Two big things you need to know: First, as we return from the Labor Day holiday weekend in the US, we find that major challenges for US equities are still lurking. We remain confident in our 5,700 YE 2024 S&P 500 price target, but acknowledge the challenges that must be worked through. Second, other updates from our high frequency indicators keep us in the camp that believes the US economy is slowing but isn’t on the cusp of an outright downturn. Overall, we continue to take comfort in earnings and economic data.

The big things you need to know: First, 2Q24 earnings season is ending up solid. With most reports in, we highlight a few of the most interesting charts in our deck on earnings right now. Second, other updates on our high frequency indicators were generally positive for US equities and mixed for the rotation trade. We end the summer of 2024 with increased conviction that August 5th was the low in the recent pullback, even if some choppiness seems likely to be there to greet us when we return in September, and feeling good about our 5,700 YE 2024 S&P 500 price target.

Special Edition: This is a special edition of RBC’s Markets in Motion podcast, recorded on June 4th, 2024, from the RBC Capital Markets 2024 Global Energy, Power & Infrastructure Conference (EPIC). Lori is joined by two of her road warrior colleagues, Ben Fisher (Midwest Equity Sales, specializes in macro) and Amy Wu Silverman (RBC’s Equity Derivatives Strategist). The format this time is a bit different from the typical Markets in Motion podcast. Ben moderates a discussion with Lori and Amy about the big things you need to know from their recent conversations on the outlook for equities. Topics include stock market concentration and the potential catalysts for leadership rotation, the influence of retail trading, and views on the Energy and Utilities sectors.

This week in the podcast, we’re updating our outlook on the broader US equity market. Three big things you need to know: First, we have trimmed our S&P 500 year-end 2022 price target to 4700 from 4860. This is a housekeeping move. We are continuing to bake in a slower economic growth backdrop in 2022-2023 as opposed to a recession. Second, we continue to be more intrigued with Growth over Value going forward as most of our indicators look better for Growth or are fading for Value. Third, we recommend removing underweights on Small Cap and moving back to neutral vs. Large Cap, as Small Cap looks intriguing or better on our positioning/sentiment, valuation, and earnings work. The better risk/reward for Small Cap is something that reinforces our view that equity markets generally can move higher through year end.

This week in the podcast, we dig into Consumer Staples, the third best performing sector in the S&P 500 so far in 2022. The big thing you need to know: We are sticking with a market weight stance on the sector. The tailwinds that have boosted sector performance so far this year (a favorable macro backdrop for defensives, rising recession fears, strong money flows, and a higher quality profile than other defensives) may continue to support leadership in the sector in the near term. But our list of concerns on the sector is growing, and includes extremely problematic valuations, crowded positioning, earnings revisions risk, a weaker ESG profile, and a cautious outlook from our analyst team. On a 6-12 month view, we think staying neutral makes the most sense and we’re reluctant to chase.

In this week’s podcast, we run through our takeaways from the first quarter 13fs of more than 300 of the biggest US-based hedge funds, which came out last week. Three big things you need to know: First, our review of the performance trends and relative valuations of the most popular S&P 500 stocks in hedge funds suggests to us that the pandemic froth is out of these names, an important milestone, but on the valuation side there may still be some room to fall. Second, we are keeping a close eye on the performance trends of the most popular hedge fund stocks relative to the broader market as another gauge of institutional investor sentiment. Third, in terms of sector positioning, what jumps out to us the most is that while hedge fund positioning in Consumer Staples remained underweight relative to the Russell 3000 as 1Q22 came to an end, the underweight has narrowed and is back to its 3Q16 high, which we view as another cautious data point on the sector.

This week in the podcast, our

latest thoughts on economic expectations, sentiment, and valuations. The big

things you need to know: First, the S&P 500 is still trading as though it’s

experiencing a growth scare, a framework that has been pointing to downside in

the S&P 500 to ~3,850. Current trends in economic forecasts continue to

support the idea that this is the right way to think about how far stocks

should fall. Second, institutional investor sentiment has made significant

progress catching down to retail investor sentiment, with overall US equity

futures positioning among asset managers now below 2020 & Great Financial

Crisis lows, and getting close to 2011 and 2015/2016 lows – something that

makes the case for a bottoming in stocks relatively soon if recession fears can

be kept at bay. Third, while valuations aren’t yet a reason to buy US equities

on their own, they are no longer a problem for the market as a whole.

