"There is a certain relief in change, even though it be from bad to worse; as I have found traveling in a stage coach, that it is often a comfort to shift one's position and be bruised in a new place." Washington Irving 1824.
Love it. Shift from being bruised in the US to being bruised abroad. However, I do think there are fewer central bank headwinds abroad, certainly better historic valuations, potentially better earnings, and sooner catalysts. May not work at all but seems like a path of less resistance.
My problem is that I don't see a lot of downside for earnings. Moreover, if ISM does bottom out and the Fed hits the pause button then multiples ought to head higher. Maybe earnings is less important. Last year, strategists nailed it--consensus earnings call in Dec 2021 was more or less spot on with the outcome. They were wrong because they did not see the multiple collapse. Let's not make the same mistake twice. Focus on the multiple. Yet, as mentioned, even if its about earnings, I think the forward looking models shown might give us a faulty signal. Of course, we are all going to be watching the SPX this week. It does seem as if that downward sloping trend line might not contain the market and next week we can discuss how it broke out to the upside. Honestly, I cannot believe I am bullish like this, it seems very uncharacteristic of me...Note---I did note that for a nanosecond, bad news was bad news as I am sure there were a flood of messages hitting inboxes with that one, but that seemed to dissappear into the OPEX, which seems to drive so much of short term moves that really make it hard to make any sweeping conclusions about a given days reaction to data.
You are not alone. As I say, I think this is where the entire debate hinges now. I see downside, you don't. I am more bearish, you are more bullish. As for multiples, I agree at some point the market will start to 'look through'. However, I don't know how soon that will be given there still may be uncertainty on the Fed, particularly if the Fed wants to get the 2023-2024 rate cuts out of the curve/investors mindset. The bond mkt is surprisingly dovish/soft landing focused. Usually more skeptical investors in that asset but they are buying the soft landing talk. This could well happen, however, this is the best case scenario, historically unlikely, and increasingly consensus. This tells me any hiccup, on Fed/earnings/geopolitics, and there is a risk. I would rather live in the moment right now than look too far ahead. Finally, I completely agree that OPEX is getting harder to decipher given the preponderance of 0 DTE options every single day.
https://people.duke.edu/~charvey/Research/Thesis/Thesis.pdf
"There is a certain relief in change, even though it be from bad to worse; as I have found traveling in a stage coach, that it is often a comfort to shift one's position and be bruised in a new place." Washington Irving 1824.
Love it. Shift from being bruised in the US to being bruised abroad. However, I do think there are fewer central bank headwinds abroad, certainly better historic valuations, potentially better earnings, and sooner catalysts. May not work at all but seems like a path of less resistance.
My problem is that I don't see a lot of downside for earnings. Moreover, if ISM does bottom out and the Fed hits the pause button then multiples ought to head higher. Maybe earnings is less important. Last year, strategists nailed it--consensus earnings call in Dec 2021 was more or less spot on with the outcome. They were wrong because they did not see the multiple collapse. Let's not make the same mistake twice. Focus on the multiple. Yet, as mentioned, even if its about earnings, I think the forward looking models shown might give us a faulty signal. Of course, we are all going to be watching the SPX this week. It does seem as if that downward sloping trend line might not contain the market and next week we can discuss how it broke out to the upside. Honestly, I cannot believe I am bullish like this, it seems very uncharacteristic of me...Note---I did note that for a nanosecond, bad news was bad news as I am sure there were a flood of messages hitting inboxes with that one, but that seemed to dissappear into the OPEX, which seems to drive so much of short term moves that really make it hard to make any sweeping conclusions about a given days reaction to data.
You are not alone. As I say, I think this is where the entire debate hinges now. I see downside, you don't. I am more bearish, you are more bullish. As for multiples, I agree at some point the market will start to 'look through'. However, I don't know how soon that will be given there still may be uncertainty on the Fed, particularly if the Fed wants to get the 2023-2024 rate cuts out of the curve/investors mindset. The bond mkt is surprisingly dovish/soft landing focused. Usually more skeptical investors in that asset but they are buying the soft landing talk. This could well happen, however, this is the best case scenario, historically unlikely, and increasingly consensus. This tells me any hiccup, on Fed/earnings/geopolitics, and there is a risk. I would rather live in the moment right now than look too far ahead. Finally, I completely agree that OPEX is getting harder to decipher given the preponderance of 0 DTE options every single day.