Thanks to everyone who responded to our survey. Please hit us back with feedback or questions you’d like to see asked – our goal is to help, after all.
Quick summary, most respondents:
On to the results.
Equity Drawdowns: Investors do not think equity drawdowns are complete. The median expectation for the max drawdown of the NASDAQ is -43% (drawdown was -30% at the time of the survey). Only 4% of our respondents think the NASDAQ has bottomed. Interestingly, our respondents think other people think roughly the same.
More of our respondents (10%) think the S&P has bottomed but the median expectation for the max drawdown is -35% (drawdown was -23% at the time of the survey). Investors think other people think roughly the same about the S&P too.
Investors expect both the NASDAQ and the S&P to shed 12-13% more top to bottom, which implies investors think Tech won’t underperform the S&P. Tech performance has been flat the past month after underperforming for most of the year.
Yield Drawdown: The majority of our respondents think the 10yr yield has not peaked. The average is 3.85% and the median is 3.65%, +79bps, and +69bps from here, respectively.
Last week we made the call that 10yr yields have peaked and we would be long 10yr bonds. Consumer spending is set to downshift, capex plans have collapsed, credit spreads are moving wider globally, and the breadth of housing data is already weakening. Simply put, the economy is slowing and recession risk is higher, which the 10yr yield will decline to reflect. We suspect the equity community is too focused on the idea short rates need to move higher to combat inflation and isn’t discounting the slowdown. More on all that here.
