RBC's Markets in Motion: Recent Episodes
RBC Capital Markets
Our regular podcast from Lori Calvasina, Head of US Equity Strategy, that brings a fresh perspective and nuanced, data driven view on the forces shaping U.S. equity markets. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
The big things you need to know:
- First, valuation opportunity is opening up in the US equity market from a variety of perspectives.
- Second, in the aftermath of Wednesday’s Fed meeting, we highlight how the stock market tends to experience choppy performance in the first few months under a new Fed Chair.
- Third, other things that jump out in our updates this week include the return of high EPS quality outperformance as a factor in both the S&P 500 and Russell 2000, the modest uptick in stock market optimism in the Conference Board consumer survey that was out this week, and what we’re watching on the midterms (which we continue to see as a risk factor in the months ahead).
- Fourth, we’ve gone through our monthly refresh of the models that feed into our 12-month S&P 500 price target and are sticking with our 8,150 forecast, though we continue to believe that the path for stocks will not be a linear one.
The big things you need to know:
- First, the stats for 2Q26 reporting season have continued to come in mixed, arguing for selectivity rather than a leadership rotation, in our view.
- Second, last week’s earnings commentary from S&P 500 companies reiterated the themes of resiliency and AI tailwinds, but didn’t give us much insight on how to think about recent war developments.
- Third, we review how we’re thinking about the role of the retail investor in today’s US equity market, which differs in some respects from the past, and how we’re monitoring risks on this front.
- Fourth, other things that jump out in our updates this week include the return of S&P 500 Semi & Semi Equipment valuations to average levels and the bright spots we’re seeing in our quant work on Japan.
The big things you need to know:
- The big things you need to know: First, the early stats from 2Q26 reporting season look a little mixed as reporting season kicks into high gear.
- Second, early earnings commentary from the companies that reported over the past week highlights a cautiously optimistic tone, consumer resiliency, and complicated AI impacts.
- Third, other things that jumped out in our latest updates include further evidence of stabilizing sentiment on the NFIB and University of Michigan consumer sentiment surveys (which have encouraged the rotation trade) and evidence of weaker flows to US equities (which point to the possibility of some geographical pressure on the US equity market).
The big things you need to know:
- First, we are making several changes to our S&P 500 sector views with upgrades to Tech to overweight and Consumer Discretionary to market weight, alongside downgrades of Communication Services to market weight and Utilities to underweight.
- Second, the expected growth rate for 2Q26 S&P 500 EPS has continued to drift up ahead of reporting season, but trends in beat rates and EPS revisions have been mixed.
- Third, on our broader outlook we’re on guard for a shift back into US and mega cap Growth leadership.
The big things you need to know:
- First, across the globe our analysts are constructive on performance over the next 6-12 months and see attractive valuations in the industries they cover.
- Second, Europe and Canada captured the most optimistic performance outlooks among our four coverage regions, but the US was not far behind.
- Third, our Canadian and US analysts expressed a favorable view of their own respective domestic policy backdrops. On the US midterm elections, our US analysts had a slightly constructive tilt on performance in a Republican sweep scenario, a slightly negative tilt on performance in a Democratic sweep scenario, and a neutral view on performance in a split Congress scenario.
- Fourth, at the global sector level, performance outlooks were mostly positive and came in stronger than other sectors for Materials and Industrials, but only by a little.
The big things you need to know:
- First, we are lifting our 12-month S&P 500 price target to 8,150 from 7,900. We also think the recent outperformance of non-US developed markets and value could last a bit longer but ultimately expect equity market leadership to return to the US and big cap growth after the recent valuation problem is resolved.
- Second, we run through our thoughts on the upcoming reporting season, noting that the bar seems high from a data perspective.
- Third, the latest Duke CFO survey pointed to a slight downtick on economic optimism but a slight uptick on optimism on the outlook for one’s own company.
Two big things you need to know:
- First, forward P/Es have generally been de-frothed, but haven’t looked deeply compelling for the major US indices.
- Second, the valuation case for the broadening trade still has some room (Small Caps, certain cyclical sectors, non-US developed market equities), but requires close monitoring.
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The big things you need to know:
- First, lingering concerns about interest rates and the Fed flared up on Friday after a surprisingly strong NFP report. We run through our thoughts on why this hit the Nasdaq so hard and note that risk of a tier 1 / garden variety pullback (5-10% from peak) has risen in the near term.
- Second, other things that jump out include the recent drop in bitcoin, which supports the idea that risks of a tier 1 pullback have risen, and the sharp drop in Small Caps on Friday on interest rate fears.
RBC’s Markets in Motion is the weekly podcast from Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, highlighting her latest views on the US equity market. This is a special edition of the podcast recorded live from the RBC Global Energy Power and Infrastructure Conference in New York on June 3rd, 2026. Lori teamed up with Callie Simpkins (Managing Director on RBCCM’s Cross Asset Hedge Fund sales team who moderated the discussion) and Amy Wu Silverman (Managing Director and Head of Derivatives Strategy) to discuss the outlook for the US equity market and other key macro issues including inflation.
Two big things you need to know:
- First, Lori and Amy review how the US equity market rally seems late innings in some respects, but is not making clear signs of a top and why there could still be room to run.
- Second, they emphasize inflation as a key risk factor, and how it factors into the equity market outlook and positioning.
The big things you need to know:
- First, earnings sentiment (the rate of upward EPS estimate revisions) is now improving broadly within the equity market, which we think opens the door for a short-term pause in mega cap Growth leadership within the US and US leadership within global developed markets equities.
- Second, the Growth/Value trade within Large Cap has turned choppy again, which we think may reflect the broadening out of improving earnings sentiment and valuations that have started to look frothy for mega cap Growth on some metrics.
- Third, stock market optimism improved in the latest Conference Board survey, a bright spot in the consumer narrative and a data point that alleviates some of our near-term pullback concerns.
The big things you need to know:
- First, we think the recent pick up in 10-year yields raises the risk of a tier 1 (5-10%) pullback in the S&P 500 in the short-term, but does not alter our longer-term constructive view on the S&P 500.
- Second, it was business as usual at the RBC Health Care conference last week in terms of company commentary.
- Third, other things that jump out from our latest updates include a move up in the median NTM P/E for the biggest market cap names in the S&P 500 (which also adds to risk of a near-term pullback).
The big things you need to know:
- First, the investors we met with this past week, in our trip to London and Switzerland, were keen to explore other opportunities in US equities beyond Semis/Tech/AI, but had difficulty envisioning what those were.
- Second, we highlight continued outperformance of high price momentum in our factor work and what we’re seeing in our valuation work for this part of the market, a pick up in the rate of upward EPS estimate revisions for the S&P 500 as reporting season slows down, and the signal we’re currently getting from S&P 500 and Russell 2000 forward P/Es – things are moving up but aren’t universally back to their 2025 and early 2026 highs.
In this special cross over edition (originally recorded for the RBC Capital Markets Macro Minutes podcast), Lori joins Blake Gwinn, Head of RBC Capital Markets US Rates Strategy in a conversation on US equities, US rates, and the Fed.
What we discuss:
Equity markets keep hitting all-time highs. Rates markets are telling a more cautious story. So which one has it right? In this episode, we examine the complacency narrative through both an equity and rates lens, unpacking whether risk assets are fully pricing the range of Iran conflict outcomes or looking past risks that haven't fully materialized yet. We also dig into what a Warsh-led Fed means for forward guidance, dissent, and market volatility, and what the shifting policy backdrop means for how investors position across equities and rates.
The big things you need to know:
- First, we have lifted our 12-month-forward S&P 500 price target to 7,900, which represents a 7.7% gain from the May 7th close. In adjusting our forecast, we are focusing on our valuation/EPS model, which does the best job of baking in a two-speed economy and earnings backdrop.
- Second, on bigger-picture positioning, we continue to prefer Growth over Value, US over non-US, and like Small Caps (but not as much as Large Cap Growth).
- Our sector views are mostly unchanged, but we have lowered Health Care to market weight from overweight. Third, we run through the strong stats from 1Q26 reporting season.
The big things you need to know:
- First, US equity market valuations are on the rise, but don’t look topped out yet. We remain constructive on the US equity market in the year ahead, recognizing that the path may not be linear.
- Second, last week’s earnings reports continued to point to resilient outlooks with a dose of caution fueled by a strong start to the year, highlighted challenges to consumer resiliency in restaurants and travel but otherwise a reiteration of the cautious but stable theme, and alluded to a complex web of buffers in place for companies regarding the impact of the war in Iran for a period of time.
- Third, things that jump out in our other updates include a sharp spike in company references to geopolitics in April, a stall in investor sentiment last week, and a pick-up in betting market expectations for a split Congress in the midterms.
The big things you need to know:
- First, the three things that stuck out to us in our review of earnings calls last week included outlooks that emphasized resiliency but contained a dose of caution, the conversation on Iran war impacts (present and future) getting underway, and descriptions of cautious but stable consumers.
- Second, with US equities breaking out to a new 2026 high relative to non-US equities, we note that valuations suggest there’s room for this trade to run and that weak earnings revisions breadth is not a problem unique to the US.
- Third, funds flows are shifting back to Financials and Growth, which we think makes sense from a valuation and earnings growth perspective.
The big things you need to know:
- First, our analysts were generally constructive aside from the war.
- Second, our survey results reiterate the idea that the US is seen as a safety trade due to greater war resiliency, and that Europe does not necessarily present as a better alternative despite the potential for the US to lag if/when war fog clears.
- Third, we review the most interesting sector tidbits from the survey.
The big things you need to know:
- First, despite the strong rebound in the US equity market, investor sentiment remained subdued last week. This signals to us that there is room for US equities to run and climb a wall of worry.
- Second, 1Q26 reporting season got off to a strong start last week, evidenced by a sharp pickup in the percent of companies beating consensus EPS forecasts and reassuring commentary from companies.
- Third, other things that jump out in our latest updates include strong outperformance by Large Cap Growth and growth-oriented sectors in April, the low-quality burst of leadership within Small Cap, and strengthening inflows to the US amid outflows from Europe
The big things you need to know:
- First, our 12-month S&P 500 price target remains 7,750, and we assume the index has put in a fragile, foggy bottom.
- Second, we run through our thoughts on what we’re hoping to learn more about in the upcoming reporting season.
- Third, other things that jump out include how 2026 EPS growth forecasts for most sectors have been frozen since the start of the war, and the decline in consumer expectations for stock market performance over the next 12 months.
The big things you need to know:
- First, the tactical indicators we’ve been tracking to gauge when equity investors’ fears may have gone too far continue to show signs of significant deterioration but are not yet pointing to extreme fear suggesting more downside in stocks remains possible in the near term.
- Second, other things that jump out include new stress tests on our valuation/EPS model, the latest C-suite tone, the signals from our US GDP model for the S&P 500 if consensus forecasts start to erode, and evidence of derisking in equities in the latest funds flows data.
The big things you need to know:
- First, we review our key takeaways from our review of March company commentary on the Middle East conflict on EPS calls and in conference presentations. What we read adds to our understanding of why the US equity market has been fairly resilient since the Iran strikes, and also leads us to believe that it may simply take more time for the equity community to fully understand the impacts from an extended conflict.
- Second, other things that jump out this week include much better EPS estimate revisions trends in the top-10 market cap names in the S&P 500 than the rest of the index (a point in favor of mega cap Growth stocks continuing to outperform), the sharp drop in investor sentiment on our AAII model (a bullish data point for the broader market) and the return of the Russell 2000 FY2 P/E to its long-term average (important progress but not a return to “hold your nose and buy” territory).
The big things you need to know:
- First, in tandem with the 5% decline in the S&P 500, investor and consumer sentiment have slipped in recent updates as investors have digested the possibility of a longer conflict in Iran and consumers have started to notice higher gas prices.
- Second, we review our macro takeaways from RBC’s Financial Institutions conference, where we detected echoes of the lingering confidence and emerging concerns that are seen in the surveys we discuss.
This week, we are excited to bring you a special edition of the podcast, a recording of a panel done by Lori Calvasina (Head of US Equity Strategy), Helima Croft (Head of Global Commodity & MENA Research), and Frances Donald (Chief Economist, Royal Bank of Canada) on March 10th, 2026, at the RBC Financials conference in NYC.
The team discussed recent events in the Middle East and the implications for the US economy and stock market, and was moderated by Brian Sullivan of CNBC.
The big things you need to know:
- First, we review the results of a survey we conducted of RBC’s equity analysts on the conflict in Iran, which helps explain the resilience we’ve seen in the S&P 500.
- Second, the valuation and sentiment barometers we’re tracking point to room for further downside in the S&P 500 in the near-term in absolute terms, while our work on US valuations vs. other global developed markets highlights why the US equity market has been embraced as a safe haven, helping outperformance versus global peers to re-ignite.
The big things you need to know:
- We run through five things we’re thinking about regarding recent developments in the Middle East from a stock market perspective.
- Then, we wrap up with a few things we’re watching in terms of general stats to help us know when the recent risk off mood in markets may have played out.
