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.