Valens Market Phase Cycle Monitor – April 2022 – Management Bullish Signals Can Fuel 2022 Earnings Growth

April 21, 2022

  • Management Bullish Signals Can Fuel 2022 Earnings Growth. U.S. corporate profitability has recovered impressively since the pandemic. Now, investment growth appears to be accelerating to match strong profits based on credit growth and management sentiment indicators. U.S. corporates are remarkably profitable and growth is starting to accelerate.
  • Credit markets remain supportive of profitability and growth through the cycle, and the Fed raising rates won’t disrupt these signals. This facilitates the market rising and limiting any risk for a downside shock.
  • While inflation remains a headline issue, investor sentiment has moderated significantly, de-risking the market
  • Monthly inflections:
    • Credit (55% of macro outlook): Bullish (no change)
    • Earnings Growth (30%): Bullish (no change)
    • Momentum/Sentiment (10%): Positive (no change)
    • Valuations (5%): Negative (no change)
  • Timetable Recommendation: 60/40 Split for 5-10 Year Money and upgrade to 6 Month Dollar Cost Averaging.

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