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Writer's pictureStéphan
Dec 29, 20234 min read

Maine joins Colorado / USDCNH 6mos lows / NAAIM 2y highs / Biggest message of 2023 ?



  • Biggest message of 2023 ? >>> Markets have a tendency to not follow the script, consensus can be dangerous...so many financial forecasters and banks come up with consensus views that end up being totally mistimed/wrong (including central banks that hiked too late, and now too much - probably), historical data has its limitations in today's world of QE/QT/BTFP/ODTE options/Fed reverse Repo and so on and central bank's very heavy involvement, probabilities : don't always follow old formulas anymore, lived experiences from long while ago are always useful, but can be a major burden, stay flexible.. >>> few 'unexpected' examples in 2023 : Mag 7 vs other 493 SPX names, bond market round trip, house prices and rates up, equity markets rallied on higher rates, China markets vs EMG, commodities, lithium, CHF and many other assets didn't do what most experts said they were going to do in 2023 ...!... >>> valuations are the best way to go about it, we stick to our valuation models, best medium to long-term results for our investor clients

  • With this in mind, this is where it could possibly go wrong, ie against current consensus in 2024 : Fewer cuts from Fed than market has priced in (2x as much as Fed dots), U.S economy goes into recession and/or earnings actually slowdown (vs expectations that are again at record, looking for 11% up)

  • Maine joins Colorado in finding Trump ineligible for primary ballot. California declines to block Trump from 2024 ballot

  • Romania and Bulgaria are expected to join the EU’s border-free Schengen area in March

  • The stopwatch for a diplomatic solution is running out,’ Israeli minister Benny Gantz has warned as fears of a wider war in the Middle East grow (yet crude prices a little softer last few days)

  • Norges Bank announces less daily 'sales' of NOK from Jan 2024

  • 30y U.S mortgage rates are now lower than at the start of 2023!

  • The outperformance if U.S vs global equities ends the year pretty much on ALL time highs (chart available from BofA FM survey)

  • Investment Managers continue to scoop up stocks at breakneck pace as the NAAIM Exposure Index hits its highest level in more than 2 years (playing catch up), with more than 76% of SPX500 stocks now trading above their 200dma's, which is also highest in 2years

  • Chinese smartphone titan Xiaomi unveils its first EV in a $10 billion bet to rival Tesla and Porsche >>> China already produces EVs only at over 40 factories, over 100 others jointly with ice’s, has huge competition coming for europe and RoW

  • 2023 was the hottest year on record, with November being the most abnormally hot month on record

 


Over the last 2months we've had the following happening :


-Markets added some 150bps of rate cuts in 2024

-The 10y UST note yield dropped some 120bps

-The average 30y mortgage rates dropped about 130bps

-SPX500 is up 16% - other 'rate sensitive' sectors and QQQ up more

-USD index is down about 7% >>>>> And this is with core inflation that is still 2x the Fed's 2% inflation target >>> is this what the FED 'wanted'..? risk is that markets went too far too fast last 2months





not ending the year in a nicer way!











Not even surprising anymore.. good grief.. According to the MAS, Credit Suisse’s relationship managers had provided clients with inaccurate or incomplete post-trade disclosures resulting in spreads for 39 over-the-counter (OTC) bond transactions being charged above agreed rates. 






Thank you for your support in 2023, we wish you and yours a super healthy, full of joy and happiness new year, Guten Rutsch! Bonne année and a happy new year 🌟🥂🫶🌈🌈🙌

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