The big things you need to know:
- First, the stock market is still experiencing a growth scare, in our view, where it is attempting to stabilize. We see more downside if recession is priced in.
- Second, we review how the process of resetting EPS expectations has begun, and run though key themes from the early reporters and companies that have presented at conferences since the Rose Garden. Our overarching takeaway from our reading is that recession is not yet a foregone conclusion but also that US equities are not out of the woods.
- Third, we run through our latest thoughts on the Growth trade, which has been outperforming again, and note that it is not a clear-cut call.
The big things you need to know:
- First, we review our stance on Small Caps. We had a little more love for them coming into Valentine’s Day weekend due to better fundamentals, but still see challenges that raise the bar for further outperformance (less appealing positioning and valuations, plus continued linkage to evolving views on the Fed).
- Second, other things that jump out include more evidence of a tough reporting season, the slide in sentiment on the AAII survey which is not signaling oversold conditions yet, and thoughts on why we’re not intrigued with the Tech sector yet from a generalist perspective.
- Programming note: The podcast will be on break next week and resume later this month.
The big things you need to know:
- First, we run through our thoughts on last week’s choppy price action in the S&P 500 and reiterate our 7,750 12-month-forward S&P 500 price target.
- Second, we update the stats we’re tracking for 4Q25 reporting season, which generally bounced back in our latest update but remain weaker than what we’ve seen in past reporting seasons.
The big things you need to know:
- First, reporting season stats have come in “slightly squishy” in our view, suggesting to us that the choppy price action in the S&P 500 of late has been about more than geopolitical concerns.
- Second, what we read in earnings call transcripts this past week continues to suggest that the macro backdrop is mixed, though we are not seeing any indications of major problems.
- Third, the thing that jumped out the most to us in our other updates was the slight downtick in optimism on the stock market outlook in the latest Conference Board consumer confidence survey.
The big things you need to know:
- First, the various earnings stats we track point to a sleepy start to reporting season, suggesting to us that geopolitics hasn’t been the only thing contributing to the US equity market’s recent gyrations. These stats also highlight how the mega cap growth trade has seen its dominance on the earnings front erode in some ways, helping fuel the rotation trade to Value and Small Caps.
- Second, our review of this past week’s earnings call commentary suggests that views of the macro have been mixed, with geopolitical concerns and consumer pressures noted, but tariffs described as manageable.
- Third, things that jump out from our other updates include the rise in the Russell 2000’s P/Es which are approaching 2024 highs
The big things you need to know:
- First, our thoughts on earnings heading into 4Q25 reporting season – questions we think need answering and stats we’re watching.
- Second, other updates include our thoughts on implications in house views on the Fed for our own US equity market outlook, why we think last week’s economic data releases support the strong start to the year in US equities, why we think Small Cap performance is at an important crossroads vs. Large Cap, and how recent trends in funds flows capture the complex crosscurrents in place for US equities today.
The big things you need to know: First, after updating our models for end of year, we are reiterating our 7,750 12-month S&P 500 price target, noting that the signal from our sentiment model deteriorated since our last update in early December while the signal from our GDP model strengthened. Second, a few things that jumped out in our other updates included the recent divergence in the size and style trades, the S&P 500’s inability to recapture last summer’s peak on the rate of upward EPS estimate revisions, and the latest results of the Duke CFO survey where optimism picked up on one’s own company and the broader economy, accompanied by an optimistic view on the productivity benefits coming from AI.
The big things you need to know:
- First, we are upgrading S&P 500 Health Care to overweight from market weight.
- Second, we are upgrading S&P 500 Communication Services to overweight from market weight.
- Third, our other S&P 500 recommendations are unchanged. We remain overweight Financials and Materials, underweight Consumer Discretionary, and market weight all other sectors. Among our market weights, we have a preference for sectors that look attractively valued on our quant analysis (Consumer Staples, Energy, REITs) over those that look expensive (Utilities, Tech, and Industrials) which have been the early beneficiaries of the AI trade.
- We also close with a quick thought on the biggest macro takeaways from our 4Q25 global analyst outlook survey.
The big things you need to know:
- First, several things that US equity markets have been linked to (breadth, bitcoin, private market fears, Fed cut expectations, consumer sentiment) have gotten better in recent updates.
- Second, a few signals from our year-ahead outlook analysis have shifted over the past week.
- Third, there have been a few interesting twists and turns in positioning since Thanksgiving week in terms of sectors and factors.
The big things you need to know:
- First, our 12-month-forward price target for the S&P 500 is 7,750, approximately the median and average of five different models that we use, which focus on sentiment, valuation, the appeal of stocks relative to bonds, the economic outlook, and monetary policy.
- Second, some of the key headwinds / downside risks and tailwinds / upside risks we’re monitoring include shifts in expectations for the economic backdrop, renewed interest in geographical diversification, and the midterm elections.
- Third, tactically (near term) we are leaning into the rotation in leadership within the US equity market from Growth to Value and the mega cap Growth trade to the rest of the market, but caution that a shift in earnings dynamics is still needed for this transition to have significant duration.
- Fourth, we have gotten more comfortable adding to Small Caps but see risk that recent outperformance ends up being short-lived once again unless the underlying economic backdrop / overall economic conditions heat up significantly.
The big things you need to know:
- First, with the S&P 500 having finally entered what we consider to be tier 1 / garden-variety-pullback territory on Thursday, we review what we’re watching to help us gauge if / when the pullback has run its course.
- Second, with old leadership within US equities under pressure, we review which trades are working best right now (or might be starting to work) among the data sets we track regularly (Small Caps – at least on Friday and Value, sectors with valuation appeal, and safer factors).
- Third, we review what we learned from the consumer companies that reported over the past week (companies highlight a mixed macro backdrop, ongoing and intense consumer challenges, ample inventories, their ability to manage through tariffs, and more specific AI use case examples).
The big things you need to know:
- First, earnings sentiment staged a partial comeback last week as the rate of upward EPS estimate revisions for the S&P 500 moved up again slightly vs. the prior week but remained below its August high.
- Second, we run through the latest big picture takeaways from S&P 500 earnings calls.
- Third, other things on our mind include our work the valuation profile of high earnings quality stocks within Small Cap and how we’re thinking about the government shutdown.
The big things you need to know:
- First, the percent of S&P 500 companies beating consensus EPS forecasts remains well above 2Q25 levels despite slipping a little last week. Meanwhile, the rate of upward EPS estimate revisions improved slightly but remains well below the high of the last reporting season.
- Second, macro commentary in last week’s S&P 500 earnings calls remained mixed and varied by sector, with the strongest tone coming out of Tech and Health Care and the weakest tone coming from Consumer.
- Third, we noticed more tricks than treats as we ran through our latest updates over Halloween weekend, and run through some of the charts that are spooking us the most on the broader market right now.
The big things you need to know:
- First, 3Q25 reporting season has gotten off to a strong start on beat rates for the major indices, but we are continuing to see deterioration in the rate of upward EPS estimate revisions for the S&P 500, the Russell 2000, the biggest market cap names in those indices, and the rest of both indices when their top weights are excluded – something we continue to see as a challenge for performance if it persists.
- Second, we run through the main macro takeaways we found in our review of last week’s S&P 500 earnings calls. The tone on the overall macro, consumer and tariffs came across as mixed, with a number of companies expressing optimism about improvements / stabilization underway or potentially coming into view.
- Third, other things that jump out in our updates this week include a new study we’ve published on the relationship between ROEs and P/Es in the major Small, Mid and Large Cap indices.
The big things you need to know: First, solid commentary from the S&P 500 Financials that reported last week helped get 3Q25 reporting season off to a good start, though it was overshadowed by private credit concerns. Second, we reviewed stock market performance in early 2023 around the regional banking crisis as a starting point for thinking about risks to the broader US equity market. Third, other things that jump out include further deterioration in earnings revisions trends for the major indices and stalling sentiment.
The big things you need to know:
- First, earnings sentiment has been fading for the broader US equity market and is at a critical juncture for the biggest market cap names and Tech sector within the S&P 500.
- Second, macro signals were mixed from the S&P 500 companies that reported over the past few weeks.
- Third, our thoughts on Friday’s weakness in the S&P 500.
The big things you need to know:
- First, across all industries and regions, our analysts are constructive on performance over the next 6-12 months.
- Second, at the global sector level our analysts have the most positive performance outlooks for REITs, Materials and Financials.
- Third, our analysts were slightly less optimistic on forward performance for Europe/UK than other regions.
- Fourth, our analysts generally had mixed views of the policy backdrop.
- Fifth, when we look at some of our macro indicators, Canada has been the bright spot in terms of performance YTD and over the past month.
The big things you need to know:
- First, many of the US equity investors we met with last week were frustrated and wary.
- Second, other things that jump out in our work include a speech by the USTR to the financial community in NYC last week, the recent fade in the broadening trade and Small Cap leadership, the continued easing in earnings sentiment, and expectations around the shutdown’s duration in betting markets.
The big things you need to know:
- First, we review what clients were most interested in talking about on our trip to the UK last week, which included differences between US and UK investor sentiment, valuations, geographical funds flows, and sectors.
- Second, we recap the macro tidbits we picked up from last week’s S&P 500 earnings calls (where the auto-related names had a negative tone), our takeaways from the Duke CFO survey that came out last week (optimism about their own companies moved up slightly), and what we learned from our review of how stocks have traded around government shutdowns in the past.
The big things you need to know:
• First, weakness in Homebuilders doesn’t bode well for the recent outperformance of Small Caps.
• Second, we’ve continued to see some slippage in earnings sentiment (the rate of upward EPS estimate revisions) for the S&P 500, which has been driven by companies outside of the biggest market cap names.
• Third, bulls picked up sharply in the AAII survey last week.
• Fourth, our work on US equity market performance in the 12-month period following non-recession-related Fed cuts and reset cuts highlights upside risk to our 2H26 S&P 500 target price of 7,100.
• Fifth, capex growth improved in 2Q25.
• Sixth, US equity funds flows bounced back last week, driven by US-domiciled funds.
The big thing you need to know:
- The big thing you need to know: We are introducing preliminary forecasts for the S&P 500 for 2026 of 7,100 (a 2H26 price target) and $297 (full-year 2026 S&P 500 EPS). We think they should be viewed as a very early indication of how our models are tracking at the moment.
RBC’s Markets in Motion is the weekly podcast from Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, highlighting her latest views on the US equity market.
The big things you need to know:
- First, we see Friday’s weaker-than-expected jobs report as having added some additional uncertainty to the US equity market outlook at a time when we’ve been on guard for choppiness for other reasons.
- Second, we reiterate our overweight stance on the S&P 500 Materials sector.
- Third, other things that jump out to us include the weakness in bitcoin and the deterioration in US equity flows and retail flows specifically, which add to our near-term concerns.
The big things you need to know: First, 2Q earnings season wrapped up with downward pressure on 2026 sector EPS forecasts & Small Cap operating margin forecasts. Second, following Friday’s news that the US Court of Appeals for the Federal Circuit had ruled against the reciprocal tariffs, we think corporate uncertainty around tariffs will remain elevated.
The big things you need to know:
- First, a better longer-term EPS outlook and more resilient operating margin forecasts help explain the recent outperformance of mega cap growth stocks and growth-oriented sectors
- Second, Small Caps recently saw a brief/mild outperformance pop on mounting Fed cut optimism, but we remain neutral on Small Caps given elevated valuations and below-average consensus GDP expectations.
- Third, mixed vibes to end the summer make us question whether the sentiment recovery that has powered US stocks may soon hit a speed bump.
The big thing you need to know: First, with reporting season starting to wind down, Health Care and Tech stand out positively on a few of our earnings-related sector stats. Second, we recap what we read in last week’s S&P 500 earnings calls. The overall tone improved vs. the prior week, but we still detected plenty of uncertainty as reporting season winds down particularly on demand, the consumer, mitigation levers yet to be pulled, and capex. Third, we run through a few other things that jump out on our high frequency indicators including the surge in Growth stocks, waning investor sentiment, and the sharp US equity funds outflows seen in the latest EPFR data.
The big thing you need to know:
Our overall impression from 2Q25 reporting season is that companies are managing through tariffs fairly well so far, but it’s still too early to assume tariffs won’t generate inflation pressures. We run through four takeaways on what we learned in 2Q25 reporting season last week regarding the overall tone, the state of demand, the consumer, and the timing of tariff impacts.
The big things you need to know:
- First, we run through our first impressions from week 1 of 2Q25 reporting season in terms of both the stats and company commentary. Out of the gate, our impression is that it’s been fine but not fabulous.
- Second, we review what else jumps out to us on our high frequency indicators which includes the underperformance of quality factors, average levels of bullishness on the weekly AAII retail investor survey, and subdued flows to US equity funds.