This week in the podcast we tackle the topic of investor sentiment, which has been back in focus given the S&P 500’s recent decline. The big things you need to know: First, the 13.9% drawdown in place at Friday’s close is near the range of prior growth scares, but our growth scare framework points to possible downside in the S&P 500 to 3,850 even with no recession if the Friday low doesn’t hold. Second, net bullishness on the AAII retail investor survey broke to a new post-Financial Crisis low last week, a contrarian buy signal for stocks on a 12-month forward basis. Third, positioning among asset managers in US equity futures hasn’t been quite as extreme, which suggests that institutional investor sentiment still needs to catch down to retail investors. Fourth, other widely watched fear gauges, the VIX and equity put/call ratio have moved up, another longer-term contrarian buy signal for stocks, but don’t look extreme yet. Overall, we think the data continues to paint a picture of extreme fear and a contrarian opportunity for longer-term investors, even though there is scope for further movement/more downside in the very near term on some gauges.

Four big things you need to know: (1) First, we’ve trimmed our year-end 2022 S&P 500 price target from 5,050 to 4,860. The recent move up in bond yields was the biggest contributor to the downward revision to our forecast. (2) Second, we think US equities are likely to keep benefiting from safe haven status for a bit longer. (3) Third, we continue to be more intrigued with Growth than Value going forward, though we’d be highly selective in our Growth exposure. (4) Fourth, while Small Caps are looking interesting again on valuation and positioning, we remain concerned that fundamentals will stay challenging for Small Caps given the downshift in economic expectations towards slower growth.

Today in the podcast, our thoughts on the 1Q22 reporting season, which kicks off this week in earnest with Financials. The big things you need to know: First, full-year S&P 500 EPS forecasts on the sell-side for 2022 and 2023 have moved up $5-6 since January, but underlying expectations regarding the path of profitability are likely more conservative than this stat suggests. Second, forward-looking expectations are being propped up by a few sectors, including Energy and Tech. Third, our quantitative transcript review highlights the extent to which demand, inflation, price hikes, labor, the Fed, and Russia/Ukraine have been in focus in recent company commentary, and we expect these issues will remain key themes in 1Q22 earnings calls. Fourth, in our manual review of earnings call transcripts, one thing that’s really jumped out to us has been commentary on the consumer, which we think reflects a shift from goods to services spending and overall resilience.

Today in the podcast, we run through the results of our quarter investor survey, which we conducted from March 28th to 31st of 106 institutional equity investors. The big things you need to know: First, stock market bulls nearly vanished in our 1Q22 survey. Second, valuations, margins, the Fed, gas prices & Russia/Ukraine are weighing heavily on investors, but on Russia/Ukraine some of the more dire outcomes aren’t seen as probable, and opinions on recession are split helping explain why us equities have been rebounding. Third, we saw a cautious bent to positioning views. Fourth, the survey results reinforce our belief that the US equity market has already baked in a lot of bad news, at least in part, but that the onset of a recession or major broadening out/worsening of the Russia/Ukraine war are key downside risks to monitor.

Today in the podcast, we’re focusing on the results of our quarterly RBC analyst survey, which we conducted in late March and helps us incorporate the bottom-up views of RBC’s team of equity analysts into our top-down strategy sector recommendations. Five big things you need to know: First, outlooks among our analysts for performance over the next 6-12 months continue to tilt positive. Second, on performance over the next 6-12 months, our analysts remained highly constructive on Financials, Health Care, and Technology, but enthusiasm on Energy faded. Third, on issues other than performance, Health Care and Utilities generally rank well relative to other sectors. Fourth, as for what’s keeping our analysts up at night, many mentioned demand related issues in their discussions of key upside and downside risks. Fifth, triggered by our survey results, as well as our desire to reduce exposure to Value, we are lowering our recommendation on Energy from overweight to market weight.

