Analysis

The Latest from Macro News

  • February 15, 2024
    Valens Market Phase Cycle Monitor – February 2024 – Banks Still Aren’t Lending And That Caps Real Growth

    • Banks Still Aren’t Lending And That Caps Real Growth. Corporate Credit Metrics Are Showing Signs Of Growing Stress. Credit availability is lacking, and corporations and individual consumers are starting to show pressure from credit tightening. Credit issues highlight the risk of a recession growing.
    • Slowing lending continues to push management teams to be more cautious. Uniform earnings growth continues to decelerate. Profits are forecasted to decline, and multiple signals for investment show decelerating management confidence.
    • After the recent strong bounce-back rally, the market is back towards neutral sentiment levels.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Neutral (no change)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 40% Equity / 60% Bond Split for 5-10 Year Money and 22 Month Dollar Cost Averaging....
    Read More

  • January 18, 2024
    Valens Market Phase Cycle Monitor – January 2024 – The Market’s Expectations Don’t Line Up With Predictive Economic Indicators

    • The Market’s Expectations Don’t Line Up With Predictive Economic Indicators. Corporate Credit Metrics Are Showing Signs Of Growing Stress. Credit availability is lacking, and corporations and individual consumers are starting to show pressure from credit tightening. Credit issues highlight the risk of a recession growing.
    • Slowing lending continues to push management teams to be more cautious. Uniform earnings growth continues to decelerate. Profits are forecasted to decline, and multiple signals for investment show decelerating management confidence.
    • After the recent strong bounce-back rally, the market is back towards neutral sentiment levels.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Neutral (no change)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 40% Equity/ 60% Bond Split for 5-10 Year Money and 22-Month Dollar-Cost Averaging....
    Read More

  • November 16, 2023
    Valens Market Phase Cycle Monitor – November 2023 – More And More Signals Point Towards A Slowdown

    • More And More Signals Point Towards A Slowdown. The Fed’s efforts to slow lending continue to push management teams to be more cautious. Uniform earnings growth continues to decelerate. Profits are forecast to decline, and multiple signals for investment show decelerating management confidence.
    • Corporate Credit Metrics Are Showing Signs Of Growing Stress. Credit availability is lacking, and corporations and individual consumers are starting to show pressure from credit tightening. Credit issues highlight the risk of a recession growing.
    • After the recent strong bounce-back rally, the market is back towards neutral sentiment levels.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Neutral (no change)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 40% Equity/60% Bond Split for 5-10 Year Money and 22 Month Dollar Cost Averaging....
    Read More

  • November 16, 2023
    Valens Market Phase Cycle Monitor – December 2023 – Be Cautious Putting Your Hope In The Fed’s Pivot Maintaining This Rally

    • Be Cautious Putting Your Hope In The Fed’s Pivot Maintaining This Rally. Corporate Credit Metrics Are Showing Signs Of Growing Stress. Credit availability is lacking, and corporations and individual consumers are starting to show pressure from credit tightening. Credit issues highlight the risk of a recession growing.
    • Slowing lending continues to push management teams to be more cautious. Uniform earnings growth continues to decelerate. Profits are forecasted to decline, and multiple signals for investment show decelerating management confidence.
    • After the recent strong bounce-back rally, the market is back towards neutral sentiment levels.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Neutral (no change)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 40% Equity/60% Bond Split for 5-10 Year Money and 22-Month Dollar Cost Averaging....
    Read More

  • October 19, 2023
    Valens Market Phase Cycle Monitor – October 2023 – Even A Dead Cat Will Bounce If You Drop It From High Enough

    • Even A Dead Cat Will Bounce If You Drop It From High Enough. After the recent pull-back, investor sentiment has dropped from excessively bearish levels. This increases
      the likelihood of a pause in the sell-off, or even a short bounce.
    • Corporate Credit Metrics Are Showing Signs Of Growing Stress. Credit availability is lacking, and corporates and individual consumers are starting to show pressure from credit tightening. Credit issues highlight the risk of a recession growing.
    • The Fed’s efforts to slow lending continue to push management teams to be more cautious. Uniform earnings growth continues to decelerate. In late 2022, data showed management teams holding off on capex, and in early 2023, management teams slowed overall borrowing as well.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Neutral (upgrade)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 40% Equity/60% Bond Split for 5-10 Year Money and 22 Month Dollar Cost Averaging....
    Read More

  • September 21, 2023
    Valens Market Phase Cycle Monitor – September 2023 – Recessions Are Caused By A Need To Refinance Debts