The big things you need to know: First, we are lifting our year-end 2025 S&P 500 price target to 6,250, essentially taking our price target back to where it was in mid-March. Second, there is no change to our 2025 S&P 500 EPS forecast of $258, which is slightly below consensus. We also review what we’ve learned from the early reporters, which makes us think it’s too early to stop worrying about tariff impacts. Third, we’re adding the momentum trade and earnings sentiment for mega cap growth to the list of things worrying us about the stock market near-term.
The big things you need to know:
- First, we review the bull thesis that we heard in client meetings last week, and our thoughts on where it could go wrong.
- Second, we review how the rally in equities has been looking a bit overdone on our valuation and EPS modeling, and how we’re also starting to run out of room on one of our sentiment studies.
- Third, conditions are rather mixed for US equities at the moment. We walk through things that look good, and things that look not so good. In the latter camp, one thing that stands out as particularly important to us is the failure of c-suite sentiment in widely followed surveys to inflect positively, as has been the case with consumer, small business, and investor sentiment surveys.
Four big things you need to know: First, globally our analysts are constructive on performance over the next 6-12 months. Second, driven in part by our survey results, we are making six changes to our US sector calls – we dig in a little deeper to the upgrades of Materials, Consumer Staples, and REITs here. Third, while we don’t make recommendations on non-US sectors, we do highlight how Financials is a favorite across the globe among our analysts. Fourth, improving 2026 consensus GDP forecasts are a positive outlier for the US compared to our other coverage regions, which we think has been helping boost US performance.
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Listen to this episode for a recap of our biggest call of the year...
Or watch my video message - https://players.brightcove.net/6021289101001/VyvCc9BZx_default/index.html?videoId=6374546435112
The big things you need to know:
- First, solid earnings stats are in place as US equity investors wait for the onset of 2Q25 reporting season.
- Second, the latest Business Roundtable survey highlighted weaker corporate vibes relative to March, echoing the tone in last week’s earnings call transcripts to some degree for Russell 3000 companies, where cost containment discussions jumped out to us.
- Third, we recap our views on how we’re thinking about the recent developments in the Middle East from a US equity market perspective.
The big things you need to know:
- First, the conflict in the Middle East comes at a complicated time for the US equity market, as our sentiment and seasonality work has been suggesting stock prices could keep moving up, while our valuation/earnings and GDP analysis has been suggesting that the stock market has gotten ahead of itself. We highlight the three potential challenges we see for the US equity market from this conflict, which we are monitoring closely.
- Second, we revisit our four tiers of fear framework, which helps us map out potential downside in US equities from the conflict, particularly if conditions escalate and broaden out.
- Third, Energy and Materials seem most likely to outperform if the conflict results in a sustained oil price spike, while Consumer Discretionary and Communication Services seem most likely to underperform. We’re also keeping an eye on Utilities and REITs as potential, tactical outperformers.
The big things you need to know:
- First, consensus expectations for 2026 are inching up for S&P 500 EPS in a broad based way, a positive data point for the stock market but a slight one.
- Second, net bulls on the AAII survey have moved up sharply, and formally entered a less robust forward return environment last week.
- Third, the seasonal playbook reminds us that in recent years June and July have tended to be strong for the S&P 500 but that the transition into fall has been tricky with declines often seen in the August – October time frame.
RBC’s Markets in Motion is the weekly podcast from Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, highlighting her latest views on the US equity market. In this special edition, Lori is joined by her colleagues Amy Wu Silverman (RBC Derivatives Strategist) and Ben Fisher (RBC Midwest Sales, who works closely with the firm's macro strategists). They discuss the current, messy state of the US equity market and the pickles investors are finding themselves in. Ben moderates the discussion, which was recorded live at the RBC EPIC Conference in NYC on June 4th, 2025.
The four big topics covered:
- First, where Lori and Amy see US equity markets and volatility headed. Lori describes herself as neutral and reviews her new YE 2025 S&P 500 target of 5,730, which is driven by her valuation and earnings work and a macro backdrop that looks a bit better than it did in early April, but not as strong as it was in January. Amy highlights how both the right and left tails have gotten fatter recently, and runs through what she sees as the potential catalysts for a pick-up in volatility.
- Second, Amy and Lori's latest thoughts on investor sentiment and positioning. Amy highlights differences in recent behavior from retail investors (who were buying the dip) and institutional investors (who were more cautious and engaged in derisking and degrossing). She points out that hedging on the institutional side has not been short term in nature, due to uncertainty about when the hard data will deteriorate. Meanwhile, Lori notes that many of the investors she speaks with are in a holding pattern, waiting to see what happens next, and walks through a number of key questions that investors will be looking for the answers to in the next reporting season. She also highlights the messiness of recent investor sentiment and positioning data, which fell but never completely collapsed for institutional investors and has been rebounding rapidly after collapsing for retail investors.
- Third, Lori and Amy's thoughts on some of the biggest positioning trades in equities of late. Lori highlights why she sees the tug of war between mega cap Growth and Value continuing, the intersection of the mega cap Growth trade and US exceptionalism, and how tariffs opened a door to curiosity about regions outside the US that will be difficult to close. Meanwhile, Amy highlights increased activity regarding trades on China and Emerging Markets and how she believes that her clients are the most Euro curious she's seen in quite some time.
- Fourth, thoughts regarding the impact of the bond market on US equities. Lori runs through why 5% on 10-year yields would be a stumbling block for US equity market performance, while Amy highlights the potential for the inverse correlation between bonds and equities to break down as a key risk to monitor.
The big things you need to know:
- First, we are modestly revising our YE 2025 S&P 500 price target, taking it up 3% to 5,730 from 5,550. Our valuation and earnings models drive this number.
- Second, we view sentiment as the main risk to our call. Even though it’s been melting up in recent weeks, our sentiment model (based on AAII net bulls) is still the most constructive one in our price target toolkit, and our analysis of S&P 500 moves off the lows of the major post GFC drawdowns indicates that the index could have more room to run through year-end 2025.
- Third, we review the case for and against Small Caps, which were in focus in our meetings last week. We remain neutral as Small Caps have been derisked to a greater degree than Large Caps, making an underweight unwise, but the conditions for outperformance seem elusive.
The big things you need to know:
- First, the S&P 500 EPS backdrop has stabilized, but we still anticipate further downward revisions for 2025 S&P 500 EPS. After a preliminary model refresh, we are maintaining our 2025 S&P 500 EPS forecast of $258, which is below the bottom-up consensus of $265.
- Second, we’ve updated our S&P 500 valuation model to reflect updated RBC house views on key macro variables like interest rates and inflation. It suggests that last week’s gap up in the stock market was largely deserved, but that upside from here may be limited without another major step-up improvement in broader macro expectations.
- Third, we run through our thoughts on the Moody’s US debt downgrade from a US equity market perspective.
The big things you need to know:
- First, it was another week of stabilization on the earnings stats we track, helping to support the recent stabilization in equity market pricing.
- Second, there was a little less conversation about tariffs in last week’s earnings calls, which left some additional room for discussions on the health of the consumer and the impacts of non-tariff policy changes.
- Third, in our other weekly updates, the thing that jumps out is that when we bake in current consensus assumptions on key macro variables and bottom-up EPS for 2025, the S&P 500 ended the week roughly in line with where our model says fair value for the index should be at year-end.
The big things you need to know:
- First, earnings sentiment has stabilized a bit, helping stock prices find some footing for the moment.
- Second, we run through our thoughts on what we learned from last week’s earnings calls. We think there are two different perspectives at play on the consumer, which may be adding to investor confusion. We exited the week seeing managing tariff impacts as a work in progress, but with a greater appreciation of the work that has been done.
The big things you need to know:
- First, earnings sentiment is at an important crossroads, with the rate of upward EPS estimate revisions having fallen to 30%.
- Second, what we read in S&P 500 earnings call transcripts last week keeps us in the camp that recession is not a foregone conclusion, makes us concerned that any adverse impacts from tariffs may be felt a little later in the year or even next year, and pushes us toward the idea that the consumer is holding up but still hasn’t been unscathed.
- Third, the idea that investors are rotating out of the US assets into other geographies is supported by recent funds flows data.
The big things you need to know:
First, the stock market is still experiencing a growth scare, in our view, where it is attempting to stabilize. We see more downside if recession is priced in.
Second, we review how the process of resetting EPS expectations has begun, and run though key themes from the early reporters and companies that have presented at conferences since the Rose Garden. Our overarching takeaway from our reading is that recession is not yet a foregone conclusion but also that US equities are not out of the woods.
Third, we run through our latest thoughts on the Growth trade, which has been outperforming again, and note that it is not a clear cut call.
The big things you need to know:
- First, shortly after midnight on Friday morning, we cut our S&P 500 EPS forecast for 2025 to $258 and our YE 2025 price target to 5,550 – the price target cut was something we’d been telegraphing we’d do if the drawdown in the index broke 10% from peak for quite some time, which it did on Thursday.
- Second, as the stock market has continued to gap down, we’ve continued to highlight our tiers of fear framework for how far US equities could decline in different scenarios. We see the index falling as low as 4,900 if this remains a growth scare, but a drop to 4,200-4,500 is a reasonable way to think about where the index could fall if a recession is priced in.
- Third, our weekly valuation and flows updates provided us with some insight into why US equity markets have been gapping down so severely.
The big things you need to know:
- The team tackles some of the top questions in consumer-related conversations today, including what their company and industry level interactions and data have been telling them about the current state of the consumer, whether the consumer has been retreating or simply shifting their spend, what's happening in different consumer cohorts, what they think the biggest challenges are for the consumer at the moment, and how their companies are managing around tariffs.
- Overall, the team comes to the conclusion that while many of the issues impacting the consumer aren't new, in the aggregate the current set of pressures feels different and conditions appear to have taken a turn for the worse. Nik notes that the tone at a recent industry event was the most downbeat of all of the year's he's been attending and highlights what he believes the incremental pressures are this year. Mike highlights how his proprietary pricing data was particularly weak in February and how weakness in housing has broadened regionally. Steve points out that many issues have been used to explain consumer weakness earlier this year (i.e. weather), but that the slowing that's been underway has persisted even with some of those things now in the rearview mirror.
- On policy, all three noted that their companies have provided very little in the way of guidance related to tariffs, which will likely lead to a tricky reporting season. The team explores whether the companies in their industry will be able to pass along tariff costs via pricing, collectively concluding that it may vary by industry and will be very difficult to do in certain verticals.
The big things you need to know:
- First, trends in investor vibes were mixed last week, both in our quant work as well as last week’s investor conversations.
- Second, the median forward P/E for the S&P 500 has fallen sharply but remains well above average. We’ve also not yet seen significant adjustments to consensus EPS forecasts, which seems likely to keep confidence in P/E analysis low for now.
- Third, Small Caps (which have seen a greater degree of valuation correction) have continued to outperform Large Caps.
The big things you need to know:
- We’ve lowered our YE 2025 S&P 500 price target to 6,200 from 6,600,
- We’ve lowered our 2025 S&P 500 EPS forecast to $264 from $271.
- Among other adjustments, our new price target and EPS forecast embed the updated views of RBC’s Economics and Rates strategy team which were released last week.
- We have updated our year-end 2025 bear case for the S&P 500, which we’ve lowered from 5,775 to 5,550.
- Fourth, some of the vibes we've been tracking are starting to look too extreme to us (in terms of their negativity), but others have more room to go lower.
RBC’s Markets in Motion is the weekly podcast from Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, highlighting her latest views on the US equity market. This week, we bring you a special edition of the podcast, recorded live at the RBC Financial institutions conference on March 5th, 2025. Ben Fisher (US Equity Sales, Midwest & Macro Sales Specialist) moderates a discussion with Lori Calvasina (Head of US Equity Strategy) and Amy Wu Silverman (Derivatives Strategist) on their latest views on the US equity market outlook and what they’ve been hearing from investors.
The big things you need to know: First, we review our basic framework for thinking about drawdowns in US equities, a topic that’s been coming up in client meetings over the past few weeks, as investor uncertainty regarding the economy has increased. Second, we have refreshed the math behind our YE 2025 bear case of 5,775, specifically our valuation/EPS stress test. Third, we run through our latest updates on the vibes breakdown in the US, where investor sentiment has plunged to crisis lows on one key metric. Fourth, some of our work suggests opportunity is opening up in Small Caps, though we think it’s too early to go overweight.
The big things you need to know: First, we found more evidence of weakening investor and consumer vibes in last week’s data updates, while getting a mostly positive data point on corporate vibes, and a flattening in political vibes. Second, the rotation of funds flows from US equities to bonds and European equities strengthened last week.
The big things you need to know: First, there was very little change last week in the stats we monitor to track reporting season, aside from the continued drift lower in the bottom-up consensus 2025 S&P 500 EPS forecast to a little below $271. Second, uncertainty, policy, tariffs, and FX remained in focus in last week’s earnings calls. Third, we continued to find evidence of weakening vibes in the latest updates from the AAII investor survey, the NFIB Small Business sentiment survey update, and EPFR funds flows.
