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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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...