DC Lite #59

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1. Household debt. "Eighty-nine percent of US household debt is fixed rate (mortgage, student, and auto loans) and 11% is floating rate (credit cards, HELOC, and other types of debt). As a result, the transmission mechanism of monetary policy has been weak."

2. Productivity & unit labor costs. "Q4 productivity came in above consensus at 3.2%, while unit labor costs were below consensus at 0.5%. This is likely reflective of supply shocks healing, greater labor force participation and gov't investment, and is supportive of the soft landing narrative."

3. Sell Side Indicator. "The SSI’s current level indicates an expected price return of +14% over the next 12 months or 5450 for the S&P 500 by year-end 2024."

4. Market cycles vs. breadth. "We are living in one of the narrowest markets in history, with only 26% of stocks outperforming the index. The last time this happened (1998-2000) it all ended in tears (down 53%), and the previous period (1970-73) led to a regime of valuation destruction (with the P/E ratio declining from 20x to 7x)."

5. Large-cap breadth (I). "How narrow can the rally be when more than two-thirds of stocks in the S&P 500 have 50-day averages above their 200-day averages? BTW that's the best level in more than 2 years and is still rising."

See: Hi Mount Research