The big things you need to know:

1. 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.
2. 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.
3. 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:

1. First, our thoughts on earnings heading into 4Q25 reporting season – questions we think need answering and stats we’re watching.
2. 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:

1. First, we are upgrading S&P 500 Health Care to overweight from market weight.
2. Second, we are upgrading S&P 500 Communication Services to overweight from market weight.
3. 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.
4. 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.