RBC's Markets in Motion - TopPodcast.com

Latest Episodes:

Int'l Exposure by Index, More Significant EPS Softening, Positioning Nuances Oct 31, 2022

Show notes

In this edition of

the podcast, we reflect on hot topics and some of the most interesting things we saw and heard last week. Three big things you need to know: First, we revisited the international revenue exposure of the major US indices and sectors. The data suggests to us that as long as the stronger US Dollar is a problem for US companies, that Small Caps and Large Cap Value are the best places to be. Second, with more than half of S&P 500 results in, the softening in the EPS-related stats that we track has become more significant, though we still think there’s another round of clean-up to forecasts that will need to happen in early 2023. Third, sentiment on the growth trade and the new economy has been deeply pessimistic, but it’s been even worse in Small Caps and the old economy.

Small Cap Balance Sheet Fears, Softening EPS Trends, More Midterm Momentum Oct 25, 2022

Show notes

In this edition of

the podcast, we reflect on hot topics and some of the most interesting things we saw and heard last week. Three big things you need to know: First, we received several questions about how Small Caps look from a balance sheet perspective. The short answer is: worse than Large Cap given shorter maturities and less exposure to fixed rate debt. This is admittedly a risk to our Small Cap overweight, but we are sticking with our call. Second, beat rates and EPS growth expectations have continued to soften now that 3Q22 reporting season is in full swing, as has the tone in company commentary. Third, midterm election developments continue to trend in a stock market friendly way. Republicans have pulled well ahead of Democrats in the generic Congressional ballot and are also now expected to take the Senate in betting markets.

October RBC Analyst Survey Results, Strategy Sector Recommendation Updates Oct 19, 2022

Show notes

In this edition of the podcast, we update our latest views on sectors and key takeaways from our October RBC analyst outlook survey. Three big things you need to know: First, in our latest survey, taken in early October 2022, our analysts had a slightly positive tilt in their outlooks for performance over the next 6-12 months, with a modestly positive view on valuations and a slightly positive tilt on the state of demand. The most constructive performance outlooks were found in Energy and Health Care, followed by REITs, then Financials, Tech, and Utilities which offset more pessimistic outlooks for Consumer Staples and Consumer Discretionary. There were some interesting shifts in some of these rankings. Second, our analysts don’t seem particularly focused on the mid-term elections, with most seeing the possibility of a split or Republican-led Congress as a neutral event for their industries. To the extent they see it as a relevant event, a good showing for Republicans is seen as the better outcome for their industries. Third, our analysts’ latest sector views support our own, ongoing US Equity Strategy overweights on Energy, Financials, Health Care, and Technology and our underweight on Consumer Staples. Our analysts’ views also support our decision – which we implemented on Monday – to upgrade Communication Services from underweight to market weight and to downgrade Consumer Discretionary from market weight to underweight.

Outlook Update, 3Q22 Earnings Preview Oct 12, 2022

Show notes

In this edition of the podcast, updated thoughts on our outlook for the US equity market as well as what’s coming up in 3Q22 reporting season. Four big things you need to know: First, we are trimming our S&P 500 EPS forecasts, which were already well below consensus, taking 2022 to $216 (down from $218) and 2023 to $208 (down from $212). Second, we are cutting our year-end 2022 S&P 500 forecast to 3,800 (down from 4,200) and issuing a new, preliminary target of 4,100 for 2023. We expect conditions to remain choppy over the next few quarters but anticipate recovery in 2023 as a whole. Third, 3Q22 reporting season has gotten off to a rough start in terms of stats and tone. The good news is that stocks tend to bottom ahead of the end of the downward earnings revision cycle and concerns about inflation and supply chains as well as expectations regarding pricing may have peaked. Fourth, Small Caps were the star of the show in 2Q22 reporting season, which helped stabilize performance vs. Large Cap. If this happens again, it could help trigger a new phase of Small Cap leadership.

Dollar Doldrums, Lessons from 2002–03, Bright Spots Oct 03, 2022

Show notes

In this edition of the podcast, we reflect on hot topics and some of the most interesting things we saw and heard last week. Three big things you need to know: First, the stronger Dollar is a clear negative for S&P 500 performance and earnings, but US equities still tend to benefit from safe-haven status within the broader global equity landscape and certain sectors tend to be more insulated from an EPS perspective. Second, S&P 500 performance in 2022 has been similar to how stocks traded in 2002 following the Tech bubble and the initial rally off the September 2001 lows. Back then, the bottoming process was lengthy with similar lows tested multiple times before the recovery could resume, but stocks did stage a strong rebound in 4Q of 2002 off an October low. Third, US equities may not be out of the woods, but there are a few bright spots worth noting in our high-frequency indicators (the equity put/call ratio recently approached Dec 2018’s level, the forward P/E is back to average on our $212 EPS forecast, the performance of popular hedge fund stocks has stabilized, and Republicans have pulled ahead of Democrats in the generic Congressional ballot).

