Scott Helfstein

For people looking for optimism on the economy away from political outcomes and monetary policy, take a look below.

Weekly Sanity Check: It’s National Fried Chicken Sandwich Day* *Not National Fried Chicken Day Fine, some data: Biden Votes in 2020 -> 81.2m Harris Votes in 2024 -> 70.4m Pretty simple. How/why? Well political science is where theories and debates go to become immortal…

Weekly Sanity Check: Q3 GDP headline on investment is misleading at 0.7%. Private investment is alive and well. YoY: Investment -> +5.2% Equipment -> +7.8% Companies continue investing and that is helping fuel the mid-cycle expansion.

Weekly Sanity Check: Odds of Sept rate cut are now priced at almost 75% following the ‘cooling’ (still better than forecast) jobs numbers. In Presidential election years since 1970: # of rate cuts in Sept -> 1 # of rate cuts in Aug-Nov -> 6 A 1 in 6 chance seems more rational?

Weekly Sanity Check: After watching the debate, wondering whether we could just elect Snuggles the guinea pig as president…

Strong labor, leverage, & liquidity continue to drive the equity market's progress in 2024, with potential for more gains ahead. Head of Investment Strategy @ScottHelfstein outlines key considerations for the second half.

Weekly Sanity Check: Michigan Consumer Sentiment dropped and 1-year inflation expectations jumped. Note: -Sentiment drops when inflation exp. rise -Sentiment does not impact retail sales -Inflation exp. averaged >3% since the 1970s Is this an economic issue a perception issue?

Weekly Sanity Check: Q1 2024 GDP disappointed slowing to 1.6% growth QoQ, missing estimates. Not the real story. YoY nominal GDP growth was 5.5%. For context: Average Nominal GDP Growth: 1983-2000 -> 6.4% 2001-2019 -> 4.0% 5.5% seems fine. Not buying the sky is falling angle.

Weekly Sanity Check: Let’s consider the idea that real interest rates (Fed funds - CPI) above 200 bps are too high for a minute. Average Real GDP Growth Since 1970 Real rate <2% = 2.3% Real rate >2% = 3.6% Did we forget 1982-1990 and 1994-2001? Maybe the teens were the outlier.

In this month's edition of Inflection Points, Head of Investment Strategy @ScottHelfstein examines AI's current market influence, suggesting a growth trajectory more sustainable than the late '90s dotcom bubble.

Weekly Sanity Check: The Fed will drop rates when either: 1) Inflation moves closer to 2% 2) US economy shows signs of slowing In review (and 40-yr avg): CPI -> 3.2% (2.9%) Nonfarm payrolls -> 275k (177k) Q4 23 GDP -> 3.1% (2.7%) Not a ton of evidence for 1) or 2) just yet…

Weekly Sanity Check: Tomorrow marks 1st anniversary of SVB failure and the banking crisis that wasn’t. Failures since SVB Signature (3/12/23) FRB (5/1/23) Heartland (7/28/23) Yeah, commercial real estate is a risk, but a heterogenous one + secondary PE hunting for discounts.

Weekly Sanity Check: Last week’s Leading Economic Indicators declined again, for the 23rd consecutive time, prompting some concern. % of time LEI decline prior quarter preceded a recession: 1960-2000-> 55% Post-2000->14% We still sticking with leading? Not to good forecasts…

@ServoWealth Why would you ever believe that Russell 1000 Growth is a good proxy for growth stocks? High PE and historical sales growth as factors is a bit of straw man, right?

Sometimes growth stocks do well. Sometimes, the do very, very bad.

Weekly Sanity Check: NVDA, NVDA... Today's headline. And yes, they beat earnings expectations 85% of the time since 2004. But here is another fact. Average Monthly S&P 500 Return: Since 1991 -> 0.8% When PE > 24.5x (+1 SD) -> 1.3% Be excellent to each other. And party on dude!

In this month's edition of Inflection Points, Head of Investment Strategy @ScottHelfstein discusses key factors and themes investors may want to consider for portfolio positioning in the current environment. gxetfs.com/4bnBPob

Weekly Sanity Check: Since Q2 2022 (6 quarters), S&P 500 sales per share grew faster than EPS. This is unusual and unnerving. EPS usually grows 2x-3x sales. Are companies righting the ship? Q4 2024 forecasts: Sales YoY -> 3% EPS YoY -> 4% The Return of The Operating Leverage...

Weekly Sanity Check: Concentration in major indexes is not necessarily new. Know what is under the hood. Number of companies >40% weight in S&P 500 Info Tech sector: 1990: 1 1995: 4 2000: 6 2005: 5 2010: 5 2015: 4 2020: 2 2/7/24: 2 Roads, where we're going, we don't need roads.

Weekly Sanity Check: Valuation multiples are not range bound, they go up over time as margins improve. S&P 500 Average Trailing PE multiple: 1949-1959 -> 11.8x 2013-2023 -> 23.1x Is the current market valuation really that high or simply a new normal given better productivity?

Weekly Sanity Check: With 3.1% YoY Q4 GDP growth, consensus once again underestimated economic strength. Forecasted Q4 23 GDP growth on: 6/30/22: 1.7% 12/30/22: -0.1% 6/30/23: 0.4% 10/15/23: 1.9% Actual: 3.1% Houston, I think our models have a problem here!