By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group
After a little reprieve earlier in the week, investors were back in "buy" mode at the end of last week. The “Magnificent 7” (Apple, Google, Amazon, Meta, Microsoft, Nvidia, & Tesla) also took a breather before heading higher later in the week. Market breadth has improved over the past few weeks as other asset classes within equities have out-paced the S&P 500 and the “Magnificent 7” - namely small caps and mid-caps. The number of stocks on the NYSE making new highs it at the strongest level in over four months. Yet, the calls for recession are still being heard. If we look at volatility, we can find some interesting clues about recessions. In 2007, prior to the 2008 Recession, the VIX spiked to 30.8 just 55 days before the S&P 500 peaked.
Contrast that to current levels, and the VIX just hit a year-to-date low of 12.35. This year, the S&P hasn’t reached a high over a multi-year period, but is still coming off the lows of 2022. At the same time, those calling for a recession are pinpointing consumer health and the labor market. Currently, loan delinquencies are at lower levels than just prior to the past two recessions. The economy added nearly 200,000 jobs in November, with an elevated number of jobs available and an improving participation rate. Things can change, but for now the economy is still on solid footing.
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