculative has been the place to be in the US.

But overseas developed is beating the US by a lot.

Money has rotated out of value back to tech in the US - reverse of last year.

Global 60/40 is a star: +6% is a great return for 4 months.

Gold +9% is notable.

Healthcare not working...a rare spell of underperforance there.

I sold all my short term junk but it's done fine despite a financial crisis and impending recession. pretty good.

Prediction check 1

This poster (154,000 followers) noted an extreme in negative sentiment a year ago. Often contrarians will buy at times like those. Was the extreme pessimism a buy or sell signal?

This time, a sell signal. Stocks were only just starting to fall during the inflation scare of '22.

So we can't always go contrarian and say 'do the opposite of whatever the crowd feels.'

@MacroCharts
25 years in markets. Combine technical charts and proprietary models. Portfolio & Fund Manager. Strategic Advisor to Global Funds and Family Offices.

Investor sentiment is at historic pessimism.
In 35 years, only five other weeks got this extreme:
• Four during the 1990 Recession trough / Inflation peak.
• One at the exact bottom in March 2009.

Thanks, and that is good info.

Still holding on my short term junk bonds etf, and mostly glad to see it has returned to even for me after being underwater for a while. Probably will try to hold it until ex. dividend date, approx. two weeks out.

remember that the NAV of the fund drops on the ex-dividend date...in theory there is no benefit to waiting for the ex-dividend date. The value of the dividends should be counted in the NAV of the fund as they accumulate at the fund company, before they are dispersed to shareholders.

but these things trade, they aren't fixed at NAV like mutual funds so who knows.

All I know is that what i usually see with a dividend payout is, of course, the drop upon ex. dividend day payout, then a gradual increase over the next few days back to the previous levels. But good to know about the counting of the dividends into the NAV prior to the dispersal, as you say.

If there was someplace else I wanted to invest, I would have pulled the trigger already, but things just seem to be in a holding pattern after recent run-up.

Really interested to see what AMZN comes up with after the bell for earnings, and Alphabet as well tomorrow.

More fallout from last month's financial crisis. Timely because First Republic is down 20% in the pre-open.

Since the bear market started, and reinvigorated last month, there has been talk of the need for a giant VIX spike to shake out the last of the weak hands and let a new bull market start. We haven't had that yet but stocks seem to be building back without it.

This is not making the historical analysis people happy...but the post-covid economics have been one-offs from the start.

here this poster (152k followers) implies that the March financial crisis would lead to a big VIX spike and far lower stock prices.

No, we haven't had a massive fear spike. Yet.

Cheddar Flow
@CheddarFlow
“St. Louis Fed Financial Stress Index rises to 1.575 - a level seen only four times during the last 30 years.” —Oktay Kavrak, CFA
In every case VIX hit at least 45. During the last two spikes, it hit 80.

3/27/23

Lamest financial crisis ever

Carl Quintanilla 🔥
@carlquintanilla
WILSON: ".. “You should expect an S&P between 3,000 and 3,300 some time in probably the first four months of the year. That’s when we think the deacceleration on the revisions on the earnings side will kind of reach its crescendo.”

11/30/2022

This is a classic bad prediction. Dude got a flippin' financial crisis to help but still was way off.

11/30/22 Morgan Stanley chief equity strategist said by now we'd get to SPY 3300. Or even 3000. Not even close. At the height of the financial crisis we got to 3815 but no lower.

wicked bad prediction. And he committed the sin: a date AND a price.

👆

Google (alphabet) and Microsoft up nicely after announcing earnings.

Phew!

MSFT soaring 7% in the preopen but goog down a couple percent. Market feels very heavy lately but we have GDP on thursday and PCE on friday to liven things up. Inflation Now has inflation building back in lately...bad news. But interest rates seem to be saying still that inflation is over. The big worry is going to be the debt ceiling...the House GOP can't get anything through its own caucus, let alone the Dem controlled senate.

Today's prediction was a good one. After AMZN had a bad earnings report a year ago this poster (85k followers) was very negative on the stock. And he was right. He issued the report on 4/28/22 when the stock was at $144 and now, after getting as low as $81, is at only $102.

Nicely accurate call for a 43% drop in a megacap.

Wasteland Capital
@ecommerceshares
$AMZN These earnings… what can be said? It’s over.
Massive cash outflows (-$18.6bn), massive share issuance ($10bn), massive losses, massive “new investments / costs”, yet only 7% revenue growth below inflation (-8% international, shrinking again)? AWS (+37%) losing share too.

Big drop in GDP Now's prediction of 1Q GDP.

Was 2.5%, now is just 1.1%. Which is so close to nothing it might depend on which measure of inflation you use to decide if positive or negative.

On the other hand, while we had an airpocket of econ activity, April seems to have rebounded.

Consensus is +2.0%.

Number comes out tomorrow morning. Probably not a massively important number given that things are changing and this number is so backwards facing. But for those predicting an imminent recession and investing bearishly as a result the number will be important.

Yipes ouch

equal weighted SP500 today: -1.1%

regular SP500: -0.30%

That kind of divergence is unusual.

Lot of weakness out there being masked by msft, amzn, goog

works for seattle I'm sure. Not so much for me.

Well, watch for more of the same tomorrow. Meta/Facebook announces great results after the bell, currently up 10%.

Boosting Tech and Naz 100 tomorrow, as well.

Th. Amazon announces after the bell.

I've been buying tech funds again so get ready for a steep drop in tech. I'm not kidding.

Today's prediction was mostly wrong but had a flash of genius.

January 2023 this poster (65k followers) noticed the 10 year yield was down to 3.4%ish. And said it was about to rocket upward to past 5%, destroying trillions in bond value.

And in fact the 10 year did rocket upwards, just as he said it would, but only to 4.0%. Then fell back to the 3.5% range it seems to want to be at, where it was when he made the prediction.

Predicting interest rate moves is harder than stocks...stocks move up 70% of years so you can be right by just staying bullish....interest rates don't have that built-in bias to up or down.

So...outstanding short term trade....(so far) bad longer term trade.

This poster (23k followers) repeated a table from Leuthold that claims over the last 80 years in a November midterm month to April the following year there hasn't been a down year for stocks.

In other words, in midterm election years, going from 11/1/22 to 4/30/23 in today's case.

And again, it worked. We're up around 5% from 11/1/2022. Seasonality and repeating patterns are interesting. Hard to know if it is just data mining or an actual bettable pattern.

I'm putting this in my calendar for 2026.

Remember Fun Facts:
📢Since 1942, $SPX has NEVER delivered a negative return from November midterm election year through April of the following year.
📢Average return is roughly 17%. Worst performance .7% $SPY
📢70s and 80s inflation, rate hike cycles included
$NYA $QQQ

Bear Market Rally in full-on Bull mode, if there is such a thing.

Amazon after the bell. That one always makes me nervous. But seeing a lot of buyers over the last couple of days and the thinking is that its peers have been surprising to the upside, esp. regarding cloud computing.

Stay tuned.