Please find our Q3 2023 Commentary below, “Creating a Risk Framework” RIM_Q3_Commentary_F_eb3094f90e
Download Market Snaphot here. Last Week’s Summary: ▪ S&P 500 Index fell 0.24% ▪ International Equities fell 0.74% ▪ Emerging Markets fell 0.86% ▪ U.S. 10-Year Treasury Yield rose to 3.46% ▪ CPI fell to 4.9%; Core CPI fell to 5.5% ▪ Initial Jobless Claims rose to 264k ▪ PPI fell to 2.3%; Core PPI
Security Brokers and Dealers; Margin Accounts at Brokers and Dealers; Asset, Level Entering the danger zone for margin debt. Historically, when margin debt has reached these levels, a subsequent stock market correction occurred. Margin debt could be extended from here, but it looks close to maxing out.
Here are some of the highlights of credit growth in 2020: During the first nine months of 2020, Total Credit in the US expanded by $6.4 trillion. The previous full-year record for Credit Growth was $5 trillion in 2007. Total Credit now amounts to $82 Trillion. It has increased 82 times in just 54 years.
E-Commerce Bubble Compared to Other Bubbles: Chart The e-commerce bubble will likely continue to grow. However, it will reach a point in which it is unable to sustain the current growth rate of earnings and capital inflows, resulting in a significant short-term drawdown followed by sideways growth until e-commerce stock prices fully are reset. Source:
2-Year Yield Curve In Historically Vulnerable Territory The 2-year yield curve continues to steepen. Historically, over the last twenty years, as the yield curve steepened, this coincided with a drop in equities. The below chart overlays the 2-year yield curve with the S&P 500. We are around the point in which equities began a multi-year
U.S. Equity Evaluations Continue To Climb To Historic Highs The S&P Price to Earnings Ratio is currently at historic highs, suggesting extremely rich valuations and a possibility of an asset pricing reset in the coming years. P/E ratios are likely to follow historic precedent and revert to their historical average of 15x earnings. If so,
Global Central Banks Continue to Flood the Markets with Liquidity Collectively, the assets of the U.S. Federal Reserve, the European Central Bank and the Bank of Japan rose from $7.2 trillion in March to a record $21.8 trillion in November. All three are also pushing their country’s fiscal policymakers for additional stimulus. The Fed’s Reserve