Strongest bear market in history(?), plus solid market starts and San Diego, CA
The Sandbox Daily (6.26.2023)
Welcome, Sandbox friends.
Today’s Daily discusses:
strongest bear market in history?
solid starts are good omens for the 2nd half
a frustrating market for many
Americans feel secure about their jobs
rates moving higher
We are out in sunny San Diego, CA at the iCapital Due Diligence Conference where Anastasia Amoroso, Chief Investment Strategist at iCapital, delivered an awesome presentation on her market thoughts and outlook.
For now, let’s dig in.
Markets in review
EQUITIES: Russell 2000 +0.09% | Dow -0.04% | S&P 500 -0.45% | Nasdaq 100 -1.36%
FIXED INCOME: Barclays Agg Bond +0.12% | High Yield +0.05% | 2yr UST 4.744% | 10yr UST 3.723%
COMMODITIES: Brent Crude +0.60% to $74.29/barrel. Gold +0.16% to $1,932.7/oz.
BITCOIN: -0.67% to $30,152
US DOLLAR INDEX: -0.13% to 102.772
CBOE EQUITY PUT/CALL RATIO: 0.64
VIX: +6.03% to 14.25
Quote of the day
“Charts are the language of Wall Street.”
- John Roque, Wolf Research
The strongest bear market in history?
This is one of the most unloved bull markets I can recall. People say the rally is too narrow, or trading volume has been weak, or even that investor sentiment remains feeble. The mainstream media is calling the VIX “broken.”
If this is still a bear market rally, it will end up being the longest bear market rally in history by measurement of time.
And it will also be the most substantial bear market rally in percentage terms.
Source: Jurrien Timmer, Alex Joosten
Solid starts are good omens for the 2nd half
The Nasdaq 100 index is on track for the best 1st half to a year ever, currently up +34.27% year-to-date.
Meanwhile, the S&P 500 is up over 20% from the October market bottom, currently up +12.74% year-to-date.
Historically, a robust 1st half in the stock market is a good omen for the remaining portion of the year. Since 1950, when the S&P 500 index has climbed more than 10% through June, it rises by a median of 10% in the second half.
Strength begets strength.
Source: Bloomberg
A frustrating market for many
With the 1st half of 2023 nearly in the books, a majority of constituents within the S&P 500 index are trailing the year-to-date index return.
In fact, just 27% of the companies in the index are doing better than the benchmark’s nearly 13% gain this year. That’s on par with 1998, the most lopsided year of the last 3 decades.
Source: Grindstone Intelligence
Americans feel secure about their jobs
Persistent labor market strength is something the Federal Reserve is very focused on curing through their monetary policy tools.
The Fed’s monthly survey of households shows that consumers are not worried about losing their jobs.
Source: Apollo Global Management
Rates moving higher
Last week, Fed Chair Jerome Powell testified before Congress that the Federal Reserve will start raising interest rates again before the end of the year to tackle inflation because the job’s not done.
The week prior, when the committee decided to “skip” the June rate hike, the Fed’s updated Dot Plot showed 12 of 18 officials thought rates must rise to 5.50%-5.75% this year—or higher—if the economy performs in line with their expectations.
The short-end of the curve and the belly have both responded by backing up rather quickly.
The 2-year yield is now pushing up toward cycle highs, although underlying support of the move (RSI and MACD) show momentum could be waning.
The bond market continues to underappreciate the Fed’s commitment to raise rates and keep rates higher for longer.
Source: Beat the Bench
That’s all for today.
Blake
Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily.