Happy New Year! We hope everyone has had a wonderful holiday season. As another year comes to a close, we are looking back with some interesting facts and figures from the last six months of 2023.
- Back to Square One (DEC). In 2022, the seven largest stocks by market cap at the start of the year fell an average of 46%, losing $4.9 trillion in market cap. In 2023, those same seven stocks averaged a gain of 105% (through 12/14) and increased their market caps by the same $4.9 trillion amount they lost in 2022. (Source: Bespoke)
- Small Caps Getting Cheaper (NOV). With the small-cap Russell 2,000 in a 30% drawdown from 2021 all-time highs, the price-to-book ratio for the index in aggregate ended October just above 1.7, which is in the bottom 20% of all readings since 1995. More than 25% of Russell 2,000 stocks are trading below their book value, including 58% of Financial-sector stocks in the index. (Source: Bloomberg)
- Lonely Offices (OCT). According to CoStar, U.S. office vacancy rates rose to a 20+ year high of 13.3% in Q3 compared to a post-financial crisis peak of 12.8%. Vacancy rates in San Francisco and Chicago are the highest at 20.1% and 16.3%, respectively. One bright spot is Miami, where vacancy rates dropped to 8.8% – the lowest since Q2 2020. (Source: Financial Times)
- Everything is Oversold (SEP). On 9/26, a basket of 14 major US index ETFs across market caps fell into “extreme oversold” territory, which occurs when a stock or index closes more than two standard deviations below their respective 50-day moving averages. The last time all 14 of those same ETFs closed in “extreme oversold” territory was one day short of a year earlier on 9/27/22. (Source: Bespoke)
- Strong Starts = Strong Finishes (AUG). Since 1928, the S&P 500 has averaged a gain of 2.3% from the end of July through year-end, with positive returns 71% of the time. In the 32 years where the index was up over 10% in the first seven months of the year, the S&P 500’s average performance for the rest of the year was a gain of 6.0% with positive returns 91% of the time. (Source: Bespoke)
- The Swifties Economy (JUL). Taylor Swift’s “Eras” tour of 117 concerts worldwide is projected to add up to $5 billion to the global economy, according to market research firm QuestionPro. The “Swifties” surveyed said they spent an average of $1,300 per show, a whopping $720 more than their intended budget. Even with the added expenses, 91% “shook it off” and said they’d do it again. (Source: QuestionPro)
Finally, take a look at the two images below. We created both AI-generated pictures with just a few words related to a “Happy New Year” theme. While both pictures have some oddities, where technology is heading is pretty amazing.
Economy
- Markets wrapped up the year little changed, with the S&P 500 up 0.3%, the Nasdaq up 0.1%, and the small-cap Russell 2000 down -0.3%.
- The number of Americans filing for unemployment benefits rose by 12K to 218K on the week ending December 23, above market expectations of 210K, to suggest some softening in the U.S. labor market before the end of the year.
- Continuing claims rose by 14K to a one-month high of 1,875K, as expected by markets.
- The S&P CoreLogic Case-Shiller 20-city home price index in the U.S. surged by 4.9% year-on-year in October 2023, marking the largest increase since November 2022 and aligning with market expectations, as a shortage of available homes for sale has been pushing home prices higher.
Stocks
- U.S. equities were in positive territory. Consumer Staples and Utilities were the top performers, while Energy and Consumer Discretionary lagged. Value stocks led growth stocks, and large caps beat small caps.
- International equities closed higher for the week. Emerging markets fared better than developed markets.
Bonds
- The 10-year Treasury bond yield decreased four basis points to 3.87% during the week.
- Global bond markets were in positive territory this week.
- Corporate bonds led for the week, followed by government bonds and high-yield bonds.
