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November to remember

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Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

· S&P 500 up 8.9%, boosted by lower bond yields

  • December strong for equities

S&P 500 Rally

November has historically been a robust month for equity returns, and this trend continued impressively this year; the index soared by 8.9%, marking its most remarkable performance since 1980, driven by a few major catalysts.

Better-than-expected economic data, lower yields, and tumbling oil prices all helped renew optimism that the Fed is done with its rake hiking campaign.

This renewed sense of optimism triggered increased investment activities, mirrored in the robust performance of the S&P 500, which now stands just 5% shy of its record high of 4796, achieved on January 3rd, 2022.

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Goldilocks

Robust US Economic data points out that markets expect a soft landing for the world’s largest and most critical economy.

So far, Mr. Powell has been able to slay the inflation beast without serious growth scares or breaking something in the economy.

Price data showed that the various measure of inflation continues their decent, moving closer but still far from the 2% target by the Fed.

Third-quarter GDP results were revised upward to 5.2% (from 4.9%) on the back of strong government spending but partly offset by consumer spending.

Those positive macro surprises did not go unnoticed by bond traders and were immediately reflected in the lower bond yields.

The peak in bond yields coincided with the start of the S&P 500 November rally.

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Lower costs of capital boosted company valuations.

On top of that, oil prices dropped, alleviating some stagflation fears. This decline translated into lower energy costs for consumers, giving them more spending power.

Currently, market participants expect rates not only to peak but also to be cut next year. The message was reiterated by legendary investor Bill Ackman, who bets that rates will be lowered as soon as Q1 2024.

Option traders do not see significant risks ahead. The VIX index, known as the fear index, dropped to its lowest levels in nearly 4 years as the move into risk-on assets lifted most asset classes.

It’s a pivotal point as the start of the cutting cycle marks has translated into strong returns for equities in the preceding months.

However, this rally is causing some valuation scares, including overconcentration fears, as few tech names, driven by the AI hype train, have delivered virtually all the S&P 500 year-to-date returns.

December rally?

Investors will monitor Powell on Dec 13th for a better sense of the policy path as the Fed is expected to leave rates unchanged on its last meeting of the year.

December is one of the best months, historically. In no other month stocks have a higher chance (74% of the time) to finish higher than the prior month.

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A Santa rally is not out of the question, especially if the Goldilocks scenarios continue and investors’ optimism keeps gripping the markets.

Investors can long the S&P 500 using our 3x US 500 , 5x US 500

Alternatively, they can short the S&P 500 using our -3x US 500

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Sandeep Rao

Research

Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

Violeta Todorova

Senior Research

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.

Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.

Julian Manoilov

Marketing Lead

Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Oktay Kavrak

Head of Communications and Strategy

Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

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