Yahoo Finance has launched a chartbook featuring key charts from leading market strategists and economists, providing insight into their views on markets and the economy in 2024.
This chartbook provides a comprehensive view of market and economic conditions based on the perspectives of various Wall Street experts. The Chartbook is intended to be a resource for investors seeking to understand current trends and potential opportunities in the market.
Yahoo Finance’s Myles Udland, Seana Smith, and Josh Schafer dig into charts on topics like inflation, S&P 500 valuations, and economic growth forecasts.
Editor’s note: This article was written by Eyek Ntekim
video transcript
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Sheena Smith: Yahoo Finance launches ‘Chartbook’. Here’s a look at key charts from Wall Street’s top minds to provide insight into how leading market strategists and economists are thinking about markets and the economy in 2024. Joining me here is Miles Udland, head of news, and Josh Schaefer, market reporter.
That’s a lot to break down, folks. And Josh, you really spearheaded this “chart book.” Please tell us how you identified these charts and what we are aiming for with this.
Josh Schaefer: Well, I have a basic question for all economists and strategists. So what is the most important chart for investors right now? It’s so broad that you can go anywhere with it. And for me at this point, the biggest takeaway from Chartbook as a whole is the difference between this edition of Chartbook, which will be released in January 2024, and the first edition, which will be released in August 2023. It was a big difference.
And Miles had written at the beginning of the first edition of the chart book we were all waiting for this proverbial shoe to drop. It was like that. It felt like a recession was just around the corner. And I think if you look at today’s chart, you’ll see that it feels like a soft landing is just around the corner and the story is starting to change a little bit.
Miles Udland: And I think that’s kind of a way to actually see the consensus that we reference all the time during live programming all in one place. And I think consensus is kind of a mean word. Oh, we’re all thinking the same thing. But ultimately, these are the themes that guide us months at a time, and the conversations these strategists have with their clients. That’s how the market works, and as Josh said, it’s very useful to be able to look back and say that at that moment, this was what was happening. And I’m already looking forward to this summer’s edition to see how January’s performance was.
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Sheena Smith: Yeah. So, we have selected here one of our favorites from the major charts given. And Josh, since you led this mission, I’m going to give it to you first. Tell us what you’re seeing and what that chart is and maybe what’s going to happen in the future.
Josh Schaefer: Inflation, right? And inflation is still kind of on the charts at the moment. And really, because inflation leads us to the rest of the market, and we’ve been watching the rapid rise in inflation, the Fed’s response, and essentially when inflation is going to come back. What we’re looking at here is core PCE, year-over-year percentage, and annualized core PCE over six months. This is a graph from Oxford Economics. Oxford Economics or Capital Economics, sorry, via Andrew Hunter.
we like both. Both are included in our book. But if you look at this chart, what stands out there is the six months on the right that are below the Fed’s target. So there’s a dotted line there, and that blue line is below the Fed’s target, which is really the argument about inflation and why we’re talking about cutting interest rates now.
Miles Udland: And I think what’s particularly interesting about this graph is that back in August, there were a lot of graphs showing how housing inflation, specifically shelter inflation, was coming down. And they would say that overall inflation is going to go down. And now we’re here and we can see that the six-month annualized rate is below 2%. Of course, we got that PC number last week, so let’s see what happens over the next two months.
Sheena Smith: Inflation, so it’s not surprising that that’s the basis of the first graph. Miles, you’re looking at something different here, something a little broader.
Miles Udland: Yeah. This chart was provided by the Goldman Sachs team led by David Costin. And it shows the valuation of the S&P 500 and the equal-weighted S&P 500. So the big theme coming in 2024, Josh, I know you’ve written about this a lot, is the idea that there’s going to be a lot of things. Market value, not just Magnificent Seven stock.
And it’s easy to see how the purple line and the blue line diverge, especially around the concept of small-cap stocks and one of my favorite phrases I hear from the strategist community: the stock-picking market. It is time for the discussion to take place. This chart shows that the equal-weighted S&P currently trades at about 16x P/E. This is essentially in line with the historical average of the entire index. So, Josh, the inflation you’re seeing in S&P valuations is coming from exactly those tech leaders. There’s a lot of opportunity there, at least from a strategist’s perspective, and certainly from a Goldman team’s perspective as well.
Josh Shafer: And other charts in the book highlight how some people view that strategy or how they view that opportunity, right? , I think that’s what makes this book so consistent in that if you ask someone, they’ll tell you, “There’s a chance.” And if you ask people to be more specific, here are two charts for the Russell 2000. Now everyone wants to talk about small-cap stocks. I mean, if you look at that equal-weighted chart, the last time small-cap stocks had a big crash was in 2000 when stock prices were this far apart, right?
That’s when it happened. So we brought Tom Lee to Fundstrat to highlight that in the chart book and say, “I’m looking at this opportunity, and this is kind of the play.” And I think it’ll be fun to see how different strategists take this question and how they communicate what they feel about the market moment.
Sheena Smith: Yeah, definitely. And that’s been repeated many times in our live shows over the past few weeks. We’ve certainly seen this huge rise in Mag7 stock. Emphasis is placed only on the chosen names. But there are opportunities elsewhere, especially when you consider the criteria and what’s required.
Okay. I’m going to take my graph here and it’s all about economic growth GDP. It was from Bankim Chadha through Deutsche Bank. And he was talking about the fact that the consensus actually underestimates economic growth in the United States. As a result, many forecasters pushed through with their predictions.
The slightly purplish line at the top of the screen shows the actual GDP growth rate. And here you can see some of the predictions we’ve gotten from economists over the last few quarters. It starts with the orange line all the way to the left. And that’s from January 2023. And here we see the expectation that the economy will slow and potentially go into recession. So nothing like that is happening. And economists simply pushed that prediction further.
Now, it’s important to point out when talking about facts. The January 2024 line, the dark magenta line on the right, yes, they’re still pushing the fact that they’re still waiting to see or hoping to see the January 2024 line. I am. Economic slowdown. But this really points to the fact that maybe we can see a scenario where we avoid a recession and have a soft landing.
JOSH SCHAFER: So that magenta line that you highlighted is interesting, because are we just going to keep rising above it again? Is that the prevailing theory? As Miles said, if you were to do this chart book again in six months or so, where would it land? I think this is one of the biggest questions I walk away from this book with. Because there are some risks that people have highlighted in this book.
Miles Udland: Yeah.
Sheena Smith: Yeah. Considering all the colors, this is the most fun chart to look at. I think magenta is the perfect way to describe it. I don’t know.
Miles Udland: I think it’s going to force readers and viewers to have a dialogue with themselves about what exactly the colors are.
Sheena Smith: But it’s definitely worth checking out. You can also find Yahoo Finance’s “Chartbook” on our homepage. A number of charts are highlighted here as key charts that The Economist’s strategists believe are worth looking at for investors as they prepare for the remainder of 2024. .
