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Earnings Preview; Recovery Signals Jul 18, 2023

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Today in the podcast, three big things you need to know: First, late last week we lifted our 2023 and 2024 S&P 500 EPS forecasts to $219 and $227, respectively. Second, the rebound in consumer sentiment that’s underway explains a lot about the stock market this year – both have been recovering off recession-like conditions since last year. Third, some of the things that jump out from our high frequency indicators currently are that investor sentiment continues to creep towards overbought territory, and low quality factors have started to perk up within Large Cap. Both speak to the idea that the US equity market is in the midst of one big recovery trade this year.

Our Bottom-Up, Global View of Sectors; Getting More Comfortable With Cyclicals Jul 13, 2023

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Today in the podcast, an update on our outlook for sectors within the US, and some thoughts on sectors from a global perspective based on the results of our latest RBC analyst survey which now includes our teams from Europe, Canada, and Australia in addition to those in the US. Five big things you need to know: First, across the globe, RBC equity analysts are most constructive on Health Care and are least constructive on Consumer Staples. Second, RBC analysts are most constructive on Europe in terms of their performance outlooks, but there is some important nuance to their regional views. Third, looking at the US specifically, our analysts are most constructive on the performance outlooks for Health Care, Energy and Financials, and are least constructive on the performance outlooks for Consumer Discretionary, Consumer Staples, and Utilities. Fourth, in terms of our own US Equity Strategy sector recommendations, we have made two changes, lifting Financials to overweight from market weight and lowering utilities from overweight to market weight. Fifth, cyclicals also stand out in our survey and quant work on Europe.

New Topics; Monitoring Shifts in Sentiment, Politics, & Flows; Russia Thoughts Jun 26, 2023

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This week the podcast is back to tackling hot topics and the most interesting things that crossed our desk last week. Three big things you need to know: First, corporate confidence, capex, and balance sheets were all new topics in focus in our investor meetings last week. Second, things that jumped out in our high frequency indicators included one of our main sentiment indicators starting to look more stretched, stabilization in Biden’s polling numbers, and strengthening in US equity funds flows – which collectively illustrate how the near-term outlook for the US equity market has gotten a bit murkier. Third, we highlight our initial thoughts on the weekend’s developments in Russia from a US equity market perspective.

Our Top Five Charts of 1H23 Jun 21, 2023

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This week the podcast is a little different. With the mid-point of the year coming up, we’re revisiting the charts we discussed the most, and that resonated the most, in our meetings with investors in the first half of 2023. Although the S&P 500 has now pulled ahead of our recently revised year-end 2023 S&P 500 price target of 4,250, we’ve been north of the consensus tracked by Bloomberg on a median basis even before we raised it from 4,100 several weeks ago. For several months, the investors we’ve met with have generally assigned us to the bullish camp given what they’ve described as a more constructive view of the stock market on our part relative to other voices. We’ve joked that we’ve felt more neutral than bullish, but agree that we aren’t part of the bearish camp. Our top charts, which we discuss in today’s podcast, help illustrate why we’ve had this mindset. As for our market call today, most of our top charts are telling us the rally still has more room left in it, though one (which is sentiment based) requires close monitoring as it may soon signal that the rally has gone too far.

Sentiment and Small Caps Join The Recovery Jun 14, 2023

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Three big things you need to know today. First, we continue to see expectations for a 2024 economic recovery embedded in GDP forecasts, and a healing process in earnings expectations is also underway – something we’ve been writing about a lot recently. Second, sentiment is embarking on its own recovery, with net bullishness returning to the AAII investor survey. Third, Small Caps appear to be getting their own recovery started, with a gain of more than 6.6% so far in June through Friday’s close, well in excess of the S&P 500’s 2.8% gain. Passive inflows have helped fuel the rebound, but we think the move is justified and remain overweight Small Caps relative to Large Caps.

Concentration & Narrow Leadership Likely More Noise Than Signal Jun 06, 2023

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Today in the podcast, three big things you need to know: First, we looked at S&P 500 performance when market cap concentration in the biggest names has been high and in the 12-month period after fewer than 10% of stocks have been making new highs. Neither suggests concentration and narrow leadership are automatic sell signals. Second, Nasdaq valuations look stretched, but unlike the Tech bubble S&P 500 and Russell 2000 are well below recent peaks. Third, other things that jumped out from our indicators last week, which are constructive for stocks, include the strengthening earnings recovery, the continuation of favorable political tailwinds, and better trends in Small Caps.

US Equity Mkt Outlook Update Pt 2: Views On US/Non-US, Growth/Value & Small Cap Jun 01, 2023

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Today in the podcast, part 2 of our US equity market outlook update, we discuss our views on higher level positioning trades. Three big things you need to know: First, we think the case against US equities relative to non-US equities has been overstated. Second, we think the risk of a pause in Large Cap Growth leadership has grown, even though we think this part of the market has outperformed for good reasons. Third, we think Small Caps are at an attractive entry point for patient investors.

US Equity Market Outlook Update Pt 1 - Thoughts On Our Revised S&P 500 Targets May 31, 2023

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Today in the podcast, part 1 of our US equity market outlook update, we discuss our revised S&P 500 forecasts and general thoughts on our broader US equity market call. Two big things you need to know: First, we are lifting our YE 2023 S&P 500 price target from 4,100 to 4,250, which represents our base case. The range of outcomes in our modeling spans ~3,800 (our bear case) to ~4,600 (our bull case). Second, we are lifting our 2023 S&P 500 EPS forecast to $213 from $200 and are introducing our 2024 EPS forecast of $223.

Stay tuned for part 2 of our outlook update, which will dig into our thoughts on US vs. non-US equities, Growth vs. Value, and Small Cap.

A Deep Dive into 1945; Recovery Expectations Persist May 23, 2023

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Two big things you need to know from today's podcast: First, we took a closer look at stock market performance and economic data around the recession of 1945, the only time since the Great Depression that the stock market didn’t fall as a recession took hold. We continue to think that this period provides useful lessons for how to think about the current macro backdrop for US equities and helps to explain the resiliency of the S&P 500 this year. Second, the theme of recovery continues to jump out to us in a number of the higher frequency stats that we’ve been tracking, adding to our belief that the recent resiliency in the US equity market has been justified.

1Q23 Earnings Season Report Card – Recovery, Resilience, Balance May 09, 2023

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Today in the podcast, we run through our takeaways from 1Q23 reporting season. Two big things you need to know: First, recovery remains a key theme permeating the S&P 500 earnings stats we’ve been tracking, helping explain the resiliency of the S&P 500 of late. Second, the tone in S&P 500 earnings calls has generally been balanced in terms of the discussion of recent trends, the state of the consumer, outlooks, and inflation/pricing, while commentary on China has been mixed.

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