Charlie McElligott of Nonura with his latest robot whispering.
After last year’s “multiple compression” beatdown, all of the rally in January 2023 YTD was on the “multiple expansion” provided by the Rates rally / yields lower / bond squeeze to start the year…and not EPS.
HOWEVER, as Rates are again under pressure (Yields higher) and resuming their upward travel due the aforementioned repricing of terminal HIGHER as the “imminent recession = Fed easing” meme sees its probabilities cratering after the latest “animal spirits” economic data reacceleration, we now again are risking a dynamic where “multiple compression” is again in the driver’s seat, and that’s particularly leaning on the January “high valuation / high vol / low quality” stuff that painfully led the rally in January, as Short books were de-grossed from last year’s alpha drivers.
