TME Daily: A tale of two cities for both earnings and positioning
Fastest pace of EPS downgrades in almost a year
Overall, reporting season has led to the fastest pace of EPS downgrades in almost a year.
Source: Bernstein
What's up with sales in Europe?
Net % of companies beating sales estimate. Huge difference vs previous.
Source: Morgan Stanley
The un-magnificient 493
It is annoying just how narrow the market has been this year, but the numbers below are nuts. In Q3 the big 7 tech stocks are expected to grow earnings 33.1%. The other 493 stocks will grow… -8.6%. That gap actually widens in Q4, before narrowing sharply into 2024. (Bernstein)
2024 estimates holding up
Consensus 2024 EPS is up 1% since 2Q, led by Consumer Discretionary and Energy.
Source: BofA Quant
Don't blame earnings (yet)
"We can’t blame a sudden change of heart within the Wall Street analyst community with respect to corporate earnings visibility. The following FactSet chart shows the 1-year progression of 2023 and 2024 aggregate S&P 500 earnings estimates. As noted, current and forward year estimates are modestly higher (+0.5 and +0.2% respectively) as compared to the July 31st year to date high for the S&P."
Source: Data Trekk
This is the best recession ever
In fact, The US is now fully back on track with its pre-pandemic trend rate. It’s as if Covid never happened.
Source: Bernstein
Goldman upgrading global growth thanks to AI
"...Our baseline expectation is that generative AI will affect productivity within our ten-year forecast horizon. We are therefore upgrading our global GDP forecasts from 2027 onwards to incorporate the impact of generative AI...."
Source: Goldman
CTAs pretty short. Can short more
"We have CTAs modeled short -$100bn of global equities (0th%tile) after selling -$41bn last week. In the US, CTAs are short -$25bn of equities after selling - $20bn last week. Per GS model, they CTAs are now sellers of SPX in every scenario over the next week"
Source: GS
Source: GS
HFs puking
The 4 week net flows are currently below -2z in the US when compared to data over the past 6 years. Most of the net selling over the past month has come from shorts added.
Source: JPM PI
Borderline unplayable
"The last few weeks have been borderline unplayable. A market where macro, micro and geopolitics have all co-mingled and competed. A market where headline index has suffered while beneath the surface sector and stock dispersion has been savage and substantial. The quantum of moves around earnings caused one client to quip that 5% was the new 1% in relation to daily moves and standard deviations. All the while carrying risk has proven increasingly hard, positioning and crowding become a material risk factor in and of itself and increasingly there being nowhere to hide (pharma, quality, defensives all coming under pressure). The net result was that global stocks lost around $1.5 trillion in market cap in the last week or so." (Bobby Molavi, GS)
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