The big things you need to know: The big things you need to know: First, the earnings backdrop has softened a bit on the stats for the broader US equity market, and has also justified the rotation in performance leadership that has been seen. Second, company commentary in last week’s earnings calls highlighted the uncertain optimism that is driving US equity market performance at the moment. Third, weakness in investor sentiment and a miss on consumer sentiment stand out in our high frequency updates last week. We continue to closely monitor the vibes whose anticipated strength has been an important part of the bullish thesis on the US equity market for 2025.
The big things you need to know: The big things you need to know: First, 4Q24 earnings season looks solid on the stats so far. Second, bulls bounced back in the weekly AAII survey last week, as US equity flows stabilized.
The big things you need to know: First, the initial batch of 4Q24 earnings call commentary, which is mostly from Financials, highlights the optimism and uncertainty that are both embedded in the current outlook for stocks. Second, investor sentiment on the AAII survey continued to slip last week despite stabilization in the S&P 500 itself. Third, we continue to see some signs of mild rotation affecting US equity funds flows where we continue to see a loss of momentum. At the same time, we are seeing improvement in flows to bond funds, global equity funds, and several categories of non-US equity funds.
The big things you need to know: First, we review our thoughts on last Friday's jobs report and reaction in the S&P 500 and Russell 2000. Second, with 4Q24 reporting season getting underway, we review what we’re listening for in S&P 500 company earnings calls. Third, we run through updates on other high frequency indicators, including a new chart comparing market cap and net income concentration for the biggest names in the S&P 500.
The big things you need to know: Today in the podcast, an update on our S&P 500 sector outlook for 2025, and the results of the quarterly RBC analyst survey that we just updated in late December. Three big things you need to know: First, globally – taking into account the views of our analysts in all of our coverage regions -- our analysts tilt constructive on performance, valuations and demand, but have more mixed/neutral views on the US and non-US political backdrops. Second, our work on global equity funds flows highlights how US, growth-oriented sector, and most cyclical sector flows faded in the final weeks of 2024, while Western Europe and defensive sector flows improved marginally. Third, within the US we have upgraded Utilities to overweight and, to offset the move, have downgraded Energy to market weight. The views of our US analyst teams as captured by the survey results really drove these changes.
The big things you need to know: First, modest downward revisions have returned to bottom-up consensus S&P 500 EPS forecasts. Second, frothy US equity market sentiment has been a problem for the US equity market, but our work suggests that many investors have become cognizant of this problem and that it is starting to self-correct. Third, outside of the biggest market cap names in the S&P 500, a number of our valuation indicators have started to contract. Fourth, US equity funds flows deteriorated as 2024 came to an end.
The format of this special edition of RBC’s Markets in Motion is a little bit different from what we usually do, and runs a little bit longer than usual. In this episode, Lori Calvasina, Head of US Equity Strategy, is joined by two of her macro partners at RBC Capital Markets, Head of US Rates Strategy, Blake Gwinn, and Equity Derivative Strategist Amy Wu Silverman. With 2024 winding down, all of their outlook reports out, and too many December investor meetings behind them to even count, these three thought leaders at RBC Capital Markets came together to discuss their thoughts on the equity market, the bond market, and volatility in the year ahead. The conversation took place on December 19th, 2024. We hope you enjoy the discussion and wish all of our regular listeners a very happy New Year.
The big things you need to know: Three big things you need to know: First, positioning in US equity futures per the weekly CFTC data has taken a tiny hit. Second, consensus US GDP forecasts have moved up, along with consensus Fed Funds and 10-year yield forecasts. Third, other things that jump out on our high frequency indicators include the continued decline in bottom-up consensus 2025 S&P 500 operating margin forecasts, geographical equity fund flow dynamics, and recent sharp inflows into momentum equity funds.
Today in the podcast: Our thoughts on the outlook for the S&P 500 sectors in 2025, with a focus on those where we've made changes to our view.
The big things you need to know: First, we have upgraded Communication Services from market weight to overweight. Second, we are downgrading Health Care to market weight from overweight. Third, we are downgrading Materials from overweight to market weight.
Today in the podcast: Highlights from our 2025 US Equity Market outlook, in which we reviewed the top 10 things we’re thinking about as the new year comes into view. We won’t go through all ten, but are going to run through some of the more important highlights regarding our broader market call.
The big things you need to know: First, our YE 2025 S&P 500 price target is 6,600 – that’s our base case; we also run through our bear case of 5,775. Second, sentiment is modestly constructive on a 12 month view but also makes the case for a near-term pullback. Third, we don’t see much room for further P/E expansion but our valuation work still helps us see how stocks can move higher next year. Fourth, US equities may soon lose their appeal relative to bonds. Fifth, the US economy is at an important crossroad from a stock market perspective. And sixth, the political backdrop presents both tailwinds and possible headwinds for stocks.
Three big things you need to know: First, over the past week we’ve become increasingly convinced that a 5-10% pullback in the S&P 500 may have already started. Second, post-election company commentary has been heavily weighted to tariffs, a part of the Trump agenda that has concerned many equity investors. Third, other things that jump out from our high frequency indicators include Financials valuations that remain slightly attractive vs. the broader market.
Three big things you need to know: First, earnings season is winding down with a disappointing feel to us on the stats, though it’s admittedly not driving price action right now. Second, in our transcript reading, a mixed macro and consumer remained in focus, as companies began to highlight key policy issues they are watching post election. Third, positioning in US equity futures, for both the S&P 500 and Russell 2000, looks stretched. Valuations have some room to run, but not a ton.
Today in the podcast, we run through three things in focus in our conversations following the US election. First, we review the tailwinds for US equities that we’ve been highlighting from a Trump win, along with some of the headwinds to watch out for. Second, we highlight why we think Small Caps have at least a little bit more room to run and what we’re watching to help us know when it’s time to fade the trade. Third, we review our thoughts on the old economy, value-oriented sectors that did well on Wednesday.
We’ve recorded this on the day of the US Presidential Election, and that’s what we're focusing on today.
There are 7 big things you need to know: They focus on the set-up, the historical playbook, bottom-up policy implications per our analyst survey, our thoughts on positioning trades, one tailwind that will manifest regardless of what happens, tail risks, and our rundown of what we’ll be watching on election night and possibly the days beyond.
Three big things you need to know: First, the early S&P 500 stats are now pointing to a mildly disappointing 3Q24 reporting season so far. Second, a mixed backdrop, the need to wait a bit longer for interest rate relief, and the need to get through the election were key themes in last week’s earnings calls. Third, the US election has been in focus in our recent meetings with US-based long-only investors, who we encourage to be ready for all outcomes.
Three big things you need to know today: First, the early earnings stats are mixed for the broader market but promising for the rotation trade. Second, company commentary continues to suggest the plumbing of the economy is in good shape, with a few clogs. Third, our examination of index, sector and industry performance and trends in polling and betting market averages suggest to us that several traditional Trump trades (specifically, Small Caps, Energy, Financials) have remained intact.
The big things you need to know: First, we’ve done some housekeeping on our S&P 500 EPS estimates for 2024 and 2025, resulting in very modest changes. Second, we highlight the two things we’re paying the most attention to in reporting season – specifically, qualitative color from companies on hot macro topics and whether mega cap Growth can maintain its earnings dominance. Third, we highlight what else jumps out from our high frequency indicators on sentiment and the US election.
Two big things you need to know: First, globally our analysts are generally constructive on performance, valuations and interest rates, with Materials most in favor and Consumer Staples most out of favor across all of the questions we asked. Second, within the US we are reiterating our overweights on Financials and Materials, upgrading Health Care to overweight, and downgrading Utilities to market weight. Energy remains a tactical overweight but goes on downgrade watch.
The big thing you need to know: Small Caps got a boost from the better-than-expected jobs report on Friday, reinforcing our belief that a return of economic tailwinds is the catalyst they need to take valuation and positioning to the next level.
Three big things you need to know: First, our survey results, which are bottom-up in nature and driven by domestic policy views, imply that the event is relevant to US equity markets, but perhaps less so than some market participants may believe. For our US analysts, a Republican sweep was seen as the most bullish outcome, while a Democratic sweep was seen as the most bearish outcome, but the key thing to note is that the tilts were extremely mild. Second, some of the traditional Trump trades continue to emerge in policy assessments and sector views. Among our US analysts, Energy and Financials had some of the most bullish tilts in a Republican sweep scenario, and some of the most bearish tilts in a Democratic sweep scenario. Third, in terms of our own broader market call, we’ve viewed the elections as creating near-term uncertainty in the US equity market and the potential for some short-term choppiness, but the survey results add to our growing belief that the thing that may matter most for US equities (for 2024) is getting past the event so companies and investors know what they are dealing with.
Two big things you need to know: First, valuations continue to look full for 2024 on the S&P 500, but our model argues for upside in 2025. Second, there’s a lot of little stuff to talk about right now. We run a few of the key updates on our high frequency indicators including those on the rotation trade, small caps, and the election.
Two big things you need to know: First, a few things (besides renewed optimism over a 50 bps cut) went right for Small Caps last week. Second, we highlight our current, top-down US equity market read throughs from the domestic policy platforms of the Harris and Trump campaigns. The longer-term signal their platforms are sending is more interesting to us than the noise around any shorter-term policy related sector trades.
Welcome to RBC’s Markets in Motion podcast, recorded September 9th, 2024. I’m Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets. Please listen to the end of this podcast for important disclaimers.
Three big things you need to know:
First, Friday’s jobs report added to investors’ uncertainty regarding the labor market, but the data point that concerned us from last week was the spike in Tech layoffs in the Challenger report.
Second, election uncertainty has persisted with policy getting greater attention from both sides. We run through our US equity market read throughs from Trump’s economic speech last week.
Third, in our discussion of other updates from our high frequency indicators, we review what we’re watching in terms of potential near-term downside levels for the S&P 500, sentiment, and the Semis trade.
If you’d like to hear more, here’s another 6 minutes. Now, let’s jump into the details.
Starting with Takeaway #1: Employment Uncertainty Has Grown After Friday’s Jobs Report, But The Spike In Tech Layoffs In The Challenger Report Spooked Us The Most Regarding Stocks
- RBC’s economics team noted that while the report “doesn’t point to a sharp contraction in the labor market, it also gave no indications that the broader cooling trend – which is not welcomed by the Federal Reserve – has in any way run its course.” From our seat in US equity strategy, we generally agree with the idea that the jobs report is still consistent with cooling and normalization as opposed to an economy on the cusp of recession.
- That being said, we were a little spooked by some of the details in the Challenger layoff report that came out earlier in the week. The overall level of layoffs moved up in August, but remained well below the spikes associated with past recessions, and was even a bit below the moves higher seen in 2023-2024 and 2015.
- What caught our attention was the spike in layoffs for Technology companies which wasn’t as bad as those seen in late 2022 and early 2023, but otherwise rivals some of the worst spikes this industry has seen over time. This primarily worries us in regards to the Tech sector itself and the broader market by way of the rotation trade. Though layoff announcements moved up slightly in a few other industries, those were generally mild relative to history.
Moving on to Takeaway #2: Election Uncertainty Persists, With Policy Getting Greater Attention
- We continue to see the US election as a key challenge that the US equity market will need to work through in coming months, due to the uncertainty that the event has injected into the outlook. We do usually see a pullback in the S&P 500 in September and October of Presidential election years, with a rebound afterwards.
- Thinking about today specifically, a number of companies referred to this idea that the election has injected some uncertainty into the outlook in their recent earnings calls.
- Meanwhile, Harris has pulled ahead of Trump in the PredictIt betting market and RCP polling average, but the race still looks quite close on these data sets, as well as in the polling for the swing states.
- We do believe the stock market has been paying attention to the event given the alignment we’ve continued to see between S&P 500 performance and expectations that Trump will win in betting markets.
- One of the primary things the stock market cares about regarding the election is domestic policy, and investors have been getting new information on the policy leanings of both Harris and Trump over the past few weeks. In our latest report, we’ve recapped our early thoughts on the stock market read throughs of Trump’s domestic policy agenda as described in his speech to the Economic Club of New York last week. We think it’s premature to put on any significant sector or industry trades based on the domestic policy ideas being by either candidate, discussed particularly since we expect Congress to be split leaving little room for major news laws. Nevertheless, a few things jumped out to us:
- First, Trump’s linking of a lower corporate tax rate of 15% to domestic production was something we hadn’t heard before, and we confess that we aren’t entirely sure what companies would be eligible for the lower corporate tax rate Trump discussed after Thursday’s speech or how the S&P 500 would be impacted in terms of profitability. If we were to take down the effective tax rate by 6% in our S&P 500 earnings model for 2025, to approximate the Trump proposal, we estimate that our 2025 S&P 500 EPS forecast could rise by more than 7%. After Thursday’s speech, however, we no longer think that’s the right way to think about the math as we suspect different companies, industries, and sectors could be impacted differently.
- Second, Thursday’s speech gave us a better sense of which sectors and industries we should be watching closely from a Trump perspective.