    • Corporate Credit Metrics Are Showing Signs Of Growing Stress. Credit availability is lacking, and corporates and individual consumers are starting to show pressure from credit tightening. Credit issues highlight the risk of a recession is growing.
    • The Fed’s efforts to slow lending continue to push management teams to be more cautious. Uniform earnings growth continues to decelerate. In late 2022, data showed management teams holding off on capex, and in early 2023, management teams slowed overall borrowing as well.
    • Investors’ Blinders To Risk Continue To Point To A Potential Pullback. After the recent rally, investor sentiment is once again elevated. More bullish sentiment is likely to increase market volatility in the short-term.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Negative (no change)
      • Valuations (5%): Negative (no change)
      • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 24 Month Dollar Cost Averaging.
      ...
    Read More

  • August 17, 2023
    Valens Market Phase Cycle Monitor – August 2023 – Risk Blind Investors Are Increasing The Risk Of A Correction

    • Investors’ Blinders To Risk Are Increasing The Risk Of A Correction. After the recent rally, investor sentiment is once again elevated. More bullish sentiment is likely to increase market volatility in the short-term.
    • Credit availability is lacking, and corporates and individual consumers are starting to show pressure from credit tightening. A better debt maturity schedule for borrowers than in prior cycles reduces the risk of a severe recession, but credit issues highlight the risk of a recession is growing.
    • The Fed’s efforts to slow lending have pushed management teams to be more cautious. Uniform earnings growth continues to decelerate. In late 2022, data showed management teams holding off on capex, and in early 2023, management teams slowed overall borrowing as well.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Negative (no change)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 24 Month Dollar Cost Averaging....
    Read More

  • July 20, 2023
    Valens Market Phase Cycle Monitor – July 2023 – Credit Metrics Continue To Show Growing Signs Of Risk

    • Credit Metrics Continue To Show Growing Signs Of Risk. Credit availability is lacking, and corporates and consumers are starting to show pressure from credit tightening. A better debt maturity schedule for borrowers than in prior cycles reduces the risk of a severe recession, but credit issues highlight the risk of a recession is growing.
    • The Fed’s efforts to slow lending have pushed management teams to be more cautious. Uniform earnings growth continues to decelerate. In late 2022, data showed management teams holding off on capex, and in early 2023, management teams slowed overall borrowing as well.
    • After the recent rally, investor sentiment is once again elevated. More bullish sentiment is likely to increase market volatility in the short-term.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Negative (no change)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 24 Month Dollar Cost Averaging....
    Read More

  • June 15, 2023
    Valens Market Phase Cycle Monitor – June 2023 – We Are Likely Past The Point of Avoiding A Recession

    • We Are Likely Past The Point of Avoiding A Recession. Credit availability is lacking, and corporates and individual consumers are starting to show the pressure from credit tightening. A better debt maturity schedule for borrowers than in prior cycles reduces the risk of a severe recession, but credit issues highlight the risk of a recession is growing.
    • The Fed’s efforts to slow lending have pushed management teams to be more cautious. Uniform earnings growth continues to decelerate. In late 2022, data showed management teams holding off on capex, and in early 2023, management teams slowed overall borrowing as well.
    • After the recent rally, investor sentiment is once again elevated. More bullish sentiment is likely to increase market volatility in the short-term.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Negative (no change)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 24 Month Dollar Cost Averaging....
    Read More

  • May 18, 2023
    Valens Market Phase Cycle Monitor – May 2023 – Credit Health Metrics Are Showing Early Signs of Borrower Stress

    • Credit Health Metrics Are Showing Early Signs of Borrower Stress. Credit availability is lacking, and corporates and consumers are starting to show the pressure from credit tightening. A better debt maturity schedule for borrowers than in prior cycles reduces the risk of a severe recession, but credit issues highlight the risk of a recession is growing.
    • The Fed’s efforts to slow lending have pushed management teams to be more cautious. Uniform earnings growth continues to decelerate. In late 2022, data showed management teams holding off on capex, and in early 2023, management teams slowed overall borrowing as well.
    • After the recent rally, investor sentiment is once again elevated. More bullish sentiment is likely to increase market volatility in the short-term.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (no change)
      • Momentum/Sentiment (10%): Negative (no change)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 24 Month Dollar Cost Averaging....
    Read More

  • April 20, 2023
    Valens Market Phase Cycle Monitor – April 2023 – Don’t Be Fooled By Charts – Constricting Credit Means We’re Not Yet In A New Bull

    • Don’t Be Fooled By Charts – Constricting Credit Means We’re Not Yet In A New Bull. The Fed’s efforts to slow lending have pushed management teams to be more cautious. Uniform earnings growth continues to decelerate. In late 2022, data showed management teams holding off on capex, and in early 2023, management teams slowed overall borrowing as well.
    • While credit availability is lacking, healthy corporate and consumer balance sheets signal any recession does not need to be a deep recession. Healthy corporate and consumer balance sheets limit the risk that ongoing tightening leads to a credit rout and waves of defaults.
    • After the recent rally, investor sentiment is once again elevated. More bullish sentiment is likely to increase market volatility in the short-term.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (downgrade)
      • Momentum/Sentiment (10%): Negative (downgrade)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 24 Month Dollar Cost Averaging....
    Read More

