CCRV - What Are Markets Pricing In?
2024-03-27 06:45:00 ET
Summary
- The major stock market indices in the S&P 500 and Nasdaq are pricing in a significant rebound in growth throughout 2024.
- However, the areas of the market which are most forward-looking (think tech, Mag 7, etc.) are looking increasingly priced to perfection.
- Sectors such as industrials and materials, as well as commodities, may outperform in the coming cycle if the leading indicators of the business cycle prove true.
- In contrast, the more pro-cyclical and growth-sensitive areas of the market (materials sector, commodities, etc.) are yet to price in any material rebound in growth throughout 2024.
- As such, commodities and other pro-cyclical areas of the market could be poised to outperform mega-cap tech moving forward. Meanwhile, from a pricing standpoint, neither long-duration fixed interest nor credit appear particularly appealing at present.
Time for a rotation
While we are clearly amidst a bull market in stocks, it is becoming increasingly difficult to argue the major indices in the S&P 500 and Nasdaq 100 aren't becoming increasingly priced to perfection. This notion does not imply a rollover of these indices is imminent, but perhaps, for those looking to allocate capital to equity markets, allocating to sectors and asset classes that are not the Mag 7 or growth darlings dominating headlines today may be prudent....
What Are Markets Pricing In?