- Industrials and Materials remain obvious ones to monitor given Trump’s attention to the manufacturing economy, rescinding unspent IRA money, and tariffs, which got a lot of attention in the speech.
- Others include Energy - even though we knew this issue was in focus for Trump, we were still surprised by the emphasis on expanding production in his remarks.
- Homebuilders - we found the comments he made on expanding housing affordability and supply interesting given the focus on the issue by Harris recently,
- Tech/AI and Utilities - we found Trump’s comments on the US needing to dominate AI and the need for more electricity to make it happen noteworthy.
- Health Care also jumped out to us, but because it was barely mentioned throughout the speech, suggesting to us that it’s not a high priority.
- Similarly, even though Financials has tended to be viewed as a Trump trade, it is worth noting that there was also virtually no discussion of this sector that we can recall in his speech on Thursday, aside from the potential link to the broad desire for deregulation.
Tuesday’s debate provides an opportunity for investors to get more insights into both candidates’ domestic policy agendas, but only if the moderators choose to dig in there.
Wrapping up with Takeaway #3: What Else Jumps Out From Our High Frequency Indicators
- The decline in the S&P 500 so far in September of 4.25% is right in line with the five-year average full month return for the index in September, and the full month September decline in the index in 2023.
- If the September pullback in the S&P 500 continues, we’ll be keeping a close eye on the index around the 5,100 level, which would represent a 10% drawdown from the July high and decline in percentage terms similar to what was experienced in Fall 2023 . We see scope for further downside, or at least choppiness, in the near-term given the five big pressures we’ve been highlighting for US equities seasonality, sentiment, the election, the typical market volatility around rate cuts, and rotation. For now, we still think any further damage would be contained within a 10% garden variety pullback range. But if hard landing fears continue to escalate, the risk of a growth scare decline in the 14-20% range, similar to 2010, 2011, 2015-2016, and 2018, will also admittedly rise.
- REITs, Utilities, Staples and Financials are outperforming the most within the S&P 500 so far in 3Q24, followed by Health Care. These represent classic defensive parts of the US equity market, along with a big pocket of cyclical value. Other than the fact that these are natural beneficiaries of the rotation out of mega cap Growth names, two things jump out to us about these sectors.
- First, Financials is an area that has almost always outperformed in the 2nd half of Presidential election years within both Large Cap and Small cap.
- Second, most of these classic defensives (ex REITs) tend to outperform following first Fed rate cuts.
- We were surprised to see that investor sentiment and positioning got even more stretched last week. The four-week average for AAII net bulls rose to 21.5% (barely below the 1 standard deviation mark) after the weekly data point came in at 20.4% (page 30).
- Lastly, we’re keeping an eye out for opportunities in some of the parts of the US equity market that are getting hit hard right now. One of these that we’re watching closely is the Semis & Semi Equipment industry. Despite the pain that’s been inflicted on this space, it still looks problematic on our industry work. Valuations for the median stock in this industry in the Russell 3000 remain elevated, and earnings revisions trends remain negative.
That’s all for now. Thanks for listening. And be sure to reach out to your RBC representative with any questions.
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.
Three big things you need to know: First, last week’s price action relieved some pressures on the stock market, but didn’t solve its major problems. Second, earnings remain solid with no major deterioration in corporate tone. Third, we’d be more selective with value-oriented defensive sectors going forward.
Three big things you need to know: First, earnings season has been fine so far, and what we’ve read has kept us in the “tired goldilocks” camp. Second, we run through the latest updates for the indicators we’re monitoring in the rotation trade. We are mindful of headfakes, but think the trade may still have some room to run in the short term. We also still think whether a durable multi-year leadership transition is underway remains to be seen. Third, individual investor sentiment took a big hit last week per the AAII survey, while US equity flows have remained strong, keeping us on guard for an end to the current pullback.
Four big things you need to know: First, investor sentiment has gotten as extreme as it did last August and this past March. Second, earnings season is off to a solid start, but we are still looking for some additional evidence in support of the idea that we’re seeing a durable leadership shift rather than a short-term rotation trade. Third, we’ve been monitoring our other high frequency indicators for clues on the rotation trade. Some suggest the rotation trade has room to run but others are less clear. Fourth, we highlight what we’re watching in the equity market regarding the US election and our initial thoughts on how Biden’s decision to withdraw may impact US equities.
Two big things you need to know: First, we see 2Q24 reporting season as a key test for the rotation trade that attempted to start up again last week. Second, we remain worried about a pullback in the S&P 500 given the latest developments on our sentiment and positioning work, but timing seems a bit more complicated due to last week’s CPI print and surge in optimism on Fed cuts.
Three big things you need to know: First, we are lifting our YE 2024 S&P 500 price target to 5,700 from 5,300, which we would characterize as a nervous raise. Second, we think the risks of a short-term pullback in the S&P 500 are growing, similar to what occurred in April. Third, on positioning, we think it will be tough for the US equity market to see a sustainable leadership transition away from mega cap Growth until we are through the economic soft patch.
Three big things you need to know: First, the Duke CFO survey highlights how C-Suite confidence has remained steady, with monetary policy and automation in focus. Second, our new valuation stress test suggests the S&P 500 has been baking in optimistic views on inflation, interest rates, and the Fed. Third, recent funds flow trends point to a lingering desire for a shift in market leadership.
RBC’s Markets in Motion is the weekly podcast from Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, highlighting her latest views on the US equity market. This week, we are excited to have Chris Louney, Commodity Strategist on RBC’s Global Commodity Strategy and MENA Research team, guest hosting this week’s episode while Lori is out.
Three big things you need to know: First, while gold prices have had a strong rally this year, having hit record highs last month, we remain cautious. We think that gold is overvalued from the perspective of a number of key macro drivers and that there are some unrealized vulnerabilities to the pillars of gold’s rally. While we are cautious, it’s more because we do not think gold should be at such high levels just yet. Second, while May and June have seen a less weak and more rangebound trend for gold-backed ETPs, we are not convinced that investors are beginning to follow through just yet. Investors sold their gold holdings as prices rallied, and we’ve yet to see a sustained return to buying. Third, central bank demand has been a key pillar to the gold rally but as China’s pause in purchasing showed, there are vulnerabilities. To be clear, we still think that central bank demand will continue to be strong, but there are reasons to be cautious on the volume at record prices and after such a sustained period of strength.
Three big things you need to know: First, the continued outperformance of mega cap Growth stocks has been logical, but still somewhat jarring to us. Second, Small Caps broke to clear new lows relative to Large Caps last week as risks piled up including a Fed that seems inclined to cut just once this year. We’d stay on the sidelines with Small Caps for now. Third, investor sentiment continues to concern us, and we’ve added consumer sentiment to our list of worries for the stock market following the Michigan survey miss. One offset is that the US may benefit from safe-haven seeking if flows to European equity funds deteriorate.
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.
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.
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.
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).
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.
The big things you need to know: Three big things you need to know: First, after a weak start to 1Q24 reporting season, it has settled into a groove on the stats. Second, we review our thoughts on key themes on company earnings calls so far. Third, we highlight what’s jumping out on our high frequency indicators. This includes our main sentiment indicator (which we still think hasn’t fallen enough) and our rundown of the key headwinds and tailwinds for Small Caps (which both weakened last week).
The big things you need to know: First, we’ve just completed our quarterly survey of RBC’s equity analysts around the globe and found that optimism on performance persists for most sectors and coverage regions, despite the challenges associated with higher interest rates. Second, with a fresh set of survey results in hand we are making three changes to our sector recommendations. Within the US (and S&P 500 specifically) we are upgrading Materials to overweight, downgrading Health Care to market weight, and downgrading REITs to underweight.
The big things you need to know: First, investor sentiment has taken a bit of a hit, but it’s too early to say the pullback is over. Second, while we continue to expect the pullback to bottom out in the 5-10% range vs. recent highs, we’ve taken a look at S&P 500 performance around recent wars to gauge potential downside risks if we are wrong in that assumption. Third, it’s been a rough start to 1Q reporting season as companies beating consensus EPS forecasts have been underperforming significantly in terms of immediate price performance. Fourth, we’ve been surprised to see Large Cap Growth underperforming given the recent move up in 10-year yields, and run through the reasons (besides crowding and overvaluation) that we think this is happening.
The big things you need to know: First, geopolitical concerns are spiking at a time when stocks already seemed due for a pullback. Second, the rotation trade has just gotten a lot more complicated. Third, companies have been keeping expectations low on earnings. Fourth, our valuation modeling suggests some modest downside risk to the stock market if we don’t get cuts, and a more significant hit if we get more hikes. Fifth, Small Caps may be stuck in a holding pattern for a while. Sixth, Biden has closed the gap with Trump in betting markets. Seventh, US equity flows have fizzled.
Two big things you need to know: First, the Energy sector still looks attractive to us, even after its big move in March, and we remain overweight. Second, Trump has lost some momentum in swing state polling, challenging a key assumption of many non-US investors.
Three big things you need to know today: First, we lift our YE 2024 S&P 500 price target to 5,300 (from 5,150). The most constructive model in our tool kit indicates upside to ~5,400, which represents our bull case if our base case is too conservative. Second, we continue to see some conflicting cross currents for stocks. Among the five models that we use, our economic, valuation, and cross-asset work are sending the most constructive signals, while our sentiment and politics work are less enthusiastic. Third, we lift our 2024 S&P 500 EPS forecast to $237 (from $234), which remains slightly below the bottom-up consensus.
Two big things you need to know today: First, our work on the R2000 relative to the S&P 600 (sparked by Small Cap PM concerns about low quality) adds to our belief that the US came close to recession in 2022. Second, CFTC buyside positioning in US equity futures rebounded last week ahead of the Fed, highlighting increased risk of a melt-up in the broader US equity market.
Three big things you need to know: First, Energy has been a top S&P 500 sector since January. We like its attractive valuations, improving funds flows, and role as an inflation hedge in our overweights. Second, Large Caps are starting to look a little better than Small Caps on a few of the earnings-related metrics that we track, suggesting to us that Small Caps’ sluggish performance of late isn’t all about Fed and inflation fears. Third, sentiment continued to slip on one of our main sentiment models from elevated levels.
Three big things you need to know: First, one of our key sentiment indicators has started to retreat after hitting extreme levels, which has coincided with a stealth rotation in leadership. Second, we’re starting to see a more broad-based improvement in US GDP expectations, which we see as supportive of continued rotation in stock market leadership. Third, Biden put out his wish list in Thursday’s State of the Union, giving equity investors a taste of his goals in a potential 2nd term.
RBC’s Markets in Motion is the weekly podcast from Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, highlighting her latest views on the US equity market. This week, we are excited to have Chris Louney, Commodity Strategist on RBC’s Global Commodity Strategy and MENA Research team, guest hosting this week’s episode while Lori is on vacation.
Three big things you need to know: First, in our most recent analysis of global commodity investor flows, we have observed that total commodity investor AUM has started off the year on a weak note. Commodity-linked exchange traded products have continued to decline, led by gold, and commodity index AUM also weakened last month. This has set 2024 up for quite the balancing act, but we remain hopeful.
Second, with gold playing such an outsized role in the weakness dominating commodity AUM, it may be surprising that gold prices have actually held up quite well. We have continued to call out gold’s price resilience, especially in the context of investors having remained on the sidelines. This compared to the gold-positive narrative of eventual rate cuts has left gold itself facing quite the balancing act.
Third, a balancing act that has for the most part not played out in a commodity’s favor so far this year is US natural gas. It has touched lows recently amid weak weather-linked demand, buoyant supplies to date, and general bearish sentiment. We have described it as a commodity that has fallen a bit too far, seemingly waiting for a catalyst, but are recent headlines enough?
Three big things you need to know: First, 4Q23 reporting season stats are similar to what we’ve described over the past few weeks with fewer earnings beats than last quarter, muted stock price reactions following earnings prints, and further compression in the forecasted growth rate embedded in consensus earnings expectations for 2024. Second, in our review of last week’s S&P 500 earnings calls the tone was mixed on the macro, negative on China, and had a positive tilt on the consumer.
Third, two of the charts in focus in our Europe/UK meetings last week included our chart showing how the earnings dominance of the top 7 names in the S&P 500 is fading (which may help spark leadership rotation down the road) and our chart showing how net bullishness on the AAII survey may be heading for a 2-standard deviation event (delaying the pullback we have been anticipating).
Three big things you
need to know: First, with reporting season almost halfway done, bottom-up consensus expectations for EPS growth in 2024 have shrunk to 9% from 11% – a combination of better-than-expected results for 2023 and a modest dampening of enthusiasm for 2024’s outlook. Second, a murky macro backdrop, elevated costs, and China challenges have been in focus in recent earnings calls along with a better monetary policy outlook. Third, in our high frequency indicators, things that caught our attention included the worsening in the sentiment backdrop for stocks last week and mostly positive data regarding the health of the economy and labor market.
