Daily Brief - Remember this chart from 2008?

TLDR

US Citi Economic Surprises just turned negative (this was bound to happen). See our Thursday Market Checklist for more detail.

Everything is expensive

A shrewd look across asset classes shows that everything is still expensive. Housing is at 7.7x median income. S&P 500 is at 17x P/E. And US 10y Treasuries have a real yield of -5.5% (that is 2.8% yield - 8.3% CPI).

Just recently, home prices rose above the peak that led to the GFC. The lesson is that the ‘everything bubble’ caused by QE will take time to disinflate. It will take time for the bear to end.

Remember this chart from 2008?

Conclusion

In conclusion, don’t hold your breath for “the end of the correction” - but also remember that markets can rally for months even during bear markets.

The TOGGLE Market Checklist

The key data point this week is that US Citi Economic Surprises turned negative. We will watch S&P 500’s Earnings keenly to see if they will follow suit.

Show me the data

Here are the links to all the data points discussed above:

• Growth. US Citi Economic Surprises / Learn ↗
• Growth. US ISM New Orders / Learn ↗
• Inflation. US Citi Inflation Surprises /Learn ↗
• Inflation. US ISM Input Prices (M) / Learn ↗
• Earnings. SPX Forward Earnings / Learn ↗
• Valuations. SPX Forward P/E / Learn ↗
• Valuations. SPX Equity Risk Premium / Learn ↗
• Positioning. SPX Positioning / Learn ↗

Idea Spotlight: CVS Health

Analyst expectation indicators for CVS Health worsened and historically, this led to a median increase in price of 6.34% over the following 1M. TOGGLE analyzed 4 similar occasions in the past to produce the median projection and this insight received 5 out of 8 stars in our quality assessment.

The experts are getting more defensive on stocks. Savita Subramanian, BofA's head of US equity and quant strategy, says buy healthcare.