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.