Analysis

The Latest from Macro News


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.
June 22, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for June 2017
More and more fundamental factors point to a growth acceleration In October 2016, management sentiment indicators started to flag positively, even as the market remained uncertain. This was followed by positive newsflow and earnings upgrades showing fundamental acceleration.
May 18, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for May 2017
Fundamental storm clouds are receding, so news related sell-offs offer opportunity Political news flow has introduced market volatility, but fundamentals have actually been improving.
April 23, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for April 2017
When sentiment reaches neutral levels (like now) in a Stage 2 bull, be a buyer In a Stage 2 bull market, momentum pushes stocks higher and investor sentiment rarely reaches negative levels.
April 12, 2017
Based on valuation alone, markets may be fully valued, but there are reasons to believe the stock market rally can continue
While valuations may appear aggressive, they are actually just around average compared to historical valuations in similar inflation and tax environments
March 23, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for March 2017
Not to be a broken record, but when this next dip comes (and it will) buy it Fundamental and management sentiment factors continue to point to a positive trend in underlying corporate profitability and growth, justifying current premium valuations. However, investor sentiment indicators remain overly effusive, creating reason for concern about increased volatility with any potential bad news.
February 23, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for February 2017
All signs still point to longer-term fundamental tailwinds, but near-term volatility Fundamental and management sentiment factors continue to point to a positive trend in underlying corporate profitability and growth, justifying current premium valuations. However, investor sentiment indicators remain overly effusive, creating reason for concern about increased volatility with any potential bad news.
January 19, 2017
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for January 2017
Overly bullish investors point to the likelihood of a market dip, but be sure to buy it Since the December Market Phase Cycle, where we highlighted that short-term sentiment had gotten ahead of admittedly bullish fundamentals, the market has been largely sideways. However investor sentiment indicators have not worked off their excesses, and remain exceptionally bullish, spelling risk for a short-term correction. But continued positive indicators around growth accelerating for the first time in years, and limited credit risk mean that any dip is an exceptional buying opportunity ahead of a 2ndstage bull market.
December 22, 2016
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for December 2016
Growth is emerging – but markets need to pause for fundamentals to catch up Since Donald Trump was elected on 11/8 markets have risen by 6%, driven by potential benefits from his plans, and from improvements already seen in the economy. However, with short-term sentiment indicators now at extended levels and substantial capital having been deployed into the market, a period of settling, or a nearterm correction early in 2017, may be warranted before valuations and the market are likely to move higher.
November 23, 2016
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for November 2016
Green shoots of growth are starting to emerge post-election Equity markets expect continued subdued growth and ROA’ reaching historic peaks. Expectations that have been correct for most of the past 5 years. However, growing management confidence, renewed easing of credit standards and a changed political environment pointing to signs that growth may be just around the corner. This could lead to earnings growth that would warrant equity upside.
October 20, 2016
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for October 2016
With many catalysts, and all conflicting, what to do? Wait. Traditional multiples are at elevated levels and adjusted metrics point to a fully valued market. But long-term investor leverage metrics are low, implying potential for incremental investment in an environment with limited alternatives.
September 21, 2016
Valens Market Phase Cycle Monitor & Corporate Credit Macro View for September 2016
Corrections remain buying opportunities due of lack of investment alternatives Correlation levels have spiked recently, signaling potential for continued near term volatility, especially with near-term sentiment indicators stretched. But investors have substantial dry powder available based on credit balances, and based on the trillions of dollars currently parked on zero-interest bearing debt. Even with current fully valued equity markets, a rotation away from fixed income into the equity markets could facilitate upside.