The current VIX level of 13 reflects a hesitancy among investors to take a bearish stance on the prominent Big 7 stocks. Global corporate buybacks, on a downward trajectory since 2019 despite heightened volatility in inflation and interest rates, may indicate a erosion of savings. As downgrades to U.S. earnings estimates persist for nine consecutive weeks, the longest streak since February, concerns about the sustainability of equities are underscored. Citi’s projection aligns with Goldman’s analysis, suggesting a potential decline in buybacks this year before a modest rebound in 2024. Despite short-term optimism, Deutsche Bank highlights the ongoing decline in earnings expectations for 2024, raising questions about the long-term support for U.S. stocks.
Made the Great7 VIX.. new lows of the year (ahead of NVDA)
VIX 13 right now.. none really wants to short big7 pic.twitter.com/7GFZerpYIa
— 🅰🅻🅴🆂🆂🅸🅾 (@AlessioUrban) November 22, 2023
Since peaking in 2019, global corporate buybacks have been on a downtrend despite the historic (downside and upside) volatility in #inflation & #interestrates. This likely points to the corrosion of #savings. Unless the latter improves, #equities may have less support. t.co/5bbtu9BuJn
— benson te (@3benson) November 22, 2023
"Downgrades to US earnings estimates have outnumbered upgrades for nine weeks in a row — the longest streak since February."
Citi via @sagarikareports pic.twitter.com/1zWKfybAkq
— Daily Chartbook (@dailychartbook) November 21, 2023
With 90% of the S&P 500 reported, 82% have beaten EPS estimates despite 51% missing on the top line.
– JPM Mislav pic.twitter.com/nN7RlCNbZi
— Daily Chartbook (@dailychartbook) November 21, 2023
This is consistent with Goldman's analysis from last month that with corporate "excess savings" running down, buybacks would fall to the lowest since 2020 this year before rebounding somewhat in 2024. t.co/MY7ZmebrYd pic.twitter.com/KYnl4CCppe
— Neil Sethi (@neilksethi) November 21, 2023
"The rally in our reading has just unwound the rates vol and geopolitical shocks rather than pricing in cyclical growth upside."
via Deutsche Bank pic.twitter.com/WiWi5lQZ9f
— Daily Chartbook (@dailychartbook) November 21, 2023
"Stocks" still expensive pic.twitter.com/mkOnRgLoaE
— Win Smart, CFA (@WinfieldSmart) November 22, 2023
While, in the short term, the sentiment for US stocks has risen again to extreme levels, the earnings expectations for 2024 have declined again for the 9th consecutive week.
via: @dailychartbook pic.twitter.com/t3naaX6OaA
— Alexander Vogt, CFA (@VogtAlexander_) November 21, 2023
Big Money Managers Warn: Recent U.S. Market Surge May Be Temporary
Big money managers view the recent uptick in U.S. stocks and bonds as a fleeting rally, overshadowed by looming concerns about fiscal and monetary policies, the 2024 presidential election, and potential recession. The market’s optimism is countered by fears of the negative impacts of Federal Reserve’s interest rate hikes and a global economic slowdown, leading to a cautious outlook for the coming year with expectations of minimal growth in major indices like the S&P 500.
Hedge fund short sellers suffer $43bn of losses in market rally