Inverted Curve, Deep Dive Into P/Es vs. Rates & Inflation, The Next Big Test Sep 25, 2022

Show notes

This week in the podcast, we reflect on some of the most interesting questions we got and things that we saw last week. Three big things you need to know: First, positioning trades within US equities tend to be fairly mixed during yield curve inversions (a topic of focus in our investor meetings even before the FOMC) but have a classic defensive bias. Second, an S&P 500 P/E of ~16x seems reasonable based on post-FOMC interest rate and inflation views and our analysis of the relationship between rates, inflation, and P/Es dating back to the 1970s. Third, the 3,500 level on the S&P 500 will be key to watch as it represents the point at which a median recession would be priced in and the S&P 500 P/E based on 2023E EPS would fall below average again, using our below-consensus EPS forecast of $212.

Growth Unwind Late Innings, Democrats Gain More Momentum, Reasonable Valuations Sep 20, 2022

Show notes

This week in the podcast, we reflect on some of the most interesting things we saw last week in terms of our high-frequency data updates. Three big things you need to know: First, positioning in the Growth trade no longer looks worrisome. Second, Democrats continue to gain momentum in polling data, stoking election angst among US equity investors. Third, valuations are starting to look reasonable again for the S&P 500.

Tug of War Into Year End Sep 13, 2022

Show notes

Today in the podcast, we update our thoughts on the broader US equity market outlook as well as bigger picture positioning trades. Three big things you need to know: First, there’s no change to our year-end 2022 S&P 500 target of 4,200 or our 2023 S&P 500 EPS forecast of $212, though we have tweaked our 2022 S&P 500 EPS forecast up to $218 from $214. Second, we continue to anticipate choppy conditions through year end, in which stocks are caught in a tug of war between deeply bearish sentiment and ongoing concerns about further Fed tightening and its longer-term economic ramifications and downward earnings revisions. The mid-term elections remain a major headache, but may ultimately still be a positive catalyst. Third, we continue to prefer US equities over non-US equities and Small Cap over Large Cap. We wouldn’t be surprised to see the pause in Growth leadership persist in the near term, but still like Growth over Value longer term given that we expect a sluggish economic backdrop to be the price markets will have to pay for a short/shallow economic downturn.

End of Summer Update on our Sector Views Aug 31, 2022

Show notes

Today in the podcast an update on our own sector views and the outlooks of our US analyst team. Three big things you need to know: First, in our latest RBC US equity analyst survey, taken in late August 2022, our analysts leaned modestly positive in their outlooks for performance over the next 6-12 months, and also had modestly positive views on valuations and demand. The most constructive outlooks were found in Energy, Financials, Health Care, and Tech and offset more pessimistic outlooks for Consumer Staples, Consumer Discretionary, Communication Services and Materials. Second, our analysts don’t seem particularly alarmed about the buyback and corporate tax provisions in the Inflation Reduction Act, but our survey suggests the latter will be more relevant to the stock market. Third, our analysts’ latest sector views support our own, ongoing US Equity Strategy overweights on Energy, Financials, Health Care, and Technology and our underweights on Consumer Staples and Communication Services. Given our concerns about another bout of volatility in stocks in the coming months and a potential pause in the Growth leadership trade, Health Care, Energy, and Financials look most intriguing to us at the moment, but we continue to like Tech as a longer-term rebound play.

Small Cap EPS Revisions Signal, Mid Term Headache, Where Valuations Stand Aug 29, 2022

Show notes

Today in the podcast, we reflect on some of the most interesting things we saw last week in terms of charts, questions, quotes and high frequency data. Three big things you need to know: First, our chart of the week (inspired by our top investor question) highlights how the Russell 2000 has been able to establish major bottoms in past periods of extreme stress about 3-6 months before EPS forecasts started to turn positive again. This time has been different, however, as Small Cap EPS revisions actually turned slightly positive a few months ahead of the June low in the R2000. Second, political polling data, mid-term betting markets, and recent political news flow continue to highlight a shift in momentum back in Democrats’ favor, a growing headache for the stock market in the near-term. Third, stock market valuations improved after Friday’s Jackson Hole sell-off but don’t look cheap.

Our TOPPODCAST Picks

Follow Us

Stay Connected

RBC’s Markets in Motion

Related Podcasts

Links

Stay Connected