With disconcerting parallels to the financial crisis of 2008, warning signals are intensifying. A stark divergence between large and mid caps, soaring borrowing costs for S&P 500 companies, a prolonged crude oil decline, and soaring hedge fund exposure all contribute to an uneasy market outlook. The historical correlation of the 10Y Minus 3M Treasury Yield Curve inverting with economic downturns adds an ominous touch, questioning whether this time is truly different. Elevated inflation expectations and a negative Equity Risk Premium for the Magnificent 7 further underscore the challenges, prompting a reassessment of equity valuations and interest rates for sustainability.
The similarities to 2008 keep piling up!#SPX #SP500 $SPY #ES_F 📉 👀t.co/rDAjmkGtvc
— Invariant Perspective (@InvariantPersp1) November 25, 2023
#recession … #GFC2 #Commodities edition#OOTT #Oil #CrudeOil #WTI #CL_F 📉 t.co/1bUC5cPi9I
— Invariant Perspective (@InvariantPersp1) November 26, 2023
Hedge fund gross exposure is approaching 290%, according to data from Goldman Sachs 👀 pic.twitter.com/L0nh5EG3FE
— Markets & Mayhem (@Mayhem4Markets) November 24, 2023
The last 4 times the 10Y Minus 3M Treasury Yield Curve inverted, it led to the 1990s recession, the Dotcom Bust, the Global Financial Crisis, and the 2020 Recession. Is this time different? 🤔 pic.twitter.com/qkEKygEYHA
— Barchart (@Barchart) November 24, 2023
From @dailychartbook inflation expectations remain elevated. pic.twitter.com/x3Vpi4L74B
— Scarlett's Grandpa (@KASDad) November 24, 2023
🚨 Higher interest rates make stocks less appealing.
📉 The Equity Risk Premium of the Magnificent 7 is currently in negative territory.
🧐Additionally, the broad equity market is not as attractive as it used to be compared to the Fixed Income markets.
📊To make equity… pic.twitter.com/3UwEIokZmQ
— Alexander Vogt, CFA (@VogtAlexander_) November 23, 2023