Asset classes of 2023, Fed pivots in context and the Magnificent 7
This week's chart covers the following topics:
The winning asset classes of 2023: Bitcoin and oil trade places
Midway through December, it’s time to revisit our asset-class “quilt” from last year. What were the winning and losing investments in 2023, and how do they compare to recent vintages?
Bitcoin was by far the best performer among the nine categories we selected, boosted by optimism that ETFs will soon allow more investors to trade cryptocurrency. It’s continuing its streak as the most “binary” asset since 2016 – either performing the best or worst in each calendar year; it trailed the pack in 2022.
Meanwhile, oil went from the best performer in 2022 (on the back of the Russia-Ukraine war) to the weakest performer in 2023 amid concerns about slowing economies and oversupply.
The Fed’s history of brisk rate-cutting
Jerome Powell stunned Federal Reserve watchers this week by discussing prospects for rate cuts. The Fed has begun its long-awaited “pivot,” according to the Wall Street Journal.
With central banks signaling that victory over inflation is near, our chart examines the lessons of history. Once the “pivot” begins, how many rate cuts follow – and how quickly?
The lines for 1995 and 2002 demonstrate the only “plateaus.” By contrast, the 1990, 2001 and 2007 pivots resulted in a series of rate cuts in rapid succession.
Visualising the Magnificent Seven
This chart uses data from FactSet via the FactSet Connector.
苹果 , 亚马逊 , Alphabet Inc. , 英伟达 , Meta , 微软 and Tesla were dubbed the “Magnificent Seven” by 美国银行 strategist Michael Hartnett this year. The moniker stuck as these seven high-tech mega-stocks were responsible for much of the S&P 500’s gains in the face of a tighter rate environment and economic uncertainty.
This chart uses Macrobond’s FactSet Connector to assess price-to-earnings ratios across the Magnificent Seven (as well as the S&P 500 as a whole) since April 2013. We generated a Z-score, on the right-hand axis, showing us how far the P/E ratios are from historic averages (a Z-score of zero).
The purple dots represent the most recent reading; the “candlesticks” represent percentile ranges, with the 10-90 range the “wick.”
Apple and Microsoft are the most richly valued stocks in the group, with P/E multiples in the top 10 percent of the historic range. Meta, meanwhile, is at the bottom of its 25-75 range, even after it more than doubled this year – showing how much more “bubbly” the social-media giant’s stock has been in recent history.
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