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· S&P 500 up 8.9%, boosted by lower bond yields
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.
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.
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.
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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Notice
If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
Risk Warnings
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Exclusion of Liability
Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Investment
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
Cookies
Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.
This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
By clicking you agree to the Terms and Conditions displayed.