Three big things you need to know: First, we’d describe 4Q23 reporting season as a mixed bag so far. Second, in our transcript review we were struck by the wide range of views on the macro backdrop and outlook as well as the continued emphasis on the challenges associated with inflation and higher costs. Third, things that jumped out in our high frequency indicators last week included some modest improvements on some of our sentiment and valuation models. Plus, one bonus thought on the US Presidential Election.
Three big things you need to know: First, EPS growth in the top 7 names in the S&P 500 is expected to continue outpacing the rest of the index in 2024 and 2025, but to a lesser degree than we saw in 2023. Second, companies have tried to strike an optimistic tone in the first batch of 4Q23 earnings calls, with consumer resilience, macro risks, and the theme of normalization emphasized. Third, the thing that jumped out to us the most in our high frequency indicators last week was the strong reading in University of Michigan consumer sentiment, which stock market performance has been closely correlated with post COVID.
Last week, ahead of earnings, we updated our thoughts on sectors for 2024 for both the US as well as other geographical regions under RBC’s coverage, Europe, Canada, and Australia. The work was based on our own top-down quantitative analysis on earnings revisions, valuations, and macro fundamentals, as well as the results of a survey that we conducted of RBC’s industry analysts in late December and early January.
Three big things you need to know: First, across the globe most of our analysts are optimistic on performance in the year ahead, with favorable views on the impact of potentially lower interest rates and, to a lesser degree, favorable views on valuations. Second, in the US, the only region where we do formal strategy sector recommendations, we remain overweight Financials, Energy, and Health Care. We downgraded Tech to market weight, upgraded Consumer Discretionary to market weight, and upgraded Utilities to overweight. Third, in Europe, Canada, and Australia our analysts’ top sectors according to the survey varied, but Utilities was among the top sectors in the eyes of our analysts in each.
We've updated our thoughts on the 2024 outlook for the US equity market, focusing on the top 10 things we’re thinking about as the new year gets underway. The biggest things you need to know: First, in December we became concerned about the possibility of a near-term pullback in the US equity market given deterioration in our sentiment work, and that remains the case today. Second, despite these near-term concerns, we remain constructive on the S&P 500 for the full year and recently revised up our YE 2024 S&P 500 price target to 5,150 from 5,000. Third, we see a mix of tailwinds and headwinds for US equities in the year ahead. Tailwinds include valuations that can stay higher than many investors realize. Headwinds include highly bullish sentiment, expectations for a sluggish economy, and uncertainty around the 2024 Presidential election. Fourth, we continue to see a number of problems for the Large Cap Growth trade and we give an edge to Value and Small Caps in the year ahead. But for a rotation into Value and Small Caps to be sustainable, US economic expectations need to improve.
Today in the podcast, our last of 2023, two big things you need to know: First, with just a few trading days left to go in 2023, the S&P 500 is close to a level that our valuation model has been suggesting is a reasonable one. Second, while we remain constructive on the year ahead, several charts that we track regularly are starting to suggest that the rally in the S&P 500 is due for a pause.
Today in the podcast, three big things you need to know: First, similar to the S&P 500, R2000 returns tend to be positive but modest in Presidential election years. Second, the valuation appeal of Small Caps runs deep and exists within both Growth and Value using both equal weighted and market cap weighted P/E’s. But Small Caps’ valuation appeal has only recently emerged on equal weighted P/E’s, helping explain why Small Caps have had a difficult 2023. Third, investor sentiment is on the cusp of looking overly enthusiastic again on the weekly AAII survey, restraining our enthusiasm for the US equity market in the near-term.
Today in the podcast, our initial 2024 outlook. Our year-end 2024 S&P 500 price target is 5,000, for a 10% gain. Today the podcast will work a little bit differently, as we’re running through the top 10 things we’re thinking about in US equities as the new year comes into view. Most of these focus on the math that gets us to 5,000.
Three big things you need to know today: First, Growth sectors are typically the biggest beneficiaries of declining 10-year Treasury yields. This analysis was in focus in our meetings last week where investors were keen to explore what to own if yields have peaked. Second, Small Caps, where balance sheet concerns have overshadowed attractive valuations, were also in focus in our meetings last week. Friday’s unemployment report also provided another reason to be taking a look at Small Caps now. Third, there were a lot of interesting updates in our high-frequency indicators last week, with the most important one being that the deterioration in US equity investor sentiment finally has started to look too extreme. The stock market has had a strong start to November, and the move seems deserved in light of what we’re seeing in most, though admittedly not all, of our sentiment indicators.
Today in the podcast, we take a deep dive into the stats and commentary for 3Q23 reporting season, as of late last week with 45% of S&P 500 results in. Three big things you need to know: First, the S&P 500 stats simply aren’t strong enough to get the US equity market out of its recent malaise. Second, Small Cap trends are pretty similar to those in Large Cap, which is good for Small Caps because Large Caps no longer have an EPS advantage. Third, in our transcript reading the overarching theme so far is one of bending, not breaking, but the pessimistic tone is striking.
Today in
the podcast, we take a deep dive into the outlook for the US equity market from
the S&P 500 all the way down to Small Caps. Three big things you need to
know: First, we are sticking with our YE2023 S&P 500 price target of 4,250.
Though upside risks remain, downside risks have grown, the outlook has become
cloudier and we don’t think the pause in the S&P 500 rally that we called
for in early August is done yet. Second, we continue to believe that Large Cap
Growth is in need of a tactical correction, but we also acknowledge its
longer-term fundamental appeal which is why we think the leadership transition
has been so tough. Third, Small Caps remain intriguing from a valuation and
earnings perspective, but have been dragged down by balance sheet concerns,
rising bond yields, and lingering economic angst.
Three big things you need to know today: First, we are lifting our S&P 500 EPS forecasts to $223 (up from $220) for 2023 and to $232 (up from $229) for 2024. Second, 3Q23 reporting season is off to a good start in terms of stock price reactions, even though EPS revisions have turned slightly negative and company commentary among the early reporters suggests that the uncertain macro is taking a toll. Third, other things that jump out from our high frequency indicators include an improvement in equity investor sentiment last week and the return of outflows from US equity funds.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
This week in the podcast, we’re focusing on the debt ceiling. Two big things you need to know: First, we see debt ceiling drama as a contributor to choppiness in US equity markets later this year, though we ultimately expect a deal. This was a hot topic in our meetings with UK investors last week. Second, we see Health Care as one of the most vulnerable sectors in the short term but would be buyers on weakness.
Today in the podcast, thoughts on 1Q23 reporting season which got underway last week. Two big things you need to know. First, 1Q23 reporting season has gotten off to a decent start. We review what jumps out to us on the stats so far. Second, the tone in company commentary on earnings calls has been balanced so far. We run through key themes in our reading from last week.
Today in the podcast, we tackle hot topics that crossed our desk last week. Three big things you need to know: First, some US equity investors have been frustrated that the stock market seems to be ignoring an upcoming recession, but it’s happened once before. Second, we are looking forward to an earnings season dominated by new hot topics, as the discussion about inflation and its underlying sources has begun to fade in company commentary. Third, a few other things that jumped out from our high frequency indicators last week are all more tactical in nature - elevated Nasdaq futures positioning, stabilization in Banks, better earnings revisions trends for Growth than Value, and the weakening rotation into non-US equities.
Today in the podcast we’re talking sectors, following the release of the results of our latest RBC analyst survey which we blend with our own top-down strategy tools to arrive at our sector recommendations.
Three big things you need to know:
- First, in our latest survey, taken in late March and early-April 2023, RBC’s US equity analysts were a little north of neutral in their outlooks for performance over the next 6-12 months.
- Second, on the performance outlook, our analysts were most constructive on Utilities and Health Care, followed by Energy and Tech, with the weakest outlooks for Consumer Staples, Industrials, and Consumer Discretionary.
- Third, the combination of our analysts’ latest views, our ESG Strategy team’s sector scorecard, and our own macro tools keep us overweight Utilities, Health Care, Energy, and Tech, and underweight Consumer Staples and Consumer Discretionary. We have also downgraded Financials to market weight.
This week in the podcast, we run through the most interesting things that crossed our desk last week which felt like one in which the equity community collectively exhaled. Two big things you need to know:
- First, according to the latest Duke CFO survey, the C suite was were becoming more optimistic before SVB and was looking ahead of 2024 as a recovery year, while expectations for sources of inflation were dimming.
- Second, things that jumped out from our high-frequency indicators last week include the decline in bond market volatility off highs consistent with past bottoms in the stock market and the stabilization of performance for banks and small caps, which suggest to us that sentiment may be starting to heal. Both are good signals for the stock market.
Today in the podcast, we have updated thoughts on sectors, sentiment, and small caps. Three big things you need to know: First, S&P 500 Tech sector valuations have room to run, while EPS and revenue revisions have turned slightly positive – supporting our continued overweight on the sector. Second, the body of our sentiment work continues to suggest fear has been approaching potential peak levels, but falls short of providing US equity investors with an all-clear. Third, other things that jump out from our high frequency indicators include how economic and earnings forecasts continue to anticipate a 2024 recovery, the return of high quality leadership, and how Small Cap performance relative to Large Cap is at an important crossroads.
Welcome to RBC’s Markets in Motion podcast, recorded March 6th, 2023. I’m Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets. Please listen to the end of this podcast for important disclaimers.
Ahead of RBC’s Financial Services conference this week, today in the podcast we’re digging into our thoughts on the Financials sector, which we remain overweight. Three big things you need to know: First, Financials has been one of the best performing sectors over the past 6 months. Second, we think the sector is an attractively valued recovery play with a positive shareholder return profile, which history suggests should benefit from a Fed pause. Third, near-term challenges for the sector, and longer-term risks to our view, include the earnings forecast downgrade cycle the sector is in the midst of and the moderation in inflation that our economists continue to anticipate.
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Today in the podcast, a refresh of our 2023 outlook. The three big things you need to know: First, we’re sticking with our 4,100 YE 2023 S&P 500 target. We continue to view 2023 as another year of messy post-crisis normalization, similar to the 2010-2011 and 2002-2003 periods. Second, we see a relatively balanced risk/reward between Growth and Value for the balance of the year, though Growth is likely to bear the brunt of renewed inflation/Fed fears in the very near-term. Third, we continue to prefer Small Caps to Large Caps, though we admit that the setup for Small Caps is less compelling than it was last July when we turned overweight Small Caps.
This week in the podcast, three big things you need to know: First, we see the drama in DC over the debt ceiling as a potential risk to keep an eye on for US equities later this year. Second, mixed messages persisted in last week’s earnings calls, with a slightly more positive tone than the prior week. Third, the rebound underway in investor sentiment, which has helped stocks stay resilient, still appears to be middle innings.
This week in the podcast, we reflect on the most interesting question we received last week, and our latest thoughts on earnings. Three big things you need to know today: First, low quality leadership has returned, something that’s normal after recession lows have been put in. Second, macro themes were muddled in last week’s S&P 500 earnings calls helping explain why the rally has stumbled a bit. Third, earnings related data points continue to highlight near-term softening at the same time that a case for an earnings recovery in 2024 is emerging, highlighting the conflicting cross currents equities are grappling with.
This week in the podcast, we touch on hot topics and interesting things that jumped out in our inbound client questions and high frequency indicators. Four big things you need to know: First, recent sector leadership within the S&P 500 is consistent with what we’ve seen in the past after final Fed rate hikes. Second, we continue to find that investors are interested in debating what kind of P/E multiple the S&P 500 deserves in light of current interest rate and inflation assumptions. With this in mind, we’ve refreshed our valuation model which makes the case for valuation expansion as inflation moderates. Third, earnings revisions trends are getting less negative for most S&P 500 sectors, suggesting that sentiment around earnings is improving at the margin, helping explain why the stock market has surged despite estimates continuing to fall in dollar terms. Fourth, we highlight what jumped out from our high frequency indicators last week. Correlations within the S&P 500 and Russell 2000 are falling, and the most popular stocks in hedge funds are outperforming – positive data points for stock pickers and broader US equity market returns.
This week in the podcast, we highlight the most interesting question we got last week, some thoughts on earnings, and updates on our high frequency indicators. Three big things you need to know:
- First, layoffs for Tech are spiking, a necessary step in the bottoming process for the stock market, while industrial layoffs remain low, supporting the soft landing thesis.
- Second, as we combed through the earnings data, a case for stocks may be starting to emerge on 2024 EPS.
- Third, we review what jumped out the most on our high frequency indicators last week in terms of sentiment, valuation, and performance, which generally supports the soft landing thesis and suggest that last week’s strong move in US equities was justified.
Today in the podcast, we reflect on hot topics and some of the most interesting things we saw and heard last week for the early reporters and our high frequency indicators. Three big things you need to know: First, the S&P 500 earnings backdrop has continued to soften, a problem for stocks in the very near term. Second, we review key themes we’ve been seeing and reading in our transcript review – which make the case for some near-term indigestion in the market. Third, we run through key developments in our high frequency indicators – which generally tilt positive and add to our conviction that any near-term indigestion in stocks from earnings will be temporary.
