Scott Helfstein

Behavioral Economist, Dad/Husband, Head of Investment Strategy, Global X ETFs | Disclosures:

[Scott Helfstein @ScottHelfstein]

For people looking for optimism on the economy away from political outcomes and monetary policy, take a look below.

[Global X ETFs @GlobalXETFs]

In this month's edition of "Inflection Points," Head of Investment Strategy @ScottHelfstein discusses the shift from the Information Age to the Automation Age. Discover which industries are poised to benefit from increased automation.
https://t.co/wDtfqUnPg1

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
It’s National Fried Chicken Sandwich Day*

*Not National Fried Chicken Day

Fine, some data:

Biden Votes in 2020 -> 81.2m
Harris Votes in 2024 -> 70.4m

Pretty simple. How/why? Well political science is where theories and debates go to become immortal…

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
Q3 GDP headline on investment is misleading at 0.7%. Private investment is alive and well.

YoY:
Investment -> +5.2%
Equipment -> +7.8%

Companies continue investing and that is helping fuel the mid-cycle expansion.

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:

Odds of Sept rate cut are now priced at almost 75% following the ‘cooling’ (still better than forecast) jobs numbers.

In Presidential election years since 1970:
# of rate cuts in Sept -> 1
# of rate cuts in Aug-Nov -> 6

A 1 in 6 chance seems more rational?

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:

After watching the debate, wondering whether we could just elect Snuggles the guinea pig as president…

[Global X ETFs @GlobalXETFs]

Strong labor, leverage, & liquidity continue to drive the equity market's progress in 2024, with potential for more gains ahead. Head of Investment Strategy @ScottHelfstein outlines key considerations for the second half.

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
Michigan Consumer Sentiment dropped and 1-year inflation expectations jumped.

Note:
-Sentiment drops when inflation exp. rise
-Sentiment does not impact retail sales
-Inflation exp. averaged >3% since the 1970s

Is this an economic issue a perception issue?

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
Q1 2024 GDP disappointed slowing to 1.6% growth QoQ, missing estimates. Not the real story. YoY nominal GDP growth was 5.5%. For context:

Average Nominal GDP Growth:
1983-2000 -> 6.4%
2001-2019 -> 4.0%

5.5% seems fine. Not buying the sky is falling angle.

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
Let’s consider the idea that real interest rates (Fed funds - CPI) above 200 bps are too high for a minute.

Average Real GDP Growth Since 1970
Real rate <2% = 2.3%
Real rate >2% = 3.6%

Did we forget 1982-1990 and 1994-2001? Maybe the teens were the outlier.

[Global X ETFs @GlobalXETFs]

In this month's edition of Inflection Points, Head of Investment Strategy @ScottHelfstein examines AI's current market influence, suggesting a growth trajectory more sustainable than the late '90s dotcom bubble.

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
The Fed will drop rates when either:
1) Inflation moves closer to 2%
2) US economy shows signs of slowing

In review (and 40-yr avg):
CPI -> 3.2% (2.9%)
Nonfarm payrolls -> 275k (177k)
Q4 23 GDP -> 3.1% (2.7%)

Not a ton of evidence for 1) or 2) just yet…

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
Tomorrow marks 1st anniversary of SVB failure and the banking crisis that wasn’t.

Failures since SVB
Signature (3/12/23)
FRB (5/1/23)
Heartland (7/28/23)

Yeah, commercial real estate is a risk, but a heterogenous one + secondary PE hunting for discounts.

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
Last week’s Leading Economic Indicators declined again, for the 23rd consecutive time, prompting some concern.

% of time LEI decline prior quarter preceded a recession:
1960-2000-> 55%
Post-2000->14%

We still sticking with leading? Not to good forecasts…

[Scott Helfstein @ScottHelfstein]

@ServoWealth Why would you ever believe that Russell 1000 Growth is a good proxy for growth stocks? High PE and historical sales growth as factors is a bit of straw man, right?

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
NVDA, NVDA... Today's headline. And yes, they beat earnings expectations 85% of the time since 2004. But here is another fact.

Average Monthly S&P 500 Return:
Since 1991 -> 0.8%
When PE > 24.5x (+1 SD) -> 1.3%

Be excellent to each other. And party on dude!

[Global X ETFs @GlobalXETFs]

In this month's edition of Inflection Points, Head of Investment Strategy @ScottHelfstein discusses key factors and themes investors may want to consider for portfolio positioning in the current environment. https://t.co/U4MYBlJKiA

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
Since Q2 2022 (6 quarters), S&P 500 sales per share grew faster than EPS. This is unusual and unnerving. EPS usually grows 2x-3x sales. Are companies righting the ship?

Q4 2024 forecasts:
Sales YoY -> 3%
EPS YoY -> 4%

The Return of The Operating Leverage...

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
Concentration in major indexes is not necessarily new. Know what is under the hood.

Number of companies >40% weight in S&P 500 Info Tech sector:
1990: 1
1995: 4
2000: 6
2005: 5
2010: 5
2015: 4
2020: 2
2/7/24: 2

Roads, where we're going, we don't need roads.

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
Valuation multiples are not range bound, they go up over time as margins improve.

S&P 500 Average Trailing PE multiple:
1949-1959 -> 11.8x
2013-2023 -> 23.1x

Is the current market valuation really that high or simply a new normal given better productivity?

[Scott Helfstein @ScottHelfstein]

Weekly Sanity Check:
With 3.1% YoY Q4 GDP growth, consensus once again underestimated economic strength.

Forecasted Q4 23 GDP growth on:
6/30/22: 1.7%
12/30/22: -0.1%
6/30/23: 0.4%
10/15/23: 1.9%
Actual: 3.1%

Houston, I think our models have a problem here!