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The CBOE has launched two new measures of implied volatility for IG and HY, and they show that credit vol has increased recently and remains above pre-pandemic levels, see chart below. These new indicators are calculated daily, and the Bloomberg tickers are VIXIG and VIXHY.
Source: CBOE, Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The P/E ratio for the S&P493 has fluctuated around 19 in 2023.
And the P/E ratio for the S&P7 has increased from 29 to 45, see the first chart below.
The bottom line is that returns this year in the S&P500 have been driven entirely by returns in the seven biggest stocks, and these seven stocks have become more and more overvalued.
What is particularly remarkable is that the ongoing overvaluation of tech stocks has happened during a year when long-term interest rates have increased significantly. Remember, tech companies have cash flows far out in the future, which should be more negatively impacted by increases in the discount rate.
The conclusion is that tech valuations are very high and inconsistent with the significant rise in long-term interest rates, see the second chart.
In short, something has to give. Either stocks have to go down to be consistent with the current level of interest rates. Or long-term interest rates have to go down to be consistent with the current level of stock prices.
Source: Bloomberg, Apollo Chief Economist. Note: 12-month trailing P/E ratio used. 
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Our latest outlook for the housing market is available here, key charts below.
Source: Apollo Chief Economist 
Source: Redfin, Haver Analytics, Apollo Chief Economist 
Source: Census Bureau, FRED, Apollo Chief Economist 
Source: NAR, Apollo Chief Economist 
Source: American Enterprise Institute, Haver, Apollo Chief Economist 
Source: Bloomberg L.P., Apollo Chief Economist (Note: Calculation of monthly payment using the 30-year purchase loan application size and the 30-year effective rate.) 
Source: Realtor.com, Apollo Chief Economist 
Source: Mortgage Bankers Association, Bloomberg, Apollo Chief Economist 
Source: Mortgage Bankers Association, Bloomberg, Apollo Chief Economist 
Source: NAR, Apollo Chief Economist 
Source: Census CPS, Apollo Chief Economist 
Source: National Association of Homebuilders, Bloomberg, Apollo Chief Economist 
Source: Census, Haver Analytics, Apollo Chief Economist. Note: Single-family homes are one-unit buildings. See important disclaimers at the bottom of the page.
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The Worker Adjustment and Retraining Notification (WARN) Act gives 60 to 90 days advance notice in cases of plant closings and mass layoffs, and the latest data shows a significant move higher in WARN notices recently, see chart below.
In other words, the WARN data is telling us that more companies are giving advance warnings about plant closings and mass layoffs.
Running a regression using WARN notices to predict unemployment shows that initial jobless claims in October will rise over the coming weeks to a level between 250K and 300K, see chart below.
Source: Department of Labor, Haver Analytics, Federal Reserve Bank of Cleveland, Apollo Chief Economist. Note: The Worker Adjustment and Retraining Notification (WARN) Act helps ensure 60 to 90 days advance notice in cases of qualified plant closings and mass layoffs. WARN factor is the Cleveland Fed estimate for WARN notices. See important disclaimers at the bottom of the page.
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Our monthly outlook for public and private markets is available here.
Source: Bloomberg, Apollo Chief Economist 
Source: Bloomberg, Apollo Chief Economist 
Source: Bloomberg, Apollo Chief Economist 
Source: Bloomberg, Apollo Chief Economist 
See important disclaimers at the bottom of the page.
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Markets are pricing that the Fed funds rate will bottom at 4% in 2025 and then start rising again, see chart below.
The same profile can be seen for the ECB, where rates will bottom at 3% and then start rising again.
The conclusion is that long-term investors should plan on rates being permanently higher than they were from 2008 to 2020.
In other words, rates are not going back to zero.
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The September data for bankruptcy filings are out, and more and more companies are going bankrupt because of Fed hikes, see the first chart below.
Bankruptcies are hitting companies with high levels of debt and low earnings in the Consumer discretionary, Healthcare, and Industrials sectors, see the second chart.
Source: S&P Capital IQ, Bloomberg, Apollo Chief Economist. Note: Bankruptcy figures include public companies or private companies with public debt with a minimum of $2 million in assets or liabilities at the time of filing, in addition to private companies with at least $10 million in assets or liabilities. 
Source: S&P Capital IQ, Bloomberg, Apollo Chief Economist. Note: Bankruptcy figures include public companies or private companies with public debt with a minimum of $2 million in assets or liabilities at the time of filing, in addition to private companies with at least $10 million in assets or liabilities. Bankruptcies announced between January 1, 2023 and July 31, 2023. See important disclaimers at the bottom of the page.
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The sectors that have higher refinancing needs in 2024 are Leisure, Retail, and Capital Goods in investment grade. And Transportation, Real Estate, and Autos in high yield, see charts below.
Source: ICE BofA, Bloomberg, Apollo Chief Economist 
Source: ICE BofA, Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The number of people going to the movies has in recent weeks slowed down more than the usual seasonal pattern, see chart below.
Consumer services make up two-thirds of consumer spending, and watching for signs of a slowdown in consumer spending in the service sector is critical for markets.
Source: Boxofficemojo.com, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The number of foreigners in the labor force has increased by more than 5 million since April 2020, and a rise in immigration puts downward pressure on wage growth and hence inflation, see chart below.
Source: BLS, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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