The last month has seen a massive divergence between macro data reported in US and Europe (the latter collapsing as the former accelerates). The Global Macro surprise index, however, fell back into negative territory...
Source: Bloomberg
In fact, Q2 saw the biggest collapse in Europe's macro data on record...
Source: Bloomberg
The gap between US and European macro is dramatic, but we note this has tended not to be a 'decoupling' but a lead-lag series (so either US is about to serially disappoint, or Europe is set to soar versus expectations)...
Source: Bloomberg
Just one thing though - while the macro surprise index is 'relative to expectations', the Leading Economic Indicators signal has been contracting for a year and screaming recession...
Source: Bloomberg
Amid those macro moves, rate-change expectations are shockingly close to unchanged on the year - despite the massive dovish shift after the SVB collapse (and on the May FOMC 25bps hike). Since then the hawks are back in control, pricing in no rate-cuts to year-end...
Source: Bloomberg
However, none of that macro malarkey matters to the equity markets where Nasdaq (led by the magnificent seven... or just AAPL) surged in H1. The Dow was H1's laggard, up a mere 3.9%...
Source: Bloomberg
The Nasdaq Composite rose around 31% in the first half of 2023 - its biggest H1 gain since 1983 (outpaced only by the even more concentrated Nasdaq 100 which rose 37% - its best H1 ever). Last year was the second worst H1 in history and this year is the 3rd best ever for the composite...
The median US stock rose 6% in H1 (based on the ValueLine Geometric Index)...
Source: Bloomberg
Nasdaq 100 has been green in July for 15 consecutive years with an avg return of +4.64%...
Source: Bloomberg
The first 15 days of July have been the best two-week trading period of the year since 1928. Since 1928, July 3rd has the highest hit rate for the S&P of positive returns (72.41%), followed July 1st (72.06%)
Tech and Discretionary stocks outperformed dramatically in H1 while Energy and Utilities tumbled...
Source: Bloomberg
H1 2023 saw the biggest outperformance of Growth over Value since H1 2020, completely decoupling from the yield curve...
Source: Bloomberg
Before we leave equity-land, we would be remiss to not note the fact that Apple is once again a $3 trillion market cap company... to the f**king moon , Alice!!
Source: Bloomberg
But there is one thing...
Source: Bloomberg
Equities decoupled from the credit market in Q2...
Source: Bloomberg
Valuations are getting stretched...
Source: Bloomberg
US Treasuries are very mixed in H1 with the short-end monkey-hammered over 40bps higher in yield while the 30Y yield is down over 10bps...
Source: Bloomberg
The yield curve crashed lower in Q2, flattening to its most inverted quarterly close ever
Source: Bloomberg
The dollar ended the month lower, and quarter flat, and down modestly year-to-date. Bloomberg's Dollar Index has basically traded sideways in a small range since Q4's big drop...
Source: Bloomberg
Bitcoin rallied to its best H1 since 2019, up over 80% to $31,000; with Ethereum up over 60%...
Source: Bloomberg
Commodities are down for the 4th quarter of the last 5...
Source: Bloomberg
Oil fell for the 2nd quarter in a row while gold managed gains in H1. NatGas was clubbed like a baby seal in H1...
Source: Bloomberg
Gold has fallen for the last two months, after tagging near record highs over $2000 (and was down 2.5% in Q1), but for now is holding above $1900
Source: Bloomberg
The bulk of Nattie's decline was early in the year and in fact it has been rising recently - though for context, well off post-Putin highs...
Source: Bloomberg
We also note that the EU-US arb is back within its long-run historical range as European NG collapsed even more than US NG in H1...
Source: Bloomberg
Finally, H1 2023 rings a very loud bell with H2 2021 for tech...
Source: Bloomberg
What happens next with the AI-boom?
Perhaps the oldest adage on Wall Street is not to fight the Fed, but as Warren Buffett is fond of saying, “What we learn from history is that people don’t learn from history.”
