The big things you need to know:

• First, shortly after midnight on Friday morning, we cut our S&P 500 EPS forecast for 2025 to $258 and our YE 2025 price target to 5,550 – the price target cut was something we’d been telegraphing we’d do if the drawdown in the index broke 10% from peak for quite some time, which it did on Thursday.
• Second, as the stock market has continued to gap down, we’ve continued to highlight our tiers of fear framework for how far US equities could decline in different scenarios. We see the index falling as low as 4,900 if this remains a growth scare, but a drop to 4,200-4,500 is a reasonable way to think about where the index could fall if a recession is priced in.
• Third, our weekly valuation and flows updates provided us with some insight into why US equity markets have been gapping down so severely.