Two big things you need to know: First, 2023 EPS forecasts have continued to soften, with former leadership sectors like Energy finally taking their lumps by participating in the downward revision cycle. Second, S&P 500 stocks with high international revenue exposure have been outperforming domestically oriented companies, as their earnings revisions trends have improved at the same time earnings revisions trends for the domestic bucket (another former leader on performance until recently) have finally started to deteriorate.
Today in the podcast, we run through some of the most interesting questions we got from US equity investors last week as 2023 got underway. Four big things you need to know: First, we’ve seen the most discussion about this year’s tax policy changes from Industrials, Financials, Energy and Utilities. Second, the three major growth/TIMT centric sectors account for almost all of the S&P 500’s decline in 2022, but the Tech sector is still a positive contributor to the index on a 3 year basis. Third, the malaise in Tech and leadership by defensive sectors may persist until the market starts to sense that a bottom in ISM manufacturing is close. Fourth, Small Caps are off to a solid start to the year. We think that will continue despite last week’s downtick in ISM manufacturing.
Three big things you need to know: First, our analysts have a slightly positive tilt in their outlooks for performance over the next 6-12 months, as well as on other hot topics. Second, on our survey our analysts were most constructive on the performance outlooks for Health Care and Energy, followed by Tech, Utilities, and REITs, with the weakest outlooks for Consumer Staples, Industrials, and Consumer Discretionary. Third, in terms of our own US equity strategy sector recommendations, which leverages our analysts’ views as well as our own tools, we are overweight Energy, Financials, Health Care, Utilities, and Technology, and underweight Consumer Staples and Consumer Discretionary.
Today in 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 run through the main topics in our conversations with European based equity investors last week. Second, expensive US valuations relative to Europe are another problem for the US equity outlook in 2023. Third, we highlight initial thoughts on potential sector beneficiaries of a weaker US Dollar and China reopening.
Today in the podcast, our thoughts on the 2023 outlook for the US equity market. Three big things you need to know: First, our year-end 2023 S&P 500 target of 4,100 is unchanged, though we have lowered our 2023 S&P 500 EPS forecast by roughly 4% to $199. Second, we continue to anticipate choppy conditions in US equities over the next few quarters. Third, in terms of higher-level positioning, we prefer US equities over non-US equities, Value over Growth, and Small Cap over Large Cap.
Today in 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 generally see last week’s cooler-than-expected inflation print as constructive for US equities, with some caveats. Second, while we see the anticipated outcome of the midterm elections as supportive of stocks, we find that we’re less excited than some as we think a divided government has been getting baked in since the mid-October lows and worry that any incremental upside in 4Q will borrow against 2023’s gains. Third, 3Q22 reporting season has revealed a softening of the earnings backdrop, with the best trends in Energy and Small Cap. Please note that Markets in Motion will be taking a break next week for Thanksgiving.
In this edition of the podcast, we pull together and update our thoughts on what the event means for US equity markets. Three big things you need to know. First, we see the midterms as a modest positive for stocks if the return of Republican control is limited to the House and a bigger positive if Republicans take back control of both chambers. Second, we highlight potential sector beneficiaries if things go well for Republicans. Third, we highlight why we agree with the consensus narrative on the midterms and its stock market impact, and also run through the risks to the consensus narrative that we see.
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.
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.
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.
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.
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).
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.
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.
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.
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.
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.
Today in the podcast, our takeaways from our review of the 2Q22 stock-level holdings of more than 300 hedge funds based on the 13f’s that were recently released. Three big things you need to know: First, the performance of the most popular S&P 500 stocks in hedge funds has started to weaken after initially showing some signs of stabilization in late 2Q – a potentially negative signal for the broader market in the near-term. Second, hedge funds began 3Q22 with overweights to cyclicals and commodities that were at post GFC highs, overweights to defensives that were below peak, and underweights in secular growth – something that tells us the longer-term opportunity remains in the Growth trade. Third, the performance of the most popular Russell 2000 stocks in hedge funds has started to stabilize – an admittedly conflicting, positive signal for stocks.
Today in the podcast, we reflect on some of the most interesting things we saw last week in terms of insightful charts and questions plus the high-frequency sentiment, economic, and political indicators we track. Three big things you need to know: First, our chart of the week highlights how the S&P 500 has been able to establish major bottoms in past periods of extreme stress before EPS forecasts were fully cut. Second, our question of the week addresses investor concerns that valuations no longer look appealing for the stock market following the big summer rally. Our work indicates that S&P 500 valuations are above average but below recent major peaks, while Small Caps still look attractively valued, telling us valuation pressures are not sufficient to call an end to the summer rebound just yet. Third, what jumps out most in our sentiment work is that Nasdaq futures are starting to look overbought in the weekly CFTC data for asset managers, a negative data point for the market, but that positioning in S&P 500, R2000, and Dow contracts are still in the early days of their recoveries, a positive signal.
Today in the podcast, a few thoughts on the composition of the snap back in stocks, where the earnings band-aid may have been ripped off within Small Cap, and the thing that caught our eye in our sentiment indicators. Three big things you need to know: First, low quality has started to work within Large Cap, something that’s frustrating investors, but began for Small Cap in June and typically happens after stocks have found their mid recession bottom. Second, we’ve been getting asked by Small Cap investors about where earnings sentiment has been most depressed within the Russell 2000 – similar to Large Cap it’s a number of key consumer/Tech/cyclical groups. Third, what jumped out most in terms of our sentiment indicators last week is that consumers of all political affiliations are feeling a little bit better in August, helping consumer sentiment stabilize a bit in the University of Michigan survey.
Today in the podcast, we highlight the most interesting chart we saw last week, the most interesting question we got last week, and some noteworthy shifts we’re seeing in some of the high frequency indicators that we track. Three big things you need to know: First, the most interesting chart we saw last week highlights how recession talk among S&P 500 companies is back to 2020 highs. Second, the most interesting question we got last week was on the 1% stock buyback tax in the Inflation Reduction Act. Third, our sentiment indicators, which have been a contrarian buy signal for stocks, are showing some signs of healing which is a positive for the stock market, but some of our political polling indicators are starting to shift in a way that’s unfriendly for stocks and are telling us that we need to keep a close eye on the midterms.
Today in the podcast, our takeaways on 2Q-2022 reporting season, with more than half of S&P results in. The big things you need to know: First, 2H22 and 2023 forecasts have started to come down, but perhaps not enough. Second, within the S&P 500 sector standouts so far include Energy, REITs and Utilities along with Tech. Third, Small Caps are the star of the show so far.
Today in the podcast, we update our outlook for the S&P 500 and several key positioning trades. The big things you need to know: First, we’ve made another cut to our YE 2022 S&P 500 price target to 4,200 from 4,700 and have lowered our S&P 500 EPS forecasts to $214 for 2022 and $212 for 2023. Second, looking into the back half of the year, the midterm election could be a positive catalyst for stocks and help stocks find a bottom, if one hasn’t been established already. (3) In terms of positioning, we continue to prefer US equities over non-US equities and Growth over Value. Meanwhile, our conviction level on Small Caps has strengthened and we are now going overweight Small Cap.
Today in the podcast, an update on our latest RBC equity analyst outlook survey, which we just completed, plus an update on our own latest US equity strategy sector views. Three big things you need to know: First, in our latest analyst survey, our US industry analysts were most constructive on Energy, Financials, Health Care, and Tech, and least constructive on Communication Services, Consumer Discretionary, Consumer Staples, and Materials. Second, in terms of sectors that we like from a strategy angle, we remain overweight Tech and Financials, and we upgraded Energy and Health Care to overweight from market weight. Third, on the other end of the spectrum, we lowered Consumer Staples to underweight from market weight and upgraded REITs from underweight to market weight. We remain underweight Communication Services.
In this week’s RBC’s Markets in Motion podcast, Chris Louney, Commodity Strategist, guest hosts to discuss his latest views on the natural gas markets. Today in our 6:15 minute podcast, we discuss the factors impacting US natural gas prices this year and beyond. Natural gas prices generally are attracting far more attention amid headlines of energy prices broadly, inflation worries and economic concerns, and even energy crises that have in many ways held outsized interest in the market. While global gas prices remain on another level, US gas prices also reached very high levels earlier this year, and even after some recent developments, they still remain quite elevated. We cover three main themes in this episode. First, geopolitical premiums are now present in US natural gas markets in a way they were not before. We draw on both an analysis we did earlier this summer as well as some learnings after an explosion that shut down a major US facility early last month. This leads us to our second point - our view for the remainder of this year. We think gas prices should average north of $6/MMBtu in the US, a view that previously was our high scenario, and now looks like the more probable one for the remainder of the year. Third, in all of our scenarios US gas prices fall next year. While we are by no means returning to the lower-for-longer price environment many had gotten used to, we do expect lower gas prices in 2023 as production comes online and there is less structural growth on the other side of the balance y/y, albeit with the caveat that geopolitics are here to stay for US natural gas.
In this week’s RBC’s Markets in Motion podcast, Michael Tran, Commodity and Digital Intelligence Strategist, guest hosts to discuss his latest views on the global oil market dynamic. Today in our 11:30 minute podcast, we discuss the recent oil price volatility and explore the dynamic between the push and pull between the looming threat of a recession which is being stacked up against the strongest fundamental oil market set up in decades, or maybe even ever. Three things to know: First, given the recent price rout, the financial oil market is dislocating dramatically from an extremely tight spot physical market. Near record Atlantic Basin physical pricing differentials, the Saudi hike to Official Selling Prices (OSPs) and the CPC pipeline outage are indicative that the steadfast physical market is telling a diametrically opposed story to the plunging paper market. The physical market is pricing in scarcity while the financial market is pricing in recession. Second, despite the recent plunge in oil prices, term structure remains relatively intact, surprisingly. This means that the term portion of the curve is also retracing significantly lower. Unless the recession is deep and protracted, we believe that the dated calendar strips are largely undervalued. However, the near term recessionary risks must be respected. In a recessionary scenario in which demand is impacted at a similar rate as previous downturns, we could see a scenario in which spot prices retreat into the mid $70/bbl range in the back half of this year. Now, we only place a 15% probability to such an outcome, but we have all been doing this long enough to know that oil price moves can be swift, violent and unforgiving, in both directions. The bullish conviction is high, but sentiment is soft among the commodity trading community. Third, while the debate regarding the health of the consumer remains an open ended question, large scale demand destruction is rare. Over the past 30 years leading into the pandemic, there were 39 individual months in which retail gasoline prices increased by more than 30%, YoY. Of those instances, we have seen gasoline demand fall by 2% or more on only 12 of those occasions. And five of those instances took place during the 2008 Great Financial Crisis. In short, protracted demand destruction events have historically been rare, absent a recession. That said, the strength of the US dollar means that oil priced in local currencies is still punching in either at or near all-time record highs for many regions across the globe.
Today in the podcast, our thoughts on a few additional questions that we’ve been getting from equity investors in our recent travels across the US, a topic we also explored in our last podcast. Three big (new) things you need to know: First, equity investors have been asking us whether inflation has been good for stocks and earnings. We think that it has, and view moderating inflation as more of a headwind in the outlook for stocks than many investors may realize. Second, a number have asked our opinion on the low quality trade. We’ve reminded investors that low quality tends to outperform after the stock market has found its mid-recession bottom. We’d expect the same this time around for a short period of time. Third, a number have asked if we could dig deeper on our sector recession playbook analysis, and we’ve replicated it for the 24 industry groups. Areas that tend to outperform during recessions as well as the broader market drawdown and rebound phases include Commercial & Professional Services, Consumer Services, Materials, Retailing, and Transportation.
This week in the podcast, highlights from our conversations with institutional equity investors last week, plus updates on the valuation and sentiment indicators we’re watching. Five big things you need to know: First, we’ve outlined two possible recession paths for S&P 500 EPS which suggest a valuation case for the S&P 500 can be made today on next year P/E if the recession is short-lived or at 3,200 on current year EPS. Second, as investors seek out clues on what’s been de-risked, we’ve been highlighting why the risk/reward for Small Caps has improved and note that Russell 2000 valuations returned to levels that often mark the low last week. Third, on sectors, we’ve also been highlighting how defensive sectors have been close to peak valuation vs. Secular Growth and Cyclicals, how Energy’s strong move up in early 2022 is out of sync with the typical recession drawdown, and how declines in Consumer Discretionary and Communication Services are already baking in recession to a significant degree. Fourth, the midterm elections are starting to emerge as a potential positive catalyst for US equities later this year in the eyes of some investors. Fifth, institutional investor sentiment appeared to get closer to a bottom last week.
This week in the podcast, some quick thoughts on US equities in the aftermath of Friday’s hot CPI print and subsequent sell-off. Three big things you need to know: First, the recent rise in long-run inflation expectations in the University of Michigan Consumer Sentiment Survey suggests that Value oriented sectors may continue to lead for a bit longer. Second, our look back at the historical playbook for US equities around recessions provides some insight into how low the S&P 500 could go. Third, our weekly sentiment indicators continue to highlight the deeply negative views that already pervade the investment community.