  • February 16, 2023
    Valens Market Phase Cycle Monitor – February 2023 – A Highly Correlated Market Is One Driven By Fear, Not Opportunity

    • A Highly Correlated Market Is One Driven By Fear, Not Opportunity. The market has had an impressive rally to start the year. However, underlying technical indicators point to it growing extended, with limited structural investor support.
    • Uniform earnings growth deceleration and continued credit headwinds that will meter growth signal means the market structure is unlikely to change favorably. Near-term corporate management demand for investment has buoyed growth. However, credit and investment metrics signal that on the margin, this is slowing, thanks to the Fed’s efforts.
    • Any credit issues do not need to lead to a deep recession, thanks to healthy borrowers. Healthy corporate and consumer balance sheets limit the risk that ongoing tightening leads to a credit rout and waves of defaults.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Neutral (no change)
      • Momentum/Sentiment (10%): Negative (downgrade)
      • Valuations (5%): Negative (downgrade)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 22 Month Dollar Cost Averaging....
    Read More

  • February 16, 2023
    Valens Market Phase Cycle Monitor – March 2023 – The Fed’s Efforts To Slow Growth Are Having Their Desired Effects

    • The Fed’s Efforts To Slow Growth Are Having Their Desired Effects. Uniform earnings growth continues to decelerate. In late 2022, data showed management teams holding off on capex, and in early 2023, management teams slowed overall borrowing as well. The Fed’s efforts have pushed management teams to be more cautious.
    • While credit availability is lacking, healthy corporate and consumer balance sheets signal any recession does not need to be a deep recession. Healthy corporate and consumer balance sheets limit the risk that ongoing tightening leads to a credit rout and waves of defaults.
    • After the recent pullback and market volatility, investor sentiment is no longer extended. More neutral sentiment is likely to reduce market volatility in the short-term.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Negative (downgrade)
      • Momentum/Sentiment (10%): Neutral (upgrade)
      • Valuations (5%): Negative (no change)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 22 Month Dollar Cost Averaging....
    Read More

  • January 19, 2023
    Valens Market Phase Cycle Monitor – January 2023 – Our Outlook for A Sideways Market in 2023 Remains Intact

    • Our Outlook for A Sideways Market in 2023 Remains Intact. For 2022, Uniform earnings growth is forecast to be -3%, and until that trend changes, the market can’t engage higher.
    • Uniform earnings growth is unlikely to reaccelerate until credit conditions are more constructive, and most metrics are trending in a negative direction. Healthy corporate and consumer balance sheets limit the risk that continued tightening turns into a credit rout and triggers waves of defaults. However, credit signals continue to point to a significant tightening of lending availability.
    • Investor sentiment is neutral while valuations are now reasonable to elevated. This appears to signal we’re at the middle to higher end of a sideways market.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Neutral (no change)
      • Momentum/Sentiment (10%): Neutral (no change)
      • Valuations (5%): Neutral (downgrade)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 18 Month Dollar Cost Averaging....
    Read More

  • December 15, 2022
    Valens Market Phase Cycle Monitor – December 2022 – The Market Follows Earnings Growth, And Earnings Growth Just Turned Negative

    • The Market Follows Earnings Growth, And Earnings Growth Just Turned Negative. A mix of U.S. corporate investment growth deceleration and profit pressures has turned U.S corporate earnings growth negative. For 2022, Uniform earnings growth is forecast to be -3%, and until that trend changes, the market can’t engage higher.
    • Credit signals continue to point to a significant tightening of lending availability. Healthy corporate and consumer balance sheets limit the risk that leads to a credit rout. Tighter credit availability is likely to reduce investment going forward.
    • After the recent rally, sentiment is neutral while valuations are now reasonable to elevated. This appears to signal we’re at the higher end of a sideways market.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Neutral (downgrade)
      • Momentum/Sentiment (10%): Neutral (no change)
      • Valuations (5%): Neutral (downgrade)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 20 Month Dollar Cost Averaging....
    Read More

  • October 20, 2022
    Valens Market Phase Cycle Monitor – October 2022 – Zero Earnings Growth Caps Market Upside, Setting Up A Sideways Market

