Saturday, November 23, 2024
On Thursday, UBS, the multinational investment bank based in Switzerland boosted its year end price target for the S&P to 5,500. This is moderately bullish and a modest increase from the bank’s previous target—the S&P currently stands at 5,300 and change.
On Wednesday, the day before the UBS announcement, JP Morgan forecast that the S&P 500 would fall, significantly, between now and year end to 4,200—a 21% drop from its present level. A dramatically bearish call.
So, what changed between Wednesday and Thursday to result in such a spectacular difference of opinion on what may be the most thoroughly studied number in the world of finance? What changed?
Nothing changed. Except maybe the news cycle.
We have our own deeply cynical view as to why smart, well-educated, well compensated people, who ought to know better—who do know better—issue prediction after prediction after prediction about a system which is obviously chaotic and, over the short term, unpredictable, and we’ll save that for another podcast on another day.
In this case, one of these well respected and hugely successful banks must be wrong. As a class, predictions like these are always wrong, worse than guesses, and, as we have said, fill the intellectual space between random noise and a fussy infant on a five-hour flight.
You should ignore them.
Stocks posted gains on Friday and made up some of the ground they lost last week but did so on dramatically lower volume.
Rates were mixed, mostly little changed on the day on Friday.
We’re not sure what to make of the economic news that was released on Friday. I guess the picture is mixed.
The four monthly consumer surveys done by the University of Michigan, which includes the Consumer Sentiment Survey all came in better than expectations. We don’t put much stock in survey like these—they’re essentially polls—but hey! Exceeding expectations is better than not. Am I right?!
Durable Goods Orders, a measure of the manufacturing sector, came in well above expectations but, the reports from several previous months were all revised downwards, which calls into question the value of these data.
And the Atlanta Fed’s GDP Now report came in a tick below expectations. It estimates that the economy has grown, in the second quarter, by 3.5% versus 3.6%. Not gangbusters but not too bad.
This week, in addition to the Initial and Continuing Jobless Claims on Thursday, we get Consumer Confidence, the Fed’s Biege Book, which will probably be more carefully examined this time than usual, and the Gross Domestic Product for the first quarter. We also get another spate of speeches from Central Bankers. We count seven but typically miss one or two.
Good times!
But, the most important data point this week comes on Thursday and Friday as the Personal Consumption Expenditures Indexes roll out. Expectations are that the Fed’s preferred measure of inflation increased 0.30% in April. A number that is even one tick better or worse than expectations will probably move the markets. Dramatically.
Everyone here at the Ministry of Truth is on mandatory double shifts so we can watch, listen, read, analyze and report, all of it, to you, here on the Buzz.
