Yahoo Finance has launched the Chartbook, featuring key charts from leading market strategists and economists, providing insights into their perspectives on the market and the economy in 2024.

The Chartbook provides a comprehensive view of the market and economic landscape based on the perspectives of various Wall Street experts. The Chartbook aims to be a resource for investors seeking to understand current trends and potential opportunities in the market.

Yahoo Finance’s Myles Udland, Seana Smith, and Josh Schafer take a closer look at charts on topics such as inflation, S&P 500 valuations, and economic growth projections.

Editor's note: This article was written by Eyek Ntekim

Video Transcript

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SEANA SMITH: Yahoo Finance launching the "Chartbook," it's a look at key charts from the top minds on Wall Street to give you some insight into how leading market strategists and economists are thinking about the market and economy in 2024. Here with me, we've got the head of news, Myles Udland, and markets reporter, Josh Schafer.

Guys, there is a lot to break down. And, Josh, you really have led the charge for this, for us here, for the "Chartbook." Talk to us just about how you guys identified these charts and what we're trying to get at here with this.

JOSH SCHAFER: Yeah so we ask every economist or strategist, a basic question, which is, what is the most important chart to investors right now? Very broad, they can sort of go wherever they want with it. And the biggest takeaway for me for the "Chartbook" as a whole right now was the difference we saw between this edition of the "Chartbook" that's coming out in January of 2024 versus our first edition, which was back in August of 2023.

And Myles had wrote at the top of the first edition of the chart book we were waiting for this proverbial shoe to drop. That was what it felt like. It felt like recession was around the corner. And I think as we go through the charts today you'll see it feels more like soft landing might be around the corner and the narrative shifted a little bit.

MYLES UDLAND: And I think it's like it's a way to see the consensus that we reference all the time during the live programming actually all in one place. And I think consensus can be like a mean word. Oh, everyone's thinking the same thing. But ultimately, these are the themes that guide a couple of months at a time, the conversations that these strategists are having with their clients. It's how the market is made and being able, as Josh mentioned, to look back and say that moment in time was when this was going on it is super instructive. And I'm looking forward already to this summer's edition to see how we did really for January.

SEANA SMITH: Yeah. So we've each picked out one of our favorite key charts here that we were given. And, Josh, I'm going to give it to you first since you have led this charge. What are you looking at, and what is that chart then tell us about what's to come maybe?

JOSH SCHAFER: Inflation, right? And inflation is sort of still the chart of the moment. And really because inflation leads us to the rest of the market, because we've been following the rapid rise in inflation, how the Fed responded, and essentially when inflation would come back down. So what you're looking at here is core PCE, it's a year-over-year percentage and then core PCE annualized over 6 months. This is a chart from Oxford Economics-- from Oxford Economics or Capital Economics, sorry, via Andrew Hunter.

We like both of them. They're both included in our book. But when you look at this chart, the thing that stands out there is the six-month, right, below the Fed's target. So you have your dotted line there and that blue line getting below the Fed's target is really what the conversation on inflation has been and why we're talking about cutting now.

MYLES UDLAND: And I think what's interesting about this chart in particular is go back to August, there were a bunch of charts on how housing inflation, specifically shelter inflation, was coming down. And it would then say, well, overall inflation will come down. And here we are, and we see six-month annualized under 2%. Obviously, got that PC number last week, and we'll see how that goes out in the next couple of months.

SEANA SMITH: So inflation, no surprise, that that's the basis here of our first chart. Myles, you're watching something else here, a bit more broad.

MYLES UDLAND: Yeah. This chart comes to us from the team over at Goldman Sachs led by David Kostin. And it shows us the valuations for the S&P 500 and the equal weighted S&P 500. So a big theme coming into 2024-- and, Josh, I know you've written about this a lot-- is the notion that there is plenty of value out there in the market that is not just the Magnificent Seven stocks.

And you can really see the way that the purple line and blue line have diverged is when you get these arguments around small caps or around the notion that it's a stock picker's market, one of our favorite phrases we hear from the strategist community. This chart is showing that the equal weighted S&P trading right now around 16 times earnings. That's basically in line with the historical average for the overall index. So any inflation that we're seeing in the valuation, Josh, of the S&P is coming just from those tech leaders. Everybody else, there's plenty of opportunities there, at least in the view of strategists and certainly the team at Goldman for people out there.

JOSH SCHAFER: And then other charts in the book highlight where some folks see that strategy or see those opportunities, right? And I think that's why the book can be so cohesive in that way is you ask one person, and they just show you, well, there's opportunity. And you ask more specific people, and we have two charts on the Russell 2000. Everyone wants to talk about small caps right now. And that's because when you look at that equal-weighted chart, the last time small caps really ripped were when they were this far apart in 2000, right?

That's when that happened. So we have Tom Lee over at Fundstrat in the chart book highlighting that and saying, well, I look at this opportunity, and here's sort of the play. And I think it's fun to see how different strategists take the question and tell their part of what they feel like the market moment.

SEANA SMITH: Yeah, certainly. And that's been echoed on our live show so many times here over the last several weeks. We certainly have seen this massive run-up in the Mag Seven stocks. So much focus being placed on just those select names. But there is opportunity elsewhere, especially when you take into account the valuation basis and that call there.

All right. I'm going to bring up my chart here and it's all about economic growth GDP. It was out here from Bankim Chadha over at Deutsche Bank. And he was talking about the fact that consensus has really underestimated US economic growth. And as a result, many forecasters had just pushed out those projections.

So the line that's at the top of your screen there, a bit of a purple tint, that is what actual growth has looked like for GDP prints. And then you can see some of the projections that we have gotten from economists over the last several quarters here, starting with the line all the way to your left, the orange line. And that's from January 2023. And you can see the expectation that the economy would slow down, potentially fall into recession here. Therefore, that hasn't happened. And economists have simply pushed out those projections.

Now it is important to point out when we talk about the fact, that January 2024 line, that deep magenta almost looking line there to the right, yes, they are still pushing out the fact that they are waiting to see or expecting to see a slowdown in the economy. But it really points to the fact that maybe we will be able to avoid a recession and see that soft landing type of scenario.

JOSH SCHAFER: And the magenta line that you highlighted is interesting, right? Because do we just continue to come up above that again? Is that the prevailing theory? As Miles said, when we do this chart book again in six months or so, where does that land? I think is one of the biggest questions I have leaving the book, because there are some risks that people do highlight within it.

MYLES UDLAND: Yep.

SEANA SMITH: Yeah. And that's the most fun chart almost to look at when you take into account all the colors. Magenta was the right way to describe it, I think, right? I don't know.

MYLES UDLAND: I think we'll leave readers and viewers to have a conversation with themselves around what specific colors those exactly are.

SEANA SMITH: But it certainly is worth checking out. And again, you can find Yahoo Finance's "Chartbook" right at our home page, a number of charts that economist strategists have highlighted here as the key chart that they think is worth investors taking a look at here as we prep for the rest of 2024.