    • Zero Earnings Growth Caps Market Upside, Setting Up A Sideways Market. Credit signals continue to point to a significant tightening of lending availability. Healthy corporate and consumer balance sheets limit the risk that leads to a credit rout. Tighter credit availability is likely to reduce investment going forward.
    • U.S. management teams still are bullish about investment, but return growth is slowing. U.S. corporate investment has finally been showing signs of growth. This can help earnings surprise on the upside but returns and credit headwinds may reduce that growth going forward.
    • After the recent rapid sell-off, sentiment and valuation indicators are overly negative. This reduces the risk of a further drop as we remain in a sideways market.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Bullish (no change)
      • Momentum/Sentiment (10%): Positive (no change)
      • Valuations (5%): Positive (no change)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 16 Month Dollar Cost Averaging....
    Read More

  • September 22, 2022
    Valens Market Phase Cycle Monitor – September 2022 – The Market Dropped, That Doesn’t Mean It’ll Continue To

    • Credit and Profit Overhangs Remain, Without Pointing to an Imminent Recession. Credit signals continue to point to a significant tightening of lending availability. Healthy corporate and consumer balance sheets limit the risk that leads to a credit rout. Tighter credit availability is likely to reduce investment going forward.
    • U.S. management teams still are bullish about investment, but return growth is slowing. U.S. corporate investment has finally been showing signs of growth. This can help earnings surprise on the upside, but returns and credit headwinds may reduce that growth going forward.
    • After the recent rapid sell-off, sentiment and valuation indicators are more negative. This may help reduce the risk of a further drop as we remain in a sideways market.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (no change)
      • Earnings Growth (30%): Bullish (no change)
      • Momentum/Sentiment (10%): Positive (upgrade)
      • Valuations (5%): Positive (upgrade)
      ...
    Read More

  • August 18, 2022
    Valens Market Phase Cycle Monitor – August 2022 – There Are Actually Three Directions a Market Can Go

    • Converging Credit and Profit Stormfronts Cloud The Market Outlook. Credit signals are highlighting a significant tightening of lending availability in the most recent several months. Healthy corporate and consumer balance sheets limit the risk that leads to a credit rout. Tighter credit availability is likely to reduce investment going forward.
    • U.S. management teams still are bullish about investment, but return growth is slowing. U.S. corporate investment has finally been showing signs of growth. This can help earnings surprise on the upside, but returns and credit headwinds may reduce that growth going forward.
    • Oversold conditions created the recent rally. With tougher fundamentals and greater investor optimism, we’re now likely positioned at the high end of a sideways market.
    • Monthly inflections:
      • Credit (55% of macro outlook): Negative (downgrade)
      • Earnings Growth (30%): Bullish (no change)
      • Momentum/Sentiment (10%): Neutral (downgrade)
      • Valuations (5%): Neutral (downgrade)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 18 Month Dollar Cost Averaging....
    Read More

  • July 21, 2022
    Valens Market Phase Cycle Monitor – July 2022 – Jesse Livermore Would Be Long This Market

    • Rising Cost to Borrow Isn’t Preventing Growth – Only Excessively High-Cost Will. Credit levels are at or slightly above peaks from the most recent bull market cycle. However, they haven’t reached levels that signal risk of markets closing. Healthy corporate and consumer borrowing growth and balance sheets point to no risk of a real recession in the foreseeable future.
    • Concerns about inflation and growth have created significant near-term volatility in the stock market, presenting an opportunity for investors.
    • U.S. corporates are remarkably profitable, and growth is starting to accelerate. U.S. corporate investment has finally been showing signs of growth. Ruddy profitability can help power that growth and the market higher as it accelerates.
    • Monthly inflections:
      • Credit (55% of macro outlook): Neutral (no change)
      • Earnings Growth (30%): Bullish (no change)
      • Momentum/Sentiment (10%): Positive (no change)
      • Valuations (5%): Positive (positive change)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and 10 Month Dollar Cost Averaging....
    Read More

  • May 19, 2022
    Valens Market Phase Cycle Monitor – May 2022 – The Worst Is Likely Behind Us, A Positive Catalyst For H2 2022

    • The Worst Is Likely Behind Us, That’s A Positive Catalyst For H2 2022. Investors have become spooked about headline risk wherever they look. However, most of these headlines have peaked in terms of the risk they can create. Concerns about inflation and geopolitical risk have created significant near-term volatility in the stock market, presenting an opportunity for investors.
    • The market has also been spooked about the dramatic 200bps+ rise in the cost to borrow across U.S. corporate markets, with the Fed still raising rates. However headline rates are unlikely to continue to spike, and corporate credit remains very healthy.
    • U.S. corporates are remarkably profitable and growth is starting to accelerate.
    • Monthly inflections:
      • Credit (55% of macro outlook): Neutral (negative change)
      • Earnings Growth (30%): Bullish (no change)
      • Momentum/Sentiment (10%): Positive (no change)
      • Valuations (5%): Positive (positive change)
    • Timetable Recommendation: 50/50 Split for 5-10 Year Money and upgrade to 10 Month Dollar Cost Averaging....
    Read More

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