Analysis

The Latest from Macro News


January 17, 2019
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for January 2019
A RECESSION IS COMING … in 1.5-2 years if trends do not change before then The yield curve has flattened dramatically in the past quarter. CDS and bond yields are trending negatively. China and Europe appear to have growth issues, and the Fed may be too hawkish. Cash levels relative to debt maturities are at levels not seen since 2007 and companies will have debt maturity headwalls in 2021 that could be a concern. A recession is coming! Run for the hills!
December 20, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for December 2018
A deep bear market does not occur without credit risk – we do not see any The basis for the Market Phase Cycle, and what 150+ years of market cycle research shows, is that credit market cycles drive economic cycles and equity market cycles. When access to credit is easy, economic cycles trend positively as do equity markets. When credit markets tighten, and credit destruction happens, equity markets and the economy react similarly.
November 21, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for November 2018

In the middle of a retest is the hardest, and best, time to trust the (right) data

Tell me if you’ve heard this before:

“Any time the market falls 6%+ in 2 days, investors justifiably ask whether something has changed that should impact their investment thesis.  This is when a consistent framework like the Market Phase Cycle is most valuable.”

October 18, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for October 2018
Halloween may be around the corner, but don’t be spooked by the market’s moves Any time the market falls 6%+ in 2 days, investors justifiably ask whether something has changed that should impact their investment thesis. This is when a consistent framework like the Market Phase Cycle is most valuable.
October 11, 2018
US Equities Market Alert 2018 10 11: One more BTD in a year of buying opportunities
BTD = Buy The Dip. Yes, yet again we are being given the gift of a US Equities market entry point. Patience is a profitable virtue when deploying capital into any market sell-off. This pullback in US equities is no reason to panic.
September 20, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for September 2018
Higher highs and higher lows, fundamentally and technically Market technicians have many metrics they look at when observing the charts. One trusty tool that many come back to is looking for charts with consistent higher highs and higher lows in stock price. This indicates positive momentum and is a favorable set-up.
August 16, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for August 2018

The signal and the noise

The title of Nate Silver’s 2012 best selling book about predictive models, The Signal and The Noise, is referencing identifying real signals from statistical data, versus identifying false noise and relationships, and the risk of conflating the two.

July 19, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for July 2018
A Goldilocks environment as earnings season enters full swing? The term goldilocks often gets overused in financial markets. There just are not many other adjectives that explain an environment where things are positive, but not so positive that the market gets overheated, the “not too hot, nor too cold” phenomenon, quite as succinctly.
June 21, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for June 2018
Bullish sentiment and headline risk creates buying opportunities – use them Equity markets rallied 6% from early-May to mid-June. Concerns about inflation, interest rates, geopolitical problems, and trade issues dropped to the background in the face of an earnings season that produced strong earnings and management confidence about corporate outlooks.
May 17, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for May 2018
“I’ve got a really good feeling about this” – Young Han Solo on today’s market In the new Star Wars movie coming out on Memorial Day weekend, a young Han Solo flips his classic line “I’ve got a bad feeling about this” at what appears to be a tense moment for the crew. His rare optimism seems appropriate as we exit Q1 2018 earnings season.
April 19, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for April 2018
Management teams are voting with their wallets, investors are likely to follow In general, management teams tend to be value buyers, buying when their stocks dip and withdrawing when their equity rallies. If they don’t, it can be a sign of their concern about fundamentals. Watching this statistic can be helpful in confirming other signals about the fundamental outlook.
March 22, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for March 2018
The fundamentals, not the headlines, will end up dictating the market direction Over the last several months, there has been increased volatility in the market. The volatility has been driven by headlines about inflation, trade, and the management at the Fed, to name a few examples.
February 22, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for February 2018
Inflation will be a headwind to multiples, but earnings growth can be a tailwind In the last month’s Market Phase Cycle, we highlighted inflation as a key risk that investors would be focused on as we moved through 2018.
January 18, 2018
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for January 2018
2018 is shaping up similar to 2017 – and that is very good for investors In late 2016 into early 2017, we repeatedly highlighted that fundamentals appeared to be accelerating favorably, and this would be a tailwind for markets for the coming year.
December 21, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for December 2017
As we sing Auld Lang Syne – let us reflect on why this old bull market still has life As the world rings in to the new year in a few days, many will sing Auld Lang Syne. The lyrics ask if we should put the past behind us, or take the opportunity to remember the friendships that got us where we are to
November 22, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for November 2017
Can Santa Claus Visit Twice In 4 Months – Investors Are Betting Against It Equity market expectations are currently not aggressive – pricing in continued modest growth with steady ROA’ improvement. If corporations continue to deliver the strong adjusted earnings growth they’ve delivered this year, there is substantial fundamental upside going forward.
October 19, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for October 2017
When fundamentals, sentiment and credit point the same way, don’t overthink it As highlighted in the September letter, equity markets tend to have strength in Q4. Even after a month where the market continued to move higher, investor sentiment remains relatively muted. This, combined with continued building earnings growth trends, offers market tail winds.
September 21, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for September 2017
Santa Claus is coming to town – someone should tell equity investors The seasonal strength of the equity markets into Q4 and through the end of the year are a well-known phenomenon. This year, they are likely to benefit from a combination of overly cautious investor sentiment going into Q4, and continued building earnings growth trends.
August 24, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for August 2017
The weighing machine continues along, but the voting machine is overheating Ben Graham said “in the short-term, the market is a voting machine, while in the long-term it is a weighing machine.” *
July 20, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for July 2017
Cross Another Concern Off – Moderating Inflation Facilitates Premium Valuations The most important factors that drive valuation multiples for individual companies surround a company’s earnings growth potential. As we have highlighted in recent editions of the Market Phase Cycle, earnings growth remains robust.