YWR: Killer Charts
Disclosure: This is market commentary and personal views only. These are not investment recommendations. For that seek professional help.
Goldman Investor Survey
The year has barely started and yet everyone has already thrown in the towel on all sectors ex-tech. It’s consensus is that 2024 is a repeat of 2023. At a recent GS conference in London tech was the favourite sector for 2024 and almost half the room predicted Mag7 outperforms again. The worst is consumer.
Everyone knows Mag7 has the best earnings growth and it continues through 2025.
Switching to US earnings.
Q4 2023 earnings have been missing, primarily in financials, but I don’t care much if this is Q4 kitchen sinking. I’m watching for if the outlook is changing for 2024.
It’s a bit soggy, but forward estimates typically trend down slightly over time, so the 2024 trend isn’t alarming (yet).
Earnings season is still early but here are the notable revisions. Three travel related stocks. 2 asset managers. I like the airlines, just wish they paid dividends.
That $240/share number needs to hold and not drop to $220. Otherwise, there is a picture forming that the S&P 500 may have gone ex-growth at the index level.
All these massive swings (2021 +, 2022 -, 2023 +), but trailing 12 month EPS has gone flat. It might just be a temporary pause.
Bottom up analyst price targets show the most upside in Energy. Second highest is Consumer (the least favourite sector in Goldman’s survey).
Citibank, GM and Conoco
I liked this interview with Bill Nygren from Oakmark. He articulated my similar views on big cap US banks like Citi, and autos (GM). I own Conoco too.
Fund Flows
Going over ICI fund flow data (ETF’s + LT mutual funds) I note that despite the US market doing well there have been no net inflows.
The money is going into bonds $400 bn cumulative since 2021 and to a lesser extent international $120 billion.
I read this as retail afraid to buy the top in the S&P and looking for steady yields (bonds) and markets which have lagged.
Is this actually bullish for the S&P?
BofA January 2024 Fund Manager Survey
Let’s wrap up with charts from the January BofA Survey.
I call this the most important chart in the market, and it got even more extended.
The extent to which this is right or wrong is goign to drive everything.