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Shutting Down the Shutdown, CFO Confidence Rises, Energy Revisions Near Peak Oct 02, 2023

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Today in the podcast, three big things you need to know: First, Congress reached a deal to avert a government shutdown, for now, but we aren’t convinced this is the end of the current period of equity market weakness, as our main sentiment indicator still has room to fall. Second, CFO economic confidence rose in the latest Duke survey despite heightened concerns about monetary policy. Third, Energy revisions trends continue to improve but are getting close to historical highs. That’s a negative data point for the broader market, but some of the other updates from our high-frequency indicators admittedly lend more support to US equities.

Perspective on the Shutdown, Growth Trade, Sentiment & Utilities Sep 26, 2023

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Today in the podcast, three big things you need to know: First, the stock market tends to experience turbulence heading into extended government shutdowns, but the S&P 500 has already done more than half the damage typically seen in those episodes and rebounds that follow tend to be powerful. Second, we view last week’s Fed meeting as a mixed bag for Growth stocks – negative short term but positive long term. Third, things that jump out from our high frequency indicators include continued erosion in investor bullishness, Trump pulling ahead of Biden in the polls, and strong outperformance by Utilities this month.

Monitoring Misery, Industrials Insights, US Inflows Return Sep 19, 2023

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Today in the podcast, three big things you need to know: First, the Misery Index (inflation plus unemployment) has fallen sharply since last summer, helping explain the surprisingly strong move in the S&P 500 this year. Second, deleveraging was one key theme that jumped out to us from RBC’s Industrials conference last week. Third, other things that jumped out from our high frequency indicators last week include the recent improvement in bottom-up 2023 S&P 500 EPS forecasts and the return of US equity fund inflows driven by passive funds.

Why We're Sticking With Energy, The Nuances We See In Industrials Sep 12, 2023

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Today in the podcast, our thoughts on two sectors that are important to the Cyclical/Value trade. Two big things you need to know. First, Energy still looks interesting on our models despite strong outperformance as summer came to an end. Second, we remain market weight Industrials, but find its been one of the more interesting sectors to discuss in meetings, as we see pluses and minuses for the sector that may not be fully understood.

AI Leadership Bounces Back, But Tactical Problems With The Growth Trade Remain Sep 07, 2023

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Today in the podcast, two big things you need to know: First, AI leadership bounced back as the summer came to a close, but tactical problems with the Growth trade remain. Second, things that jumped out in our high frequency indicators last week included improving EPS revisions in Energy and Financials and an improvement in 2024 GDP forecasts, both of which support a transition in stock market leadership back to Cyclicals and Value.

Historical Election Playbook, Tactical Problems With Growth Persist Aug 29, 2023

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Today in the podcast, three big things you need to know: First, historically, the US equity market tends to have a weak start in Presidential election years before rallying back ahead of the event, while trends tend to turn choppy again in the months around the event itself. 2024 could be different given the unusual circumstances in the upcoming race, but the history is still worth a quick look back. Second, while last week’s mega cap Tech earnings were generally viewed as strong, it didn’t change the fact that the Large Cap Growth trade has tactical problems (i.e., overvaluation, stretched positioning) that need to be resolved. Third, developments in our high frequency indicators were mixed for equities this past week, with improvements in earnings revisions trends and individual investor sentiment, but continued deterioration in trends for US equity funds flows. Overall, we remain concerned that the “breather” in the US equity markets that’s been underway hasn’t fully played out yet, but also consider ourselves to be more neutral than bearish on stocks from here.

Winding Down 2Q23 Reporting Season Aug 11, 2023

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Today in the podcast, our thoughts on 2Q23 reporting season as it winds down for the S&P 500. Three big things you need to know: First, the overall stats have been decent, with some clear soft spots. Reporting season has been fine in our view but not good enough to fend off a bit of choppiness in the equity market. Second, Energy stands out positively at the sector level, along with Health Care. Third, we are saying goodbye to 2Q23 reporting season feeling as though equity investors are in a bit of an information vacuum – which seems likely to contribute to choppiness in US equity markets for the time being.

Due For A Pause Aug 08, 2023

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Today in the podcast, an updated overview on our market call. Three big things you need to know: First, we’ve tweaked our S&P 500 EPS forecasts up modestly by $1-2 to $220 for 2023 and $229 for 2024, while leaving our YE 2023E S&P 500 price target of 4,250 unchanged. While one of our models highlights potential upside to ~4,800, and we think the gains in the index so far in 2023 have been deserved, we have become concerned that the rally in the S&P 500 is due for a pause in the months ahead. Second, we continue to see tactical challenges for the Growth trade, though we continue to like Growth over Value longer term. Third, Small Caps continue to look more appealing on our work overall than Large Caps, and we remain comfortable adding exposure there despite near-term risks to market direction broadly.

2Q23 Halftime Report Aug 02, 2023

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Today in the podcast, we take a deep dive into the stats and commentary for 2Q23 reporting season, based on data through July 28th when 51% of S&P 500 results were in. Three big things you need to know: First, the stats have improved since our last update and we’re now on track for a more solid reporting season. Second, in terms of the sectors that are shining, Energy and Materials continue to rank highly in terms of stock price reactions to EPS beats, but Tech is also standing out positively on some stats. Third, in terms of commentary, the level of conversation around prior headwinds like inflation continues to dissipate, while topics like AI, inventory destocking, and normalization have been in focus. In the ongoing discussion of outlooks and current conditions, commentary has been mixed though consumers are still described as resilient.

Performance Under Pressure, Complicated Cross Currents Jul 25, 2023

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Two big things you need to know today: First, actively managed long-only funds are underperforming their benchmarks for the year in most of the US categories we are tracking, with Small Cap Value emerging as a bright spot. Second, the cross currents for US equities are getting more complicated based on our high frequency indicators. We discuss negatives (sentiment, flows, valuations vs. Europe) and positives (better economic expectations, and the broadening of leadership) that we see.

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