DC Lite #232

Welcome back to DC Lite: Daily Chartbook’s free, entry-level newsletter containing 5 of the day’s best charts & insights. Upgrade to get all 30 charts.

Administrative note: please add [email protected] to your safe senders’ list to ensure you receive all emails.

1. ADP employment change. Private businesses added 233k jobs in October, led by the services sector (211k), for the biggest monthly gain since July 2023. Consensus called for just 115k.

2. Q3 GDP. "Bad time to bet against the American consumer—last quarter, consumption growth had the largest contribution to US real GDP growth in more than three years."

3. Momentum vs. beta. "One difference [between today and the 90s] is the correlation between momentum and high-beta factor portfolios. During the Tech bubble, momo and high beta were synonymous. Today they are antithetical. This suggests the bar is higher to unwind this bull market in momentum."

4. Returns vs. volatility. "The S&P 500 has rallied over 40% since last October with a realized vol of about 12 ... [the] last 12 months have been one of the greatest risk adjusted yearly returns in the history of the US stock market. Note that historically a low vol rally has not necessarily been an indicator of future volatility."

5. Cyclical earnings. “Approximately half of the leverage-sensitive sectors in the S&P 500 have reported earnings. Earnings expectations there remain weak, confirming the broader macro pressures. Make no mistake: tech & consumer discretionary have a far bigger index impact. Macro pressures persist."