The Weekly Edge

Earlier this week we released our 2024 macro and market outlook titled “Stranger in a Strange Landing”. It argues that instead of having a Hard, Soft, or No Landing, we could have a “Strange Landing” in 2024.

Kansas’ 1976 signature song “Carry on My Wayward Son” alluding to perseverance and uncertainty, is a fitting analogy for the upcoming earnings season, which kicked off yesterday with reports from economic bellwethers J.P. Morgan, Wells Fargo and United Healthcare.

We are watching closely (or pulling out our Libra Scales of Justice) for indications that Value’s early outperformance in 2024 could be setting up for a triple top in Growth vs. Value, meaning a period where Growth underperforms Value.

Equity markets have been acting invincible (save for Wednesday of this week).  With the tailwinds of a friendly Fed and resilient growth data, equities have been in full melt-up mode as investors chase to increase exposure into year end.

As current Federal Reserve Chairman Powell was “Livin’ in the 90’s” this week, we dust off our debut Third Eye Blind CD and ask “how’s it going to be?” for markets and the economy now that the tightening cycle is (or at least is expected to be) over.

Wasn’t that nice? A whole week without Fed speak! The board is in its “quiet period” in the lead up to next week’s meeting of the Federal Open Market Committee.

Annual outlook season has begun in earnest on Wall Street. Strategists from around the Street have started publishing their predictions for the S&P 500 next year, and though there are ample critiques about using single point estimates for markets , it is helpful to understand the logic and drivers behind these different takes on the market.

After this week’s softer CPI and sharp movement lower in bond yields, is this time different? Is it truly “all over now baby blue” for this tightening cycle?

This week we are providing our assessment of the third quarter S&P500 earnings season which could be appropriately summarized by AC/DC’s “Back In Black”, as the broad index has returned to profit growth after four straight quarters of declines.

Lags can be a powerful force, not just in music, but also in monetary policy. When it comes to lags, Jimmy Page walked so the Fed could run. One of Page’s innovations was capturing the Led Zeppelin’s “ambient sound” in recording, which is why the album sounds paradoxically rich and raw at the same time.