This week in the podcast, guest host Sara Mahaffy, RBC’s ESG Strategist, runs through the team’s latest work on ESG flows. Inflows into US listed ESG ETF’s have been relatively strong so far in early March, and we’ve seen relative performance trends for ESG darlings stabilize. Clean energy flows have also bounced back in March.

Two big things you need to know: First, we highlight how and why old leadership in the US equity market has returned with a vengeance and run through our latest thoughts on what might get the rotation trade going again. Second, several of the gauges of investor sentiment and equity market risk that we track are keeping us neutral on stocks through year-end for now, and tactically cautious.

This week in the podcast, we run through a few new thoughts on Russia /Ukraine from a US equity market perspective. Three big things you need to know: First, the big, obvious risks to our call on the S&P 500 are the possibility that the war will turn into a prolonged conflict involving NATO or the possibility that the US will slip into recession. We took a look at the historical playbook for stocks during WW2 and past recessions as a starting point for how to think about possible downside levels in the index should either of these risks materialize. Second, we are starting to see some shifts in momentum in political polling data back in Biden and the Democrats’ favor, which are worth keeping a close eye on given the mid term elections coming up in November. Third, public company commentary on the Russia/Ukraine crisis has surged and while most companies have said direct exposure is minimal, the broader conversation reflects a significant degree of uncertainty surrounding the impact of the event – reinforcing to us that the stock market either needs more time to digest what’s happening or an outright de-escalation of the conflict in order to stabilize.

In this week’s podcast, we run through the takeaways from our latest Macroscope report, our big monthly chart book in which we update our thoughts on the US equity market outlook from both a top-down and bottom-up perspective. We know all eyes are focused on Russia and Ukraine, but we thought it's important to pause and reflect on where things are at this particular moment in time. Three big things you need to know: First, we continue to see a path for the S&P 500 to our 2022 year-end price target of 5,050, but remain mindful of risks to our view. Second, we’re getting closer to an inflection back to Growth leadership. Third, Small Cap outperformance vs. Large Cap since early February seems deserved, but we suspect that it will be short-lived.

This week in the podcast, our latest thoughts on Russia’s invasion of Ukraine from a US equity market perspective. Three big things you need to know: (1) First, while the duration of growth scares in the S&P 500 since the Financial Crisis has varied, recoveries tend to be quick and powerful. (2) Second, individual investor sentiment took another hit last week and remains below pandemic lows - a contrarian buy signal for stocks. (3) Third, while stocks have fallen a bit more than we expected to start the year and we are mindful of risks to our view, we are sticking with our 5,050 year-end S&P 500 price target for 2022.

This week in the podcast, we run through our thoughts on what a Russian invasion of Ukraine might mean for US equity markets going forward. Three big things you need to know: First, US public companies haven’t been talking much about geopolitics or Russia/Ukraine recently, but the level of conversation is starting to pick up. Second, RBC’s US equity analysts see the potential for slowing growth/recession in Europe, higher energy prices, and potential impacts on supply chains as the most relevant challenges for their industries if a Russian invasion of Ukraine occurs. Third, we continue to believe that geopolitical risk emanating from Russia/Ukraine is not priced into the US equity market, should conditions worsen, and will be a key issue to watch in the weeks and months ahead.

This week in the podcast, we run through our latest thoughts on earnings, sentiment, trends in high frequency indicators, and Russia. Five big things you need to know: First, with 4Q21 reporting season starting to wind down, the earnings outlook remains stable. Second, in terms of the rate of upward EPS estimate revisions, Value and Cyclicals continue to outshine Defensives and Secular Growth. Third, retail investor sentiment has started to stabilize on the AAII survey and positioning in Nasdaq and Russell 2000 futures also suggests both Growth and Small Caps are oversold. Fourth, high frequency indicators are still recovering for the most part, casting doubt on recession fears. And fifth, while we continue believe the Fed is mostly priced in to the S&P 500, a Russian invasion of Ukraine may not be and currently presents one of the key risks to the stock market.

This week in the podcast, we run through our main takeaways on 4Q21 reporting season, with just over half of S&P 500 results in. The big things you need to know: First, the earnings resiliency we discussed in our last Spotlight solidified over the past week, supporting the stock market. Second, early sector standouts include Tech, Energy, and Health Care. Third, our quantitative transcript review suggests confidence has slipped a little, along with demand and margin views. Fourth, our manual review of earnings calls transcripts has kept us vigilant on the consumer, but not panicked.

