Valens Market Phase Cycle Monitor & Corporate Credit Macro View for July 2019

July 18, 2019

  • The Fed makes the trend, and the (upward) trend is your friend. The Fed is set to cut interest rates in July. This, combined with overall lower corporate borrowing costs may allow companies to refinance debt maturity headwalls that have been a potential market overhang. This gives a confirming all clear signal for the next year and beyond
  • Profits and profitability continue to rise to all time highs across US corporations (UAFRS adjusted, accurate calculations)
  • US firms are likely to use profits to increase capital investments in 2019
  • The combination of profitability and growth, with low to no credit risk, suggests continued US equity upside in 2019
  • Near term volatility may require investors to be more nimble . Investor sentiment has grown extended in the past month, as the market has rallied to new all time highs. There is a chance that in the short term, there could be a pull back, or a pause in appreciation, until the market digests the recent move

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