Life after leverage unwind is slowly, or even quickly, returning to “old-normal”!
How much have individual asset classes/stocks reversed the recent sell-off? Here is the list (as of Aug-15 closing):
Meta: 97%
Eli Lilly: 89%
Gold: 89%
S&P500: 74%
Nvidia: 67%
Novo Nordisk: 66%
Apple: 63%
Nikkei 225: 62% (till Aug-16)
Nasdaq100: 58%
Amazon: 43%
USDJPY: 36% (till Aug-16)
Microsoft: 36%
WIG30: 35% (till Aug-14)
Tesla: 31%
TLT: 23%
Bitcoin: 22%
Alphabet: 9%
Tesla experienced the largest drawdown (-27%), and gold experienced the smallest one (-4%).
However, the only thing that was important yesterday for the market was retail sales.. beat! Nonetheless, the beat did not change at all the Atlanta FED Q3 forecast: PCE’s contribution to Q3 GDP change did not move at all… see the Table 1.
What spoiled the (macro) party was industrial production. As a result, change in inventories (plus Equipment) accounted for virtually all of the decline in the GDP forecast.
Figure 1 shows the change in GDP forecast according to the Atlanta FED vs S&P500. We are by no means closer to a recession, at least when we look at the GDP forecast for Q3 2024. Today’s level of GDP growth is within a goldilocks scenario - see Figure 2.
Finally, here is how Goldman's trading desk described the day's narrative (via Zerohedge): “EVERYTHING rally with all baskets on our screens green on the day”.
Comments