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.
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).
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.
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.
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.
This week in the podcast, we discuss the results of our June survey of RBC’s equity analysts. The big things you need to know: (1) Outlooks for performance over the next 6-12 months remain constructive, driven by optimistic views on fundamentals and cash deployment. (2) The results a guide for the best ways to get exposure in three distinct parts of the US equity market - Financials & Energy within Cyclicals, Information Technology within Secular Growth, Health Care & Utilities within Classic Defense. (3) The survey helps to set the stage for what we expect to be an important earnings season, with roughly half of our analysts saying it is unclear to what extent inflationary impacts are baked into company guidance and/or consensus estimates.
This week in the podcast, we recap our thoughts on how we’d play defense in the very near-term, if short-term macro indicators like ISM are in the process of making a peak – something we think the decline in 10 year yields throughout most of 2Q may have been signaling. Our bottom line – we worry a peak in major macro indicators like ISM could spark a pullback in the market or a pause in the rotation into Value and Cyclicals. We think there’s a case for adding some exposure to Classically Defensive sectors in the near-term. But longer-term we still like Cyclicals.
This week in the podcast, Lori takes a deep dive into the holdings of actively managed Large and Small Cap funds, based on their 1Q filings. Though the data lags, it usually provides important insights into active manager positioning and sentiment, and this time it was actually quite insightful. The big thing you need to know – the favorite stocks of long-only managers in both Small Cap and Large Cap aren’t performing very well in 2021, but it doesn’t really matter as the funds themselves are still having a very good year, due to good stock picking in 1Q and some favorable sector exposures.
This week in the podcast, Lori does a slightly early, mid-year check in on her outlook for the US equity market. Three big things you need to know: First, we’re sticking with our market call and 4325 target on the S&P 500. Slipping sentiment and peaking economic and earnings indicators may contribute to a brief pullback at some point during the 2nd half, but the longer-term economic outlook remains constructive. Second, we remain neutral US equities relative to non-US equities, but are admittedly feeling better about the latter. Third, while we wouldn’t be surprised to see Small Cap underperform in a broader market pullback, we continue to see considerable opportunity in Small Caps longer-term and are maintaining our bias to Small over Large.
This week in the podcast, Lori discusses her takeaways from last week’s release of 1Q21 13fs for major hedge funds. The big thing you need to know: the most popular Large Cap stocks in hedge funds in terms of the Dollar value owned, which we call the Hot Dogs, have continued to underperform in 2021 in a significant way. At the sector level, big reversals in performance have been seen for the most popular hedge funds stocks in the Communication Services, Consumer Discretionary, and Tech sectors, with the most popular names lagging this year. But Energy has bucked the trend as the most popular hedge fund names in the sector have outperformed. Lori also discusses what surprised her about positioning in Financials among hedge funds.
In this week’s podcast, Lori discusses why she believes the unwind in big Tech isn’t done yet. She cites five reasons: (1) positioning in Nasdaq futures hasn’t bottomed out; (2) valuations have improved but aren’t compelling; (3) the sector tends to underperform when inflation expectations are rising; (4) earnings revisions trends appear to be peaking; and (5) ETF flows to the sector have dried up.
This week in the podcast, Lori discusses the latest changes to her S&P 500 forecasts. Earlier this week, we lifted our 2021 S&P 500 price target to 4,325, up from 4,100. We also raised our 2021 and 2022 S&P 500 EPS forecasts, baking in a moderate increase in the corporate tax rate to the latter. Our bottom line: we see a little more room for stocks to climb higher this year, but we also continue to expect a pullback/heightened volatility before the year is done, capping that upside.
This week in the podcast Lori discusses where we are in the earnings cycle, and what it means for stock prices going forward. The big thing you need to know: while 2021 S&P 500 EPS is tracking better than expected, we think expectations for decelerating EPS growth in the back half of 2021 are a major hurdle for the stock market, and help make the case for a short-term pullback, or volatility, in the US equity market in the months ahead.
This week in the podcast, guest host Sara Mahaffy, RBC’s ESG Strategist, runs through the team’s latest work on ESG fund flows, valuations, and ESG momentum. Following a strong surge in 2020, ESG fund flows have eased back in February and March, keeping the team on guard for better valuation opportunities in ESG leaders. In addition, we found that the REITs sector moved up the rankings in our ESG momentum analysis (which looks at sectors seeing the most recent improvement in ESG) this April.
This week in the podcast, we run through our initial thoughts on Biden’s plans to raise corporate taxes. We think Trump’s tax cuts played an important role in fueling strong equity market returns in 2017 through 2019, and our work suggests Large Cap Growth was one of the biggest beneficiaries. We also believe that Biden’s proposal to raise corporate taxes to fund his infrastructure bill has been impacting rotation within the US equity market recently. Investors have been worrying about higher corporate taxes all year, and the stocks that were the biggest beneficiaries of Trump’s tax reform have stumbled recently, telling us risks are getting baked in now. Run time: 6 minutes.
In this edition, Lori reviews the results of her latest US equity investor survey. The big thing you need to know: The mood of the market is slightly less optimistic than our December survey. Slightly better valuation assessments and improved outlooks for EPS and the US economy are a big part of the reason why investors remain optimistic. The reasons why investors reined in their enthusiasm a bit include concerns about the timeline for the return to normality, the new COVID variants, the stronger dollar, inflation, fiscal policy, and the Fed.
In this edition, Lori tackles the topic of the US Dollar, and what its recent strengthening means for the US equity market. The consensus view coming into 2021 was for the US Dollar to weaken, but that may be starting to reverse. A stronger Dollar is mostly a negative for the US equity market in terms of performance, earnings revisions, and margins. But sector impacts aren’t uniform, and it’s a challenge for the stock market that should be thought of as looming in the distance rather than one that’s likely to hit stocks imminently.
In this edition, Lori gives her take on the Growth vs. Value debate that has become a key underpinning of positioning within the US equity market. She reiterates her preference for Value over Growth in 2021 due to: a better cash deployment profile in Value, stronger earnings momentum in Value, a greater positioning problem in Growth, extended Growth valuations relative to Value, Value’s status in the market as a reflation trade, and surging ETF flows for Value. Lori acknowledges that these are all intermediate term reasons to prefer Value. Ultimately, she believes the ability of Value to continue leading longer term depends on whether the economy can sustain above-trend GDP growth in 2022 and beyond.
In this edition, we discuss the results of our March 2021 survey of RBC’s equity analysts, in which we asked them to quantify their outlooks for their industries on 6 issues – performance, cash deployment, margins, valuations, fundamentals, and policy. Overall, our analysts are optimistic on performance, cash deployment, fundamentals, and margins. They are less enthused about the state of valuations and the Washington policy backdrop, and are split on the impact of inflation. Our Financials team stood out for being the most constructive on several questions, supporting our ongoing overweight on the sector. Our Consumer Staples team stood out for seeing a major, positive change in view since the start of the year, supporting our upgrade of the sector to market weight.
In this edition, we discuss three reasons why we believe Mid Caps offer opportunity within the US equity market: (1) greater exposure to cyclicals than Tech/Internet/Media/Telecom, (2) plenty of runways on positioning, and (3) attractive valuations relative to Large Caps. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, we discuss why we remain overweight in Financials sector, a key part of the reflation trade. Among other reasons, we like the sector’s cash deployment, earnings, and valuation profile. We also discuss the favorable macro tailwinds in place. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses her thoughts on the outlook for Small Cap stocks in the US. Three big things you need to know: (1) Lori sees greater opportunity in Small Caps than Large caps on a long-term, 3-5 year view, but prefers a more neutral stance on the two size segments on a 6-12 month time horizon. (2) In terms of stock price performance, Lori thinks Small Caps may benefit more in the short-term from a Trump re-election than a Biden win in this fall’s Presidential election. (3) Lori’s work finds that individual investors on the Robinhood platform have been more engaged with Large Caps and Nasdaq stocks than Small Cap stocks, helping to explain why Small Caps haven’t seen consistent outperformance since the mid-March low in the US equity market. Disclaimer:https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses her takeaways from 2Q20 earnings season so far. She and her team recently did a deep dive into the trends in beats rates, forward-looking revisions, and commentary on earnings calls for the 63% of S&P 500 companies that had reported 2Q results as of Friday, July 31st. Three big things you need to know: (1) Similar to May and June economic data, 2Q earnings have been less bad than feared, but the reaction in the stock market has been very mixed – up until the big Tech results came in at the end of the month. (2) The rate of upward EPS estimate revisions (earnings sentiment) has continue to surge, but we are on guard for a peak before too long. (3) Among the major sectors, Consumer Staples and Tech have been positive standouts, while Energy and REITs have been negative standouts. Disclaimer:https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses her thoughts on the 2020 Presidential Election in the US, and specifically how investors should be positioned for a Biden win. She’s put together a sector playbook based on the policy leanings of the Biden campaign and her July survey of RBC Capital Markets’ research analysts. She also discusses why Biden’s proposed increase in the corporate tax rate is a key challenge for the stock market. Finally, she discusses why she views the election as a mild, negative catalyst for US equities in the second half of 2020 and risks to her view. Disclaimer:https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses her outlook for the S&P 500 in the 2nd half of 2020. She’s lifted her year-end 2020 S&P 500 target from 2750 to 2900, but there’s no change in her overall message – she continues to expect choppy markets in the back half of the year and see downside risk from current levels. Lori discusses her latest thoughts on valuation, sentiment, earnings, and seasonality. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses updates her thoughts on some of the more important daily and weekly indicators that she tracks. Four big things she’s learned over the last week: (1) The S&P 500 has been surging, but defensive undertones remain. (2) A pivotal earnings season is underway, in which we see risk of downward revisions. (3) Signs of stress remain in short-term indicators. (4) Stocks are starting to trade more in sync with Biden’s chances of winning in November than Trump’s. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses the latest developments in some of the more important daily and weekly indicators that she tracks. Two big things she’s learned over the last week: (1) bearishness continued to build among both institutional and individual investors, based on her review of the latest updates from CFTC on asset manager positioning in US equity futures, and the weekly individual investor survey from AAII. Second, she sees evidence that worsening virus trends may be starting to adversely impact consumer and small business behavior, putting the rebound in the S&P 500 at risk. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses the results of her latest quarterly US equity investor survey, which was conducted June 15th – 22nd and included mostly institutional US focused equity investors. There are two key findings. First, bearish outlooks on the US equity market are rising, while bullish views are retreating. Second, the survey identified several things behind the increase in bearishness – valuation concerns have risen to a new survey high, most of our participants expect a long, slow recovery, and fears of a 2nd wave of the coronavirus are high as are worries about the outcome of the 2020 election in the US. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses two trends she’s keeping a close eye on right now. The first is the extent to which incoming economic data is positively surprising forecasters, something that’s been an important driver of US equity market performance recently. The second is the performance of the most popular stocks in actively managed, long-only Large Cap funds (known as the Lions), which experienced an important reversal in fortunes in mid-May. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses Small Caps, both her outlook for the Russell 2000 and performance trends in the top stocks of Small Cap portfolio managers. Tactically, she expects Small Caps to continue outperforming Large Caps as long as the broader US equity market remains in rebound mode, and to underperform Large Caps in any pullbacks. In terms of the performance of Small Cap managers’ favorite stocks, she’s seen several sharp reversals in performance recently, with the most popular stocks outperforming strongly YTD, lagging in the late March – early June rebound, and a return of outperformance in Thursday’s sharp sell-off.
In this edition, Lori discusses the China trade war, the civil unrest in the US, and the outlook for S&P 500 earnings. The stock market has been more focused on the China trade war than the protests because the implications of the trade war are more clear. On Earnings, she highlights how the rate of upward revisions is starting to improve, helping stocks for now by feeding the “things are getting less bad” narrative. She also reiterates her view that there’s still risk lurking in 2021 estimates, which could be a problem for the market later this year. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses her takeaways on the latest hedge fund filings. The most popular stocks in hedge funds have been outperforming throughout the first half of 2020. Hedge funds ended 1Q20 with greater exposure to Health Care. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discusses her thoughts on the outlook for the S&P 500. She expects US equity markets to stay choppy in the months ahead and another drawdown. There’s no change to her year-end S&P 500 target of 2750. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori discussed her thoughts on how 1Q20 reporting season for the S&P 500 is shaping up and the key lessons learned. 2021 EPS growth forecasts have continued to slip, but still seem too aggressive. Company commentary suggests investors need to prepare for a long, slow and uneven recovery. Health Care jumps out as a bright spot. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page
In this edition, Lori reviews the narratives driving the late March/April rebound in the S&P 500, plus the historical playbook for past rebounds in the stock market coming out of recessions as well as those that occurred during prior QE periods. Lori believes the rally is legitimate but fragile. So far, the composition of leadership is mostly in line with what we’ve seen in recovery trades associated with past recessions. Disclaimer: https://www.rbccm.com/en/policies-disclaimers.page