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. If you’d like to hear more, here’s another five minutes. While you’re waiting, a quick reminder that you can subscribe to this podcast on Apple, Spotify, and other major platforms. Now, the details.

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 ofthe 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 ofthe 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.