RBC's Markets in Motion

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 bring you a special edition of the podcast, recorded live at the RBC Financial institutions conference on March 5th, 2025. Ben Fisher (US Equity Sales, Midwest & Macro Sales Specialist) moderates a discussion with Lori Calvasina (Head of US Equity Strategy) and Amy Wu Silverman (Derivatives Strategist) on their latest views on the US equity market outlook and what they’ve been hearing from investors.

The big things you need to know: First, we review our basic framework for thinking about drawdowns in US equities, a topic that’s been coming up in client meetings over the past few weeks, as investor uncertainty regarding the economy has increased. Second, we have refreshed the math behind our YE 2025 bear case of 5,775, specifically our valuation/EPS stress test. Third, we run through our latest updates on the vibes breakdown in the US, where investor sentiment has plunged to crisis lows on one key metric. Fourth, some of our work suggests opportunity is opening up in Small Caps, though we think it’s too early to go overweight.

The big things you need to know: First, we found more evidence of weakening investor and consumer vibes in last week’s data updates, while getting a mostly positive data point on corporate vibes, and a flattening in political vibes. Second, the rotation of funds flows from US equities to bonds and European equities strengthened last week.

The big things you need to know: First, there was very little change last week in the stats we monitor to track reporting season, aside from the continued drift lower in the bottom-up consensus 2025 S&P 500 EPS forecast to a little below $271. Second, uncertainty, policy, tariffs, and FX remained in focus in last week’s earnings calls. Third, we continued to find evidence of weakening vibes in the latest updates from the AAII investor survey, the NFIB Small Business sentiment survey update, and EPFR funds flows.

The big things you need to know: The big things you need to know: First, the earnings backdrop has softened a bit on the stats for the broader US equity market, and has also justified the rotation in performance leadership that has been seen. Second, company commentary in last week’s earnings calls highlighted the uncertain optimism that is driving US equity market performance at the moment. Third, weakness in investor sentiment and a miss on consumer sentiment stand out in our high frequency updates last week. We continue to closely monitor the vibes whose anticipated strength has been an important part of the bullish thesis on the US equity market for 2025.

The big things you need to know: The big things you need to know: First, 4Q24 earnings season looks solid on the stats so far. Second, bulls bounced back in the weekly AAII survey last week, as US equity flows stabilized.

The big things you need to know: First, the initial batch of 4Q24 earnings call commentary, which is mostly from Financials, highlights the optimism and uncertainty that are both embedded in the current outlook for stocks. Second, investor sentiment on the AAII survey continued to slip last week despite stabilization in the S&P 500 itself. Third, we continue to see some signs of mild rotation affecting US equity funds flows where we continue to see a loss of momentum. At the same time, we are seeing improvement in flows to bond funds, global equity funds, and several categories of non-US equity funds.

The big things you need to know: First, we review our thoughts on last Friday's jobs report and reaction in the S&P 500 and Russell 2000. Second, with 4Q24 reporting season getting underway, we review what we’re listening for in S&P 500 company earnings calls. Third, we run through updates on other high frequency indicators, including a new chart comparing market cap and net income concentration for the biggest names in the S&P 500.

The big things you need to know: Today in the podcast, an update on our S&P 500 sector outlook for 2025, and the results of the quarterly RBC analyst survey that we just updated in late December. Three big things you need to know: First, globally – taking into account the views of our analysts in all of our coverage regions -- our analysts tilt constructive on performance, valuations and demand, but have more mixed/neutral views on the US and non-US political backdrops. Second, our work on global equity funds flows highlights how US, growth-oriented sector, and most cyclical sector flows faded in the final weeks of 2024, while Western Europe and defensive sector flows improved marginally. Third, within the US we have upgraded Utilities to overweight and, to offset the move, have downgraded Energy to market weight. The views of our US analyst teams as captured by the survey results really drove these changes.

The big things you need to know: First, modest downward revisions have returned to bottom-up consensus S&P 500 EPS forecasts. Second, frothy US equity market sentiment has been a problem for the US equity market, but our work suggests that many investors have become cognizant of this problem and that it is starting to self-correct. Third, outside of the biggest market cap names in the S&P 500, a number of our valuation indicators have started to contract. Fourth, US equity funds flows deteriorated as 2024 came to an end.