This week in the podcast, we run through five good things we’re seeing in the data right now for the broader US equity market right now. First, bottom-up 2022 and 2023 EPS forecasts have been holding steady. Second, the contraction in the S&P 500 forward P/E is in line with past Fed tightening periods. Third, the valuation gap between the most expensive and least expensive stocks is getting close to pre-pandemic levels. Fourth, retail investor sentiment is back to pandemic lows. Fifth and finally, Small Cap futures positioning is on the cusp of net short territory, and isn’t too far above where it bottomed in March 2020.

In this episode, we run through early takeaways from the 4Q21 earnings reporting season, a few new thoughts on the Growth/Value rotation, and an update on investor sentiment. Four big things you need to know: First, performance has been poor, with 63% of S&P 500 companies falling significantly post results and companies missing on revenues getting hit hardest. Second, our transcript review suggests that labor is emerging as the new hottest topic, and that omicron disruption may have been greater than anticipated. Third, our valuation work suggests that progress has been made on the Growth rotation, but that it still has room to go. Fourth, retail investor sentiment is close to pandemic lows, a positive for stocks on a 12-month view.

In this edition of the podcast, we discuss the biggest takeaways from the publication of Macroscope, our big monthly chartbook digging into the US equity market from top to bottom, looking at everything from the S&P 500 to style to sectors to industries to factors and Small Caps. Two big things you need to know. First, we’re sticking with our 5,050 forecasts for the S&P 500 at year-end 2022, a tougher year but one that ultimately sees modest gains. Second, while we still like Value and Cyclicals in early 2022, we’ve lost faith in Small Caps’ ability to see an early year outperformance trade and dig into the reasons why.

In this edition of the podcast, we review our latest thoughts on the fierce rotation we’re seeing from Growth to Value and Cyclicals so far in 2022. Two big things you need to know: (1) We think it’s premature to declare the rotation out of Secular Growth into Value and Cyclicals over yet. (2) We’ve continued to get questions about what to own in a rising rate environment – our answer is pretty simple – sell what’s expensive (a list still dominated by Tech) and buy what’s cheap (a list still full of commodities and Financials).

The big things you need to know: First, Small Caps are retesting their relative low vs. Large Caps once again, as Fed rate cut optimism has faded once again. We remain neutral Small vs. Large for now. Second, investor sentiment has almost returned to the highs in place to start the year (as well as the summer of 2023) on the AAII survey, reinforcing our neutral stance on the broader US equity market for now. Third, our S&P 500 valuation model continues to suggest that the broader US equity market is fairly valued, with some modest downside risk if current inflation, interest rate, and Fed assumptions end up being too rosy. For a material move higher in the market by year-end to be justified on the math, we think investors will need to start focusing on the outlook for 2025, where visibility still seems a bit limited.

This week in the podcast, we run through the results of our quarterly RBC US equity analyst survey, which we conducted in late December 2021. The big things you need to know: First, our analysts’ outlooks for performance over the next 6–12 months remain optimistic, boosted by constructive views on fundamentals, valuations, cash deployment, and margins. Second, across all questions, our analysts tilt positive on Energy, Financials, Materials, and Information Technology, along with Utilities and Health Care. Third, key issues in focus for our analysts are demand, COVID, inflation, regulation, labor, supply chains, and pricing power. What jumped out the most on hot topics is that our analysts generally see their companies as able to manage through the major challenges ahead, including Omicron.

This week in the podcast, we’re running through the results of our December US equity investor survey, conducted December 16th through 21st. Three big things you need to know: First, half of investors are optimistic on stock market performance over the next 6-12 months, supported by constructive views on the economy and cash deployment, but weighed down by concerns about valuations, policy and margins. Second, in terms of hot topics, monetary policy and inflation top the list of issues keeping investors up at night. Third, in terms of positioning, High Quality, US, and Large Caps, were the most popular choices for outperformance over the next 6-12 months, as the popularity of Value, Cyclicals, Financials and Energy faded.

This week in the podcast, we recap some of the conversations we’ve been having with investors in December about our 2022 forecasts. Two big things you need to know: First, investors have been keen to discuss the downside risks to the stock market. While we’re still constructive on 2022, and are still looking for 5,050 on the S&P 500, we outline five things we’re concerned about regarding the broader market, which could generate volatility during the year, particularly early on. Second, as we’ve discussed our view that Value, Cyclicals, and Small Cap will lead early in the year while Growth, Secular and Large Cap will lead late in the year, the investors we’ve been speaking with have wanted to explore what our thoughts are on the timing and triggers of that mid-year leadership shift.

This week in the podcast, we review the results of our November 29th investor survey on views regarding the omicron variant. The big things you need to know: (1) “Neutral/don’t know” was the most popular response to our question on the general outlook for Omicron with more than one-third of respondents, but nearly half put themselves into the optimistic or very optimistic camp. (2) Roughly half saw no impact on the path of tapering, while views on the impact of the path of hikes were split between those who said hikes will be delayed and those who said there’s no impact. (3) Roughly half said they are not doing anything with regard to portfolio positioning until they have more information. (4) Vaccine efficacy and severity of disease were the biggest questions on investors’ minds.

This week in the podcast, we review our latest thoughts on the broader US equity market outlook. The big things you need to know: First, last week we moved our 2022 S&P 500 target up by ~3% to 5,050 from 4,900, adjusting our forecast for the bigger than expected move we’ve seen in the index as 2021 starts to wind down and the latest updates in our models. We continue to see 2022 as a solid year for the US equity market, but with more moderate gains than we’ve experienced in 2021. Second, we highlight how inflation has helped prop up US equity positioning, making it tough to be too bearish on US equities in the wake of last week’s higher than expected CPI print. Third, we discuss the breakout that Small Caps are attempting in November, and reiterate our view that Small Caps and Value are likely to see another burst of out performance between now and mid 2022.

This week in the podcast, we review our latest thoughts on the US equity market’s recent resiliency. The big things you need to know: First, US equities tend to outperform bonds when the Fed is hiking rates, providing one longer-term reason for US equity market resiliency as the timing of Fed rate hikes remains in focus. Second, negative real yields, which are close to their lowest levels post Financial Crisis, also remain supportive of US equity markets for now. Third, last month’s peak in freight rates helped to put in what has been, at least for the moment, a bottom in the S&P 500 and the cyclical trade as investors have been inclined to latch onto glimmers of hope on the supply chain problem.

This week in the podcast, we review our latest thoughts on investor sentiment and 3Q21 earnings season. The big things you need to know: First, in terms of investor sentiment, optimism continued to build among individual investors last week, while institutional investor positioning stabilized. Second, reporting season stayed “good enough” for the stock market to keep moving up last week. Strong beat rates and company commentary that emphasized the strength of underlying demand and the ability of many (though not all) companies to manage through inflation and supply chain pressures allowed the S&P 500 to make a new high, even though the few companies that did miss lagged sharply.

This week in the podcast, we revisit our work on investor and earnings sentiment, which we’ve been watching closely post Labor Day, offer a few thoughts on earnings season which officially got underway last week, and offer some new thoughts on supply chains. Four big things you need to know: First, individual investor sentiment may be starting to recover, after turning deeply bearish last month. Second, earnings sentiment has continued to deteriorate for the S&P 500, but may soon bottom in Industrials and Materials, supporting the idea that much of the pain from supply chain pressures may already be baked into those sectors. Third, 3Q21 reporting season is off to a good enough start in terms of the stats, and the commentary from companies has also continued to emphasize strong underlying demand. Fourth, we see other glimmers of hope – in data – on supply chains beyond the recent decline in freight costs that has captured investors' attention.

This week in the podcast, we run

through the results of our latest quarterly RBC analyst survey, in which we

poll the firm’s equity analysts on the outlooks for the industries they cover.

The big things you need to know: First, outlooks for performance over the next

6-12 months remain optimistic, driven by constructive views on fundamentals,

valuations, and cash deployment. Second, our analysts tilt most positive on

Financials, Energy, Information Technology, Utilities, and Health Care, and

least positive on REITs and Industrials. Third, policy outlooks generally

remain cool, though it’s worth noting most see higher corporate taxes as a

moderate problem for earnings and performance as opposed to a major one.

Fourth, while margin expectations have eased only a handful of our analysts

consider supply chains to be a major problem for the industries they cover.

In this episode, we’re continuing to explore the state of investor sentiment by digging into the results of our late September US equity investor survey. Four big things you need to know: First, pessimists on the overall US equity market continued to rise, but remained below past highs. Second, the deterioration in the overall stock market outlook occurred alongside persistent valuation concerns, and deteriorating margin expectations, as well as slipping optimism on cash deployment and the economy. Third, on the hot topics in the market, investors are most concerned about China, geopolitical risk, and monetary policy. Fourth, investors are still leaning into select parts of the reflation trade.

The big things you need to know: Three big things you need to know: First, Tech has bounced back on performance and earnings revisions but valuations remain a problem. Second, valuations more broadly have started to look less appealing. Third, other updates in our high frequency indicators highlight how pendulums have swung on a few different fronts (namely investor sentiment, election stats, and funds flows).

This week in the podcast, we discuss the latest developments in investor and earnings sentiment, which we’ve been keeping a close eye on this month, as well as a few thoughts on the rotation out of growth we’ve been seeing this week.

Three big things you need to know.  First, institutional investor positioning has finally taken a hit.  Second, earnings sentiment has continued to deteriorate, driven by cyclicals and supply chain concerns, but so far the damage has been concentrated in a few sectors. Third, we think there’s more to the rotation out of Growth this week than higher bond yields, but regardless this rotation has become another catalyst for downside in the US equity market in the near-term. Our bottom line, as we think across all of these issues, is that the volatility we’ve been in as regards to the broader US equity market likely isn’t done yet.

This week in the podcast, we tackle three topics: investor sentiment, earnings sentiment, and supply chains.

Three big things you need to know: (1) First, individual investor sentiment has fallen so hard recently, it may soon send a contrarian buy signal. (2) Second, earnings sentiment has started to deteriorate, led by Cyclicals, but Secular Growth has stayed resilient. (3) Third, we highlight what we’re watching on supply chains -- specifically, the rate of change in freight costs, global COVID trends, and regional Fed surveys -- where we are seeing some faint glimmers of hope.

In this episode, we update our thoughts on the broader US equity market outlook. Three big things you need to know: (1) First, we are lifting our 2021 EPS forecast and price target by ~4%, and lifting our 2022 EPS forecast by ~3%, while also introducing our S&P 500 price target for 2022 which calls for a 9% annual gain. (2) Second, we continue to see risk of a pullback in the S&P 500 before year-end, but view it as a buying opportunity. (3) Third, one key risk that we are monitoring for the stock market – and our call – is the possibility that S&P 500 EPS growth will turn negative in early 2022.

This week in the podcast, guest

host Sara Mahaffy, RBC’s ESG Strategist, runs through the team’s latest work on

sustainable fund flows, ESG themes in focus, and trends in new sustainable fund

launches.

This week in the podcast, we provide an end of summer

update on our earnings transcript review and the high frequency economic,

sentiment, and virus indicators that we track. We also offer a few thoughts on

what tapering means for US equity markets. Three big things you need to know:

(1) Last week’s earnings calls provided an important reminder about the

strength of the consumer. (2) The reflation trades remain tethered to COVID

trends. (3) We think equity investors have already priced in tapering to a

significant degree, given the underperformance of Value and Small Cap that we

saw earlier this summer.

In this week’s podcast, we take a closer look at the recent impact of the COVID backdrop on the US equity market. The three big things you need to know: (1) First, COVID has taken up more airtime on earnings calls in August, and the tone on the variant has been fairly mixed. (2) Second, we’re seeing more pronounced signs of stress in the high-frequency indicators that we track. (3) Third, for the most part, the US equity market has remained forward-looking, focusing not on the impacts of the latest surge but rather on the continuation of the recovery thereafter.

This week in the podcast we run

through our latest thoughts on positioning within the US equity market with an

eye on longer-term trends through 2022, which has been the focus of our

conversations with investors in recent weeks. The big things you need to know:

1) We expect the Growth/Value trade to stay choppy through 2022. Once current

pressures on the Value trade resolve (primarily COVID and growth concerns), we

see another significant outperformance trade in Value in the intermediate term,

but suspect that will end up being the time to exit the trade. (2) As we start

to get ready for 2022 outlook discussions, we are getting more balanced between

Value/Cyclicals and Growth in our S&P 500 sector overweights. Our

Financials and Energy overweights remain, but we are lowering Materials from

overweight to market weight. We are also lifting Tech to overweight from market

weight. (3) High quality leadership has returned to the US equity market,

supporting our upgrade of Large Cap Tech.

This week in the podcast

(1) Most of the major trends and themes for 2Q reporting season that we’ve been

highlighting over the past few weeks remained intact. (2) We learned four new,

important things last week on slowing growth rates, supply chains, labor, and

COVID/mobility. (3) It’s not unusual for slowing growth rates to trip up the

stock market temporarily following recessions. (4) The high-frequency data we

track suggest mobility trends remain constructive.

This week in the podcast we take a

look at what we learned in the second full week of 2Q21 reporting season. Three

big things you need to know: First, the overall tone from management teams

improved in week 2 relative to week 1, with a focus on the strong demand and

cash deployment backdrop, increased confidence on the 2nd half, and COVID

concerns toned down. Second, while we generally sensed a better tone regarding

the ability of companies to manage through margin pressures, we also came away

with the impression that management teams are inclined to see general

inflationary and supply chain pressures as enduring for a bit longer. Third,

while upward earnings revisions are still happening, we continue to see a

softening in earnings sentiment driven by deterioration in Financials, Consumer

Staples, Health Care, and Utilities specifically and Value, Defensives, and

Cyclicals more broadly.

This week in the podcast, we take a

look at what we learned from week 1 of 2Q21 reporting season. The two big

things you need to know: (1) 2Q21 reporting season got off to a sour start, but

it’s too early to gauge the overall tone, as last week’s reporters were mostly

Financials, and their weak stock price reactions, stand in contrast to the more

positive reactions seen by the early reporters. (2) COVID discussions haven’t

disappeared from management commentary which have highlighted ongoing vigilance

on the Delta variant. This may contribute to additional pressure on the

reflation trade in the near term, as the Large/Small, Growth/Value, and

Secular/Cyclical trades have started to move in tandem with domestic case

counts again.

The big things you need to know: First, reporting season has ended up looking just fine on the stats, with one twist at the end. Second, we update our rundown of key themes on earnings calls. Third, net bulls on the AAII survey bounced back last week as 10-year yields decoupled from their 2023 spike, hopes for Fed cuts returned, and flows to US equity funds improved.

This week in the podcast, we

run through our thoughts on 2Q21 reporting season, which gets underway this

week.  Three big things you need to know: (1) 2Q21 reporting season is off

to a good start, based on the stats of the early reporters. (2) An important

shift in earnings sentiment has occurred, with Cyclicals, Value, and Financials

weakening. (3) Our recent analyst and investor surveys suggest inflation

impacts will be one of the key issues to monitor.

This week in the podcast, we run

through the results of our 2Q21 US equity investor survey, conducted June 22nd

– 29th. The respondents were mostly US focused and based portfolio managers.

All were institutional investors. The big things you need to know: Overall, US

equity investors remained optimistic, though optimism did fade a bit relative

to our late March survey. Cash deployment and economic outlooks are strong,

though valuations, margins, inflation, COVID variants, the Fed, and Washington

policy are all weighing on sentiment. Interest in reflation trades is also

fading.

This week in the podcast, we

take a look at the historical playbook around Fed tapering and hiking, and what

it means for our US equity market outlook. We’ve moved into the flattening camp

on multiples, as Fed rate hikes are historically a headwind for forward P/E’s.

While we don’t think these trades are done playing out yet, we think Fed

tapering and rate hikes, and the cooling off of economic growth that’s already

anticipated for 2023, put a potential expiration date on the rotation into

Value, Cyclicals, and Small Caps.