Fed Funds Rate – Target Probabilities at the Fed’s FOMC Meeting Traders exhibit little optimism for a Fed rate cut at the January 29, 2025 FOMC meeting, with market expectations showing only a 2.1% probability of a 25 bps reduction. Image: CME Group
S&P 500 Performance per Year of a 4-Year Presidential Cycle The U.S. stock market typically outperforms in the first two years of a President’s second term compared to a new President’s term, suggesting a potentially strong year for stocks and giving bulls reason to smile. Image: Carson Investment Research
U.S. High Yield Corporate Bond Spreads While tight high-yield credit spreads often indicate strong market confidence, they can also be a warning sign of excessive investor complacency. Given this dual nature, it’s crucial for investors to monitor credit spreads closely. Image: Topdown Charts
S&P 500 Valuation – Shiller’s Cyclically-Adjusted Price-To-Earnings (CAPE) Ratio With the Shiller P/E ratio indicating an unusually high valuation for the U.S. stock market compared to the start of previous presidential terms, investors may need to moderate their expectations for future returns. Image: The Wall Street Journal
Sentiment Indicator and Stock Positioning The GS sentiment indicator not being stretched at the moment is a positive sign, as it suggests a balanced sentiment among investors, which is generally viewed as favorable for market stability. Image: Goldman Sachs Global Investment Research
ISABELNET Cartoon of the Day The S&P 500 rose 1.74% this week, maintaining its positive trajectory for January and giving bulls a reason to throw a party, while bears are contemplating a career change to avoid the market madness! Have a Great Weekend, Everyone! 😎
AAII U.S. Investor Sentiment Bull – Bear Spread The AAII Sentiment Survey indicates a notable rise in bullish sentiment among U.S. individual investors, suggesting a growing sense of optimism regarding the stock market. Image: The Daily Shot
Company Insider Buy-Sell Ratio As the S&P 500 continues its rally, corporate insider selling alone may not definitively predict a market downturn, but it can be a signal of executive caution or opportunistic profit-taking. Image: Bloomberg
Probability of U.S. Recession In the Next 1 Year The likelihood of a U.S. recession in the coming year remains at 15%, according to Goldman Sachs, in line with the long-term historical average. Image: Goldman Sachs Global Investment Research
Euro to U.S. Dollar (EUR/USD) The euro has shown strength this week, but caution is warranted. Potential shifts in U.S. trade policy under Trump and ongoing economic disparities continue to give the dollar an edge. Image: Bloomberg
NFIB Small Business Confidence Index In December 2024, the NFIB Small Business Optimism Index soared to 105.1, a six-year high, as small business owners’ confidence surged following the recent election and expectations of pro-business policies. Image